Jon Kyl

Mr. KYL

Mr. KYL. Mr. President, I wish to pose a question to the Senator from New York, if I may. Do I understand the offset is with Customs user fees; is that correct?

Mr. KYL. Reserving the right to object.

Mr. KYL

Mr. KYL. Mr. President, as Senator McCain just noted, we have a crisis on the southern border with Mexico. We have drug and human smuggling daily. There are over 500,000 illegal immigrants a year crossing into the United States; 320 people died last year crossing into the desert area of Arizona. There is a significant degradation of the environment that has occurred because of the large number of people and vehicles coming across. The ranchers' operations are disrupted, their cattle are sent scurrying, their fences are cut, their water is taken. We have hundreds of millions of dollars of medical costs that are unreimbursed because of the emergency care that is being provided to illegal immigrants. We have the vigilantes that Senator McCain talked about springing up now, an understandable reaction to a problem but not an appropriate one. We have attacks on the Border Patrol every day, and even park rangers are being killed. This is a crisis and it has to be dealt with. I thank Senator Stevens and the other Senators who were helpful, for helping us to restore some of the funding the President had requested, and for their willingness to accept this amendment to begin to deal with at least one aspect of this problem. We have not only, however, a problem of controlling the border at the border, but we also have a problem of dealing with the people who come to the United States legally but stay here illegally. That is one of the specific focuses of this amendment. I would like to take just a second to talk about it. Did you know that half of the approximately 10 million people who are here in the United States illegally today came here legally and they overstayed their visas? The problem is, we don't have an effective system in our country that can track the people who are here illegally. We have mandated it three times in the law now. It is called an Entry Exit System. One of the things this amendment will do is to restore about $80 million to help fund this Entry Exit System. This was originally left out of the Senate version of the bill, but as I said, thanks to the work of Senator Gregg and Senator Hollings, Senator Byrd and Senator Stevens, we were able to get this funding back into the bill. The Entry Exit System was originally authorized in 1996 through the Illegal Immigrant and Immigrant Responsibility Act of 1996, and then it was strengthened again in the U.S.A. Patriot Act after September 11, and again in the Border Security and Visa Entry Reform Act. In all three cases we need to basically mandate the Federal Government to institute and administer this program. Finally, Congress has gotten the attention of the appropriate officials, and we are beginning to get this done. It makes no sense to spend all of the resources we spend to control the border and then totally ignore the fact that half of the people who are here illegally got here legally, but we have no way of tracking them and determining where they are at a given time. There are a lot of reasons this is important, but just think about the terrorism aspect for just a moment. This will help us identify terrorists, someone who arrived on a valid visa but hasn't exited the country because they want to stay here and engage in some nefarious activity. Just imagine if we had an effective system working at the time the September 11 hijackers came here. All of them came legally but of course they weren't all remaining in the country legally after they arrived. It will also obviously help in a lot of other ways. As a matter of fact, when someone exits the country, if our law enforcement officials need to question them for any reason, they can be stopped and therefore they can be questioned because of the effectiveness of this system. I want to make a final comment for the benefit of the administration because Congress is now acting to begin the funding of this program. Senator Gregg, the chairman of the Appropriations Subcommittee, has made the point in the past it always has not been a wise expenditure of money by Congress to fund INS systems because the money doesn't seem to be spent very wisely. What we are saying is, as a result of this amendment, we are willing to put confidence in the INS, in the new Homeland Security Department, Justice Department, Border Patrol, and the other agencies that have this responsibility. But we expect them to follow through on the laws that we pass so when we mandate a system, it is implemented, and we expect it to be implemented on time. We are going to be restoring the funding so they can do that. We expect them to do their part of the job and put these systems into effect. Not only is it important to help us with the problems of illegal drug smuggling and illegal immigration and general crime control, but it is now very important to deal with the problem of terrorism and the terrorist threat to our country. I thank Senators Stevens, Gregg, and Hollings. I thank the cosponsors of this legislation. I am very much looking forward to working with them on the problems that Senator McCain and I have identified in many other areas that we are going to have to deal with this year to deal with this crisis situation on the border between the United States and Mexico.

Mr. KYL. Mr. President, let me take a couple of minutes to amplify a couple of points my colleague, Senator McCain, made and also I ask unanimous consent Senator Domenici of New Mexico be added as a cosponsor of the amendment.

Mr. KYL. I would like to speak on it as well.

Mr. KYL

Mr. KYL. Mr. President, I wish to associate myself with the remarks of my good friend, the Senator from California, and also look forward to working with the chairman and ranking member of the subcommittee to resolve the funding disparity in the State Criminal Alien Assistance Program (SCAAP). Before I begin my comments about this important program and the level of funding in the Senate Commerce-Justice-State Appropriations bill, I want to state my full support for what I have been told will be a $500 million funding level for SCAAP in the House fiscal year 2003 bill. Through the Crime Control Act of 1994, the Congress created SCAAP to reimburse States and localities for the costs they incur incarcerating criminal illegal aliens. Such costs, it has been made clear, are the responsibility of the Federal Government. Previously, SCAAP was authorized at $650 million, although total expenditures of the States and localities exceeds $1.6 billion per year. Last year, the Congress reauthorized the program for the next 2 fiscal years at an open-ended level. Though the financial burden to process and incarcerate criminal illegal aliens overwhelms the budgets of many States and localities, SCAAP has never even been allocated to its full authorization. Over the past 5 years, SCAAP has usually been funded at levels between $500 million and $600 million, which has provided States and localities reimbursement of about 30 cents for each dollar spent on incarceration. The Congress would be doing the right thing if it allocated $1.6 billion. In fiscal year 2002, the State of Arizona and its localities incurred costs of well over $305 million to incarcerate criminal illegal aliens, and received $24 million in Federal reimbursement--when SCAAP was funded at $565 million overall. To reduce the total 2003 SCAAP funding from its $565 million to zero is unacceptable. Should the funding be eliminated, all 50 States, D.C. and the increasing number of localities that incur costs, which now receive an unacceptable 30 cents for each dollar spent, will receive nothing, if Congress were to eliminate funding altogether. Mr. President, I very much hope that Senators Gregg, Hollings, Feinstein, Schumer, and I can work to resolve these issues before this bill is signed into law.

Mr. KYL

Mr. KYL. Mr. President, today I am introducing legislation to repeal the death tax permanently, effective January 1, 2005. While I strongly believe that Congress must make all of the tax cuts enacted in 2001 permanent, and I have introduced S. 96, the ``Contract with Investors,'' that would make this and other important tax law changes, I want to make a separate and special case for repealing the death tax forever. It is an unfair, inefficient, economically unsound and, frankly, immoral tax that should not come back. In 2001, President Bush and Congress agreed to repeal the death tax. Repeal was tremendously popular. Even though most Americans may never be subject to the death tax, the vast majority know it is terribly unfair to allow Washington to seize more than half of a person's assets when he or she dies. According to a 2001 McLaughlin and Associates poll, 79 percent of respondents approve of the idea of abolishing the death tax. It is unfair, first of all, to the decedent and to his or her heirs. A person who works hard throughout his or her life, perhaps starts a business, and buys a home in a fast-growing metropolitan area where real estate values are skyrocketing. Or perhaps the person owns a farm or just works hard in a company owned by others, but that person saves and invests and eventually accumulates a small but respectable nest egg. The American dream is to be able to leave these assets to one's children so that they might enjoy a slightly better life than their parents. It is simply unfair and immoral for the government to take more than half of these assets at death. The impact of the death tax on small, family-owned businesses highlights another inequity, that small businesses often pay taxes at the highest individual rate, currently set at 38.6 percent, while the highest corporate tax rate is 35 percent. When the owner of a small business dies, the heirs may be forced to sell off the business to pay the applicable death tax. When the head of a C corporation dies, his or her heirs may have to sell some assets to pay the death taxes, but generally there is no need for the business to be sold. While Congress has tried to make provisions to ease the impact of the death tax on family businesses, the rules are so restrictive that a business owner can never be sure if he or she qualifies. Furthermore, the family business provisions restrict the size to which the business can grow and still quality for special treatment, creating a disincentive for businesses to expand and create new jobs. A far better solution is to repeal the death tax entirely and permanently. The death tax also causes collateral damage. Take our small entrepreneur described above. Suppose the business employs 25, maybe 30 people, all of whom rely on the business for their livelihood, health insurance, and retirement savings. The entrepreneur's heirs may not have enough cash to pay the applicable death tax and, therefore, may be forced to liquidate the business. All its employees must now find other jobs. Or suppose the heirs cannot find a ready purchaser for the business and must sell it off in pieces. All of the companies that sold items to or bought items from this business must find other suppliers or customers, leaving a hole in the economy. Although the death tax brings in only about one-and-a-half percent of the Federal Government's annual revenue, it inflicts a disproportionately large and negative impact on the economy. Not only does the death tax cost jobs directly when heirs are forced to liquidate businesses, it actually reduces Federal revenues by weakening the incentive to save and invest. One of the biggest problems our economy is facing now is that individuals are unwilling to invest at sufficient levels, leading to lower profits, interest, dividends and capital gains, not to mention reduced productivity and lower taxable wages. Economists Gary and Aldona Robbins estimate that repeal of the death tax would increase gross domestic product to such an extent that in 10 years' time, Federal tax revenue would be higher than it would be if the tax were retained. Of course, if the tax comes back after only one year of repeal, this growth will go unrealized. Beyond lost jobs, liquidated businesses, and confiscatory tax rates, the death tax is inefficient because people pay tremendous sums to tax- planners in hopes of avoiding as much of the tax as possible. Alicia Munnell, a former member of President Clinton's Council of Economic Advisors, estimates that the costs of complying with death tax laws are roughly equal to the revenue raised, or about $23 billion in 1998. In addition to being unfair and a drag on the economy, the current plan for repealing the death tax and then reinstating it the next year is incomprehensible to most Americans. Under current law, the exemption is $1 million in 2003, gradually raising to $3.5 million in 2009. At the same time, the tax rate drops from its original high of 55 percent down to 45 percent by 2007 and stays there until the death tax is repealed in 2010. In that year, heirs will only be taxed on any inherited property when they sell or otherwise dispose of the property, applying carryover basis, and then at capital gains rates and with an exemption of $1.3 million, and an additional $3 million for a surviving spouse. But, the entire death tax returns the following year at the 2001 rate of 55 percent, with the 2001 exemption of $675,000. The American people know that this makes absolutely no sense. We must fix this problem now and fix it permanently. My legislation, the Permanent Death Tax Repeal Act of 2003, abolishes the death tax permanently, effective January 1, 2005. I suggest 2005 to give people time to plan for the altered date of repeal. I believe that fairness and sound economic policy require that we enact my legislation as soon as possible, so that people will know that when the death tax disappears, it will disappear for good. As Edward J. McCaffrey, a law professor from the University of Southern California and self-described liberal, said in testimony before the Senate Finance Committee a few years back: ``Polls and practices show that we like sin taxes, such as on alcohol and cigarettes. . . . The estate tax is an anti-sin, or a virtue, tax. It is a tax on work and savings without consumption, on thrift, on long term savings.'' We must end this tax on virtue, work, savings, job creation and the American dream, and we must end it permanently.

Mr. KYL

Mr. KYL. Mr. President, today I am introducing legislation to repeal the death tax permanently, effective January 1, 2005. While I strongly believe that Congress must make all of the tax cuts enacted in 2001 permanent, and I have introduced S. 96, the ``Contract with Investors,'' that would make this and other important tax law changes, I want to make a separate and special case for repealing the death tax forever. It is an unfair, inefficient, economically unsound and, frankly, immoral tax that should not come back. In 2001, President Bush and Congress agreed to repeal the death tax. Repeal was tremendously popular. Even though most Americans may never be subject to the death tax, the vast majority know it is terribly unfair to allow Washington to seize more than half of a person's assets when he or she dies. According to a 2001 McLaughlin and Associates poll, 79 percent of respondents approve of the idea of abolishing the death tax. It is unfair, first of all, to the decedent and to his or her heirs. A person who works hard throughout his or her life, perhaps starts a business, and buys a home in a fast-growing metropolitan area where real estate values are skyrocketing. Or perhaps the person owns a farm or just works hard in a company owned by others, but that person saves and invests and eventually accumulates a small but respectable nest egg. The American dream is to be able to leave these assets to one's children so that they might enjoy a slightly better life than their parents. It is simply unfair and immoral for the government to take more than half of these assets at death. The impact of the death tax on small, family-owned businesses highlights another inequity, that small businesses often pay taxes at the highest individual rate, currently set at 38.6 percent, while the highest corporate tax rate is 35 percent. When the owner of a small business dies, the heirs may be forced to sell off the business to pay the applicable death tax. When the head of a C corporation dies, his or her heirs may have to sell some assets to pay the death taxes, but generally there is no need for the business to be sold. While Congress has tried to make provisions to ease the impact of the death tax on family businesses, the rules are so restrictive that a business owner can never be sure if he or she qualifies. Furthermore, the family business provisions restrict the size to which the business can grow and still quality for special treatment, creating a disincentive for businesses to expand and create new jobs. A far better solution is to repeal the death tax entirely and permanently. The death tax also causes collateral damage. Take our small entrepreneur described above. Suppose the business employs 25, maybe 30 people, all of whom rely on the business for their livelihood, health insurance, and retirement savings. The entrepreneur's heirs may not have enough cash to pay the applicable death tax and, therefore, may be forced to liquidate the business. All its employees must now find other jobs. Or suppose the heirs cannot find a ready purchaser for the business and must sell it off in pieces. All of the companies that sold items to or bought items from this business must find other suppliers or customers, leaving a hole in the economy. Although the death tax brings in only about one-and-a-half percent of the Federal Government's annual revenue, it inflicts a disproportionately large and negative impact on the economy. Not only does the death tax cost jobs directly when heirs are forced to liquidate businesses, it actually reduces Federal revenues by weakening the incentive to save and invest. One of the biggest problems our economy is facing now is that individuals are unwilling to invest at sufficient levels, leading to lower profits, interest, dividends and capital gains, not to mention reduced productivity and lower taxable wages. Economists Gary and Aldona Robbins estimate that repeal of the death tax would increase gross domestic product to such an extent that in 10 years' time, Federal tax revenue would be higher than it would be if the tax were retained. Of course, if the tax comes back after only one year of repeal, this growth will go unrealized. Beyond lost jobs, liquidated businesses, and confiscatory tax rates, the death tax is inefficient because people pay tremendous sums to tax- planners in hopes of avoiding as much of the tax as possible. Alicia Munnell, a former member of President Clinton's Council of Economic Advisors, estimates that the costs of complying with death tax laws are roughly equal to the revenue raised, or about $23 billion in 1998. In addition to being unfair and a drag on the economy, the current plan for repealing the death tax and then reinstating it the next year is incomprehensible to most Americans. Under current law, the exemption is $1 million in 2003, gradually raising to $3.5 million in 2009. At the same time, the tax rate drops from its original high of 55 percent down to 45 percent by 2007 and stays there until the death tax is repealed in 2010. In that year, heirs will only be taxed on any inherited property when they sell or otherwise dispose of the property, applying carryover basis, and then at capital gains rates and with an exemption of $1.3 million, and an additional $3 million for a surviving spouse. But, the entire death tax returns the following year at the 2001 rate of 55 percent, with the 2001 exemption of $675,000. The American people know that this makes absolutely no sense. We must fix this problem now and fix it permanently. My legislation, the Permanent Death Tax Repeal Act of 2003, abolishes the death tax permanently, effective January 1, 2005. I suggest 2005 to give people time to plan for the altered date of repeal. I believe that fairness and sound economic policy require that we enact my legislation as soon as possible, so that people will know that when the death tax disappears, it will disappear for good. As Edward J. McCaffrey, a law professor from the University of Southern California and self-described liberal, said in testimony before the Senate Finance Committee a few years back: ``Polls and practices show that we like sin taxes, such as on alcohol and cigarettes. . . . The estate tax is an anti-sin, or a virtue, tax. It is a tax on work and savings without consumption, on thrift, on long term savings.'' We must end this tax on virtue, work, savings, job creation and the American dream, and we must end it permanently.

Mr. KYL

Mr. KYL. Mr. President, I wish to speak to the issue that is very much on everybody's mind today, and that is the question of what is going to happen on the peninsula of North Korea and how do the actions of the United States, with respect to the North Korean Government's violation of international agreements, affect our ability to deal with the current situation we face in Iraq. Let me begin by saying that there have been attempts by people in the media to compare the threats between Iraq on one hand and North Korea on the other, sometimes I think in an effort to suggest that the President has misplaced his priorities. I would like to set the record straight. I think the administration has made it clear, and others are very clear, that there is a big threat from both Iraq and North Korea. Make no mistake about it, it serves no purpose to try to compare those threats in some theoretical way. Both have to be dealt with in their own way, and that also means in their own time. The reason the administration began dealing with Saddam Hussein and Iraq is because that was left over business from the gulf war of 11 years ago where Saddam Hussein said--promised--that he would do certain things: That he would, for example, not have weapons of mass destruction or seek to acquire nuclear capability; that he would dismantle his missile program, and so on. We know through our intelligence that he has failed time and again to comply with those requirements. He has even continued to shoot at our unarmed predator reconnaissance aircraft, as well as the manned aircraft we fly to do surveillance over the areas of Iraq we have been flying over, the so-called no-fly zones, ever since the end of the gulf war. I note that is a kind of inspection. When people at the United Nations say Iraq is cooperating with the inspections, I wonder how much those pilots think this cooperation is for them when they are being shot at by the Iraqis. Some cooperation. In any event, that is unfinished business with which we have to deal if international agreements are going to mean anything. The United Nations has resolutions. Saddam Hussein agreed to abide by them. He has not done so. The question is, At what point is the United Nations going to finally decide to enforce those resolutions? That is the point President Bush brought to the attention of the United Nations Security Council. They adopted a resolution that basically gave Saddam Hussein one last chance to show he was in compliance. In the judgment of virtually everyone who looked at the document filed by Saddam Hussein allegedly demonstrating his compliance, it is a false and fraudulent document and shows that he is in noncompliance rather than the other way around, a result of which, sooner or later, we are going to have to deal with Saddam Hussein. That is where the President found himself prior to the evolution of the North Korean crisis. In one respect it is timely for us to deal with Iraq because from a military standpoint, there is no question that we can deal with Iraq in a way that can minimize casualties, that does not involve a large threat that he will attack his neighbors. Fortunately, the Israelis have developed a missile defense program in the 11 years since the end of the gulf war and will probably be able to, through the Arrow missile defense system, handle any kind of Scud missile attack on them, and Saddam Hussein has not yet acquired a nuclear weapon, in our belief. As a result, he is not in a position to resist a U.S. effort to bring him into compliance with the U.N. resolution militarily in a way that we fear from a military standpoint. On the other hand, the crisis in North Korea has now broken out, and we are faced with a question of whether military action there is possible. Of course, it is possible. We should never take military action off the table. But we know that the capability of North Korea has evolved to the point where it would be much more difficult to take military action, among other reasons, because they have long-range missiles, they have nuclear weapons, we believe, and they have a lot of weaponry just a few miles across the DMZ from Seoul, Korea, where something like 8 or 10 million people are located, including a large number of American troops. As a result, that situation has evolved beyond the point where we believe it is efficacious to use a military solution to deal with the crisis. It is a good illustration of why we should deal with those problems before they get to that point. Fortunately, Iraq does present the situation prior to that point that enables us to take military action there. Again, that crisis evolved, diplomacy failed, and it is a crisis ripe for resolution, if Saddam Hussein does not come clean for the world community and the United States, by military action. We are not at that point with North Korea yet. That situation arose relatively recently. We have known for some time there had been violations of the agreement that North Korea made not to produce fissile material. They finally confessed to Under Secretary Kelly back in September that they had, in fact, been developing a uranium enrichment program for nuclear weapons. They pointed out that they still had not, however, violated the agreement to keep their plutonium program frozen, but in the last few weeks--in the last week actually-- they decided to unfreeze their plutonium program, as a result of which that fissile material can be produced in relatively short order for inclusion in nuclear weapons. It is our assessment that in a matter of a very short period of time North Korea could again begin producing a number of nuclear weapons. The threat to the world, obviously, is significant because Korea is the largest proliferator of weapons of mass destruction and missiles, and if they begin selling nuclear weapons, just imagine what the consequence would be if a Saddam Hussein or Muammar Qadhafi--someone like that--would purchase nuclear weapons from a country such as North Korea. The point is, that is another crisis with which we have to deal. I do believe it is a crisis, and I believe it is a serious threat, but, as I said, it is a different kind of threat from what we are presented in Iraq. The obvious solution is to do what the President suggested. North Korea has to meet a goal, and the goal is to dismantle its weapons program in a verifiable way. If it does not do so, it is going to have to face consequences. The President is willing to engage in a dialog with North Korea, but there has to be more than carrots at the end of that dialog to entice North Korea to come into compliance. North Korea also has to understand there can be consequences it will not like if it fails to reach an agreement that is enforceable, verifiable, and one that is acceptable to the rest of the international community. It now has removed itself from the Nuclear Non-Proliferation Treaty. This is a very dangerous step. As a result, the United States and the other countries of the world need to take action. It would be possible to do so under chapters 6 and 7 of the U.N. Charter which provide for action by the United Nations in the event of a threat to international peace and stability. We could impose a resolution similar to that which applies to Iraq today, Resolution 661, which essentially has quarantined Iraq from export and import. We could do the same with North Korea saying no more would they be able to export weapons of mass destruction to generate hard currency or, by the way, illicit drugs, since their two biggest forms of making money are selling illicit drugs and weaponry which they should not be selling to countries. That would benefit the world. We would deny hard currency to North Korea and help prevent the further proliferation of these weapons of mass destruction. Those are actions we can take today. Senators McCain, Sessions, Bayh, and I introduced legislation Monday that provides a range of options of which the administration can take advantage. It ranges from dealing with the refugee crisis in North Korea to preventing repatriation of funds from other countries into North Korea--again denying hard currency--increasing the broadcasts of Radio Free Asia into North Korea, ensuring we are adequately prepared to provide a deterrent to military activity in the region. But probably the key to it is the reimposition of sanctions or imposition of new sanctions, such as Resolution 661 that applies to Iraq today. Those are all the kinds of action that North Korea should understand could come about if it does not cooperate in these discussions that the administration would like to have. It seems to us that it is important to put those kinds of points in place so that in addition to the carrots this administration has suggested exist, there are some sticks out there, too, because we have seen in the past that North Korea tends to violate the agreements it signs; it tends to negotiate from the posture of strength. If it has cards on the table, such as its nuclear weapons and the ability to proliferate these weapons around the world, then we need some cards on the table as well. Right now I do not think the rest of the international community has many cards on the table. In effect, we need to put an ``or else'' to the end of those negotiations so when we sit down and talk to them and they are intransigent, as they usually are, there is a point our negotiators can say: Look, you either do this or else, and the ``or else'' has to have some meaning. Dr. Kissinger made another important point, and that is the United States should not be in this alone. This is not our fight alone. South Korea, of all countries, has a stake in helping to resolve the situation, as does Japan, China, Russia, and other nations in the region. It is important that those nations be brought into this, and I am glad to see the Chinese are willing to host some kind of a meeting and that perhaps other countries are willing now to be brought into the process of discussion so that whatever agreements are reached, it is a product of the entire group and not only the United States. We should not put ourselves into the position of being the sole party to be blamed or for people to be looking to for enforcement of any agreement that may be entered into. We have recently seen on the streets of South Korea our friends, the South Koreans, telling us they do not want us in their country anymore. Now that is a very bad turn of events because we have been great allies. We are great allies. We mean only to help South Korea to provide security assurances for their people. What it does is tell Americans that if we are not wanted there, then perhaps we ought to leave. That is not the right message to be sending when stability in the region is so important to maintain. It would, of course, send the wrong signals to North Korea were we to begin pulling our troops out of South Korea. That is not the solution now. Perhaps someday it will be. If South Korea does not want the United States to remain, obviously we should not remain, but the right time to do this is after this crisis is resolved, not in the middle of the crisis. There is a lot hanging in the balance. It seems to me when we analyze the situation in Iraq and in Korea, we have to appreciate that they are two totally different situations. There are some parallels. Both countries are part of the axis of evil. Both represent threats to the United States and other nations in the world. They both have to be dealt with, but they have to be dealt with in different ways. There is no confusion in the administration policy in this regard. There is no conflict. This is not a matter of having disparate policies. It is merely a matter of recognizing that it is a complex world and what works in one particular place may not work in another particular place. That is why we have the two different policies, both of which I hope will involve the international community of nations. At the end of the day, the United States has to have a clear-eyed policy of its own, one that we are able to apply in a way that will help to protect our own national security. That is why I support what the administration and President Bush have been trying to accomplish in bringing the situation in Iraq to the point where we can conclude one way or the other that Saddam Hussein has complied with the international obligations he agreed to, and bring that matter to a conclusion to enforce those agreements, while at the same time preparing to resolve the situation in North Korea in a way that will not break out in some kind of military conflict but will result in a situation in which North Korea has dismantled its nuclear program, its weapons of mass destruction proliferation program, and its missile development program in an enforceable and verifiable way. I yield the floor.

Mr. KYL

Mr. KYL. Mr. President, may I inquire, are we in a period for morning business?

Mr. KYL

Mr. KYL. Precisely the point. So unless there is some other ulterior motives--and I never ascribe motives to my colleagues and they can explain their own actions--the result of this is delay, though, and given the fact that we have unfinished business from last year because of the Democrat leader's inability to pass a budget and get appropriations bills passed, we are already behind schedule. We are in a war with terrorists. There could be a military conflict with Iraq. The President has an economic agenda that the American people are very interested in because it affects both their families and the economy as a whole. My constituents want Medicare reform and a prescription drug benefit to go along with that so we can strengthen and preserve Medicare. We have a lot on our agenda, and this delay is not helping the American people and there is no reason for it. That is why I, again, urge my Democratic colleagues. We are not saying this in anger or in a partisan tone, I hope, but it does not serve the interests of the American people, and it certainly blemishes the Senate to be unable to organize, to simply recognize which side won the election. Let this side chair the committees so we can get on with the other business of the day. That is the inevitable result of what is happening here. I urge my colleagues on the other side of the aisle to recognize that fact. It doesn't make them look good, it doesn't make the Senate look good, and it is bad for the American people. I hope we can get the resolution adopted quickly and get on with the business of the American people.

Mr. KYL. I respond to my colleague from Kentucky that in the last five Congresses we have organized the Senate on January 3, January 5, and January 7. The very latest date was January 9. We are already a week beyond that, and the week has, in fact, been wasted except for a very quick passage of the unemployment compensation benefit, which shows what we can do when we get down to work here. The history is that we do this very quickly, even in the most complicated circumstances, as the Senator noted, when we were 50-50 and had a lot of issues to try to resolve. That gets back to my point that there is no reason to hold up the exchanges of the gavels, a routine matter that recognizes who won the election, simply because there is still some disagreement about whether the money is going to be split--I don't even know--57/43, or whatever the numbers are.

Mr. KYL. Yes. The first time, I guess, since the 1880s; that is right.

Mr. KYL. I am happy to yield.

Mr. KYL. Mr. President, the American people must be wondering what is going on in the Senate today. They frequently see us just talking. We do a lot of that. But sometimes they see a little action on the Senate floor. And, of course, other than extending the unemployment benefits, we have done nothing in the Senate since we reconvened at the beginning of this year. Why is that so? Why is it that we have been having this squabble on the floor of the Senate for the last 24 hours or so, accusing each other of not wanting to get on with doing the Nation's business and the constructing, getting on with that business? People have asked me: Why can't you all get along? Why can't you resolve what appears to be petty disputes and get on with the Nation's business? One person said: Didn't we elect you to the majority? He was talking about me as a Republican Senator. So I had to explain what the situation was. I said: Yes, as a matter of fact, last November the news was full of the fact that, for the first time in a long time, Republicans were supposedly in control. The Presidency was occupied by George Bush, and the Republicans were to control both the House of Representatives and the Senate. But he said: Well, then, why aren't you getting going? Why aren't you doing things? I said: Well, there's a little problem; that is, as you know, in Congress most of the work is done in committees, and the Democrats, who had controlled the Congress for the last year and a half, have been unwilling to turn over the gavels to the new Republican chairmen. My friend said: That's not possible. This is the United States of America. You Republicans won the election. Just take them. I said: Well, it's not quite that simple. It is kind of like the old phrase: Possession is 99 percent of the law. The Democrats are in possession of the gavels. They are currently considered to be the chairmen until we do a very simple thing in the Senate. Usually it takes about 10 seconds. The majority leader asks unanimous consent that the list of Republican Senators assigned to these committees be accepted, with the committee chairmen as indicated. The Democratic leader does the same thing for the Democrats. And then the Senate is considered organized. The new Senators have their committee assignments, the chairmen are noted, and we get to work. But that has been objected to on the Democratic side. They want to hold on to the gavel a little while longer, even though in the election last November they lost--supposedly lost the majority control of the Senate. My friend said: Well, how can they prevent change? I thought you were in control. I said: Remember that in the Senate we have a procedure called the filibuster, and in order to stop debate and force a vote on our organizing resolution--or committee resolution, it is called--it takes 60 Senators to agree to force the vote. It only takes 51 to adopt the resolution, but 60 Senators are required to actually force the vote; otherwise, you have to just keep talking. And that is what we are doing right now. Obviously, with the Senate organized at 51 Republicans and 49 Democrats--unless some of our Democratic friends would be willing to concede that the election was won by Republicans, and be willing to turn the gavels over to the Republican chairmen--if they want to stick in their partisan mode here, at 49, they can continue to keep us from voting on this resolution and, thus, continue to have control of the committees. Well, why is this important? Things my colleague was just talking about a moment ago: The budget and getting on with the President's economic growth package are a good illustration. For the first time in the history of the Senate, since the Budget Act of 1974, last year, when the Democrats were in control of the Senate, they failed to pass a budget. And the appropriations bills, except for the Defense bills, were not passed. That is unfinished business from last year we have to hurry up and do. The President would like to see that done before his State of the Union speech. We have to get on with that. We cannot do it if the Appropriations Committee cannot meet, pass out a resolution, and get it to the floor so we can debate it. We have judges who have been waiting for almost 2 years now to be confirmed by the Senate because they have been held up by the Democratic Senate. We need to get on with that. And there is other important business. The point is, we ought to get on with it and stop this squabbling. What is it that is really at the bottom here? What is the complaint? What is the Democratic objective? It is a little hard to tell. Part of it, I suppose, is just delay for delay's sake. But part of it also has been indicated by those who say: We want our fair share of money and office space. This may seem pretty petty to people watching, but it is true that both sides need to have money for their staffs and operations. The majority leader has been negotiating in good faith on that, and he says they are very close to getting that issue resolved. But that does not have to be resolved today. The funding resolution goes on until the end of February. So we could easily get the committee process started, exchange positions so that Republican chairmen would have a gavel, get on with the Nation's business in the committees, and continue to work to resolve the issue of funding, such as that issue may continue to exist. Democrats have talked about the comparison to the middle of the year switch in parties when Jim Jeffords, a Senator from Vermont, left the Republican side, became an Independent, and joined the Democrats. The day that happened, Republicans turned their gavels over to their Democratic counterparts to let them run the committees, recognizing the power had now shifted in the Senate and they were now in the majority. It took another several weeks to get all the funding issues resolved, but they were resolved. We have that same amount of time here, so we can go ahead and give the gavels over to the Republicans to chair the committees and continue to negotiate the funding issues. We have several weeks yet to get that done. There is no reason to continue to delay this process. So I urge my Democratic colleagues to stop the squabbling and act like the world's greatest deliberative body that the Senate is often called. Instead, we look more like some Third World country where the losing party did not want to turn over control to the party that won the election. And that is just not acceptable in the Senate of the United States of America. So I urge my colleagues to agree to turn the power over to the party that won. Then we can continue to try to satisfy their requirements with funding. We want to do the Nation's business.

Mr. KYL

Mr. KYL. Mr. President, I have no objection to the Senator's request for an additional 5 minutes.

Mr. KYL. I don't want to object to the Senator's request.

Mr. KYL. Mr. President, I wonder. Some of us have been waiting. Would the Senator make it a little bit shorter?

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the North Korea Democracy Act of 2003 be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the North Korea Democracy Act of 2003 be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, on January 7, I reintroduced the ``Contract with Investors,'' which proposes a number of changes to the tax code to spur investment and encourage economic growth and job creation. Investment, especially by individuals, is the lifeblood of the U.S. economic system. They key to fostering robust economic growth, rather than the anemic growth we are seeing right now, is to eliminate the disincentives, the high tax rates, that discourage individuals from investing. Once individual investors return to the stock markets, or are encouraged to start up, or invest in existing, small businesses, we will get the growth that creates new, good jobs. The first element of my proposal repeals from the 2001 tax-relief law the sunset provision that was required by arcane Senate budget rules. The prospect of taxes reverting back to their 2001 levels in 2011 sends a signal to businesses and investors that tax increases are in their future, and this dampens investment. Furthermore, a dramatic tax increase in 2011 will devastate our economy. Next, I propose to accelerate the remaining marginal rate reductions from the 2001 law, moving the 2004 rate reductions to this year and the 2006 reductions to 2004. Lowering these rates benefits all taxpayers, and is the key to encouraging individuals to invest and take the economic risks that will create jobs. In our progressive income tax system, the marginal rate is the rate at which a person's last dollar of income is taxed. This means that a person who works harder and longer and earns more has those additional earnings taxed at the highest rate for which he or she qualifies. Reducing marginal rates encourages taxpayers to work harder and longer because they will not be taxed as much on that extra income. On the same principle, it makes sense to accelerate the planned tax-rate reductions. Phased-in reductions give taxpayers an incentive to put off income-producing activity into the future, when rates are scheduled to be lower. Accelerating the reductions gives taxpayers the incentive to engage in that income-producing activity immediately. This also gives quicker relief to small businesses, which are typically taxed not at corporate, but at individual rates. Small businesses account for most new jobs and half of the output of our economy. Currently, the maximum income tax rate for C corporations is 35 percent; once the individual rate cuts are fully implemented, the top tax rate for individuals will also be 35 percent, instead of the current 38.6 percent. This will eliminate a penalty unfairly imposed on small businesses and enable them to expand and employ more workers. The next element of my plan accelerates to 2005 repeal of the death tax, the estate and generation-skipping transfer taxes. The death tax is unfair and counterproductive and it must be permanently eliminated. A 1998 study by the Joint Economic Committee concluded that the existence of the death tax during the last century has reduced the amount of investors' capital in the economy by nearly half a trillion dollars. The same study estimates that, by repealing the death tax and putting those resources to better use, as many as 240,000 jobs could have been created over seven years and Americans would have had an additional $24.4 billion in disposable personal income. In 2001 testimony before the Senate Finance Committee, Dr. Wilbur Steger, the president of Consad Research Corporation and a professor at Carnegie Mellon University, testified that immediate repeal of the death tax would provide a $40 billion automatic stimulus to the economy, based on estimates of the amount of net unrealized capital gains that would be ``unlocked.'' Many Americans choose to hold on to their assets until death in order to obtain for their heirs a ``step- up'' in basis. Getting rid of the death tax will encourage Americans to sell assets before death, hence my term ``unlocking.'' Repeal also removes the strongest disincentive to business investment and expansion that faces older business owners. After all, why would people in their golden years expand their businesses, when the federal government is poised to confiscate a large share upon their death? Under current law, the death tax will go down to zero in 2010 but reappear thereafter, at exorbitant 2001 levels, thus adding significant complexity to future death tax planning, increasing costs that are a drag on economic activity, and retreating from a principled rejection of this unfair tax. This is unacceptable. Until the death tax is gone, family business, farms and ranches must still pay for expensive life insurance policies, death tax planners, and tax attorneys. These expenses, wasted resources that could be put to much more productive use, total more than $12 billion a year, according to Consad Research Corporation. My bill would, as I said, permanently repeal the death tax in 2005, thus allowing all Americans two years to plan for a future in which the federal government no longer taxes the death of its citizens. The Contract with Investors also addresses capital gains. It provides for maximum taxation of individual capital gains at a rate of 10 percent, which is half the current rate. Ideally, this tax should go the way of the death tax. The capital gains tax is a form of double taxation that penalizes risk-taking and entrepreneurship. Short of eliminating this tax, a solution endorsed by many economists, including Federal Reserve Chairman Alan Greenspan, Congress must enact a substantial and permanent reduction in the capital gains tax rate to stimulate new investment and more productive use of resources for both the short-term health of our economy. According to a recent study by the American Council for Capital Formation, American taxpayers face capital gains tax rates that are 35 percent higher than those paid by average investors in other countries. Furthermore, the United States is one of a small number of countries that requires a holding period for an investment to qualify for preferential capital gains treatment. Reducing the capital gains rate will promote the type of productive business investment that fosters growth and creates high-paying jobs. Lowering rates will aid entrepreneurs in their effort to make advances in products, technologies, and services that people want and need. The fifth component of the Contract with Investors modernizes the capital loss limitation of the tax code by increasing the amount of capital loss an individual may deduct against ordinary income from the current $3,000 to $10,000, and by indexing this amount for inflation. The capital loss limitation was set arbitrarily more than 25 years ago, and would have grown to $10,000 if it had been indexed for inflation when enacted. Modernizing this provision will allow investors to move out of unproductive assets or unfavorable investments, and use the profits to reinvest, save, or spend, as they choose. My bill also encourages savings. It accelerates the increase in amounts that may be contributed to certain tax-qualified retirement savings plans, and raises the age at which mandatory distributions must begin. Increasing the annual, maximum individual retirement account, IRA, contribution to $5,000 and the annual, maximum 401(k) plan contribution to $15,000 will enable American workers to save more for the future by investing in businesses. Increasing from 70.5 to 75 the age at which seniors must begin making annual withdrawals from this tax-deferred retirement accounts will allow seniors who are approaching this arbitrary age to choose whether to maintain their investments, rather than being forced to divest. Finally, the Contract with Investors eliminates the double taxation of dividends by excluding from gross income 100 percent of dividends received by individuals. Currently, corporations pay income taxes on their profits. Their investors are forced to pay income tax at the highest marginal rate applicable on amounts that corporations distribute to them in the form of dividends. The National Center for Policy Analysis has calculated that the combined tax rate on corporate profits is approximately 60 percent. My bill will eliminate the tax imposed on individuals receiving dividends from domestic C corporations, which will produce higher returns on dividend-yielding equity investments. It will also remove the disincentive for corporations to pay dividends and put equity financing on the same tax-footing as debt financing. Eliminating the tax bias against equity will improve corporate governance at a time when the public is demanding better practices at American firms. It will reassure investors who may be concerned about companies taking on too much debt or making unwise or unnecessary investments with excess cash. Eliminating the double taxation of dividends will, like the other elements of my plan, encourage investment and foster economic expansion. Finally, I have included five provisions under ``Sense of the Senate'' language. I believe that the Senate must act on these issues and I stand ready and willing to assist my colleagues in solving these problems. First, Congress should pass legislation to safeguard American workers' pension and retirement accounts. Last Congress, the Finance Committee unanimously passed out of committee such a bill. The Senate and the House of Representatives should act quickly to pass similar legislation as soon as possible. Second, Congress should modernize this country's international tax provisions to permit U.S. companies to better compete internationally. Our tax code places U.S. companies and the investors who own them at a distinct competitive disadvantage. Congress must modernize these provisions and move towards ending the current practice of taxing profits earned outside the boundaries of the United States. Third, Congress must take the trouble to purge redundant, outdated, and unscientific regulatory burdens on investors and U.S. companies. Congress is quick to pass onerous new laws but slow to repeal them. This is an abdication of our responsibility as legislators. Before placing new burdens on investors and businesses, Congress should be required to perform a cost-benefit analysis and institute performance criteria to evaluate these new burdens on U.S. businesses and investors. Fourth, Congress should enact meaningful tort reform as soon as possible. Finally, Congress should enact meaning tax reform that simplifies the Internal Revenue Code and reduces the depreciation recovery periods that businesses are forced to use to recover the cost of capital investments. Now is the time for bold action. A ``Contract with Investors'' is long overdue. I have laid out my principles. I look forward to future hearings and discussions with my colleagues. It's time to get working.

Mr. KYL

Mr. KYL. The reason I do this at this point, Mr. President, Dennis Ross makes the point, and I think eloquently, that the administration should not rule out force; that it ought to make it clear not only to North Korea but to North Korea's neighbors, Russia and China, that, of course, force is always an option; that there have to be some consequences to an absolute refusal of North Korea to agree to abide by the norms all the rest of us abide by, and to abide by the agreements it has entered into. I hasten to point out neither Dennis Ross nor I are advocating the use of force. He points out, and I reiterate the point, one would hope it would never come to that because the use of force against North Korea is fraught with the perils I discussed before. But Ross makes the point, and I think it is a valid one, that without consequences to failing to agree to be reasonable, it is unlikely North Korea will be reasonable. And more importantly, without that kind of a potential development, it may well be our allies in the region--the Russians and Chinese--who may also not be willing to put the kind of pressure they can and should against North Korea to cause North Korea to back down. So that is the reason why this kind of action by the United States should not necessarily be ruled out, even with all of its potential dangers. The reason I make this point is as follows: Talks can only succeed if we change the circumstances on the ground today. As of right now, talks result in promises by North Korea in exchange for fuel oil or food or whatever to North Korea, and then they violate the agreements and we are left in a position of reacting to their violation. We have to change that dynamic in some way so that North Korea feels some pressure to come to terms with its violations, some pressure to comply with the commitments it has made, some pressure to begin to dismantle its nuclear programs. Without that kind of pressure, without something to lose by refusing to go along in our negotiations or violating the agreements they make, talk alone is not likely to change anything. We have to change the circumstances. How do we do that? That is where our legislation comes in. This legislation would put into place several circumstances which we believe would cause North Korea to more seriously consider negotiations as a means toward real, peaceful resolution of the dispute and real disarmament of its nuclear facilities. But without these kinds of pressures or conditions or circumstances, they are not likely to do so. Let me briefly summarize the legislation. The first thing is to recognize what the North Koreans themselves have said, but to make it official: That the agreed framework entered into 9 years ago has failed and is no longer extant and it related to a circumstance North Korea has no longer permitted to exist and, as a result, the subsidization of North Korea called for under the agreement will cease; that they are not going to continue to be supported by the United States under the agreed framework. The second thing we do is prohibit the United States assistance to North Korea or the Korean Peninsula Energy Development Organization under the agreed framework. This is designed, among other things, to help deny North Korea the funds, the hard currency it needs, to continuing the development of its nuclear program. That is the third thing the act would do. It would reinstitute the sanctions that were previously in place and permit the President to invoke new sanctions. In effect, what I have called for is a resolution similar to resolution 611 against Iraq. Same terms, prohibiting exports and imports, as a way of denying hard currency to a country to engage in illicit activity. In the case of North Korea, this is especially important. The biggest source of hard currency for North Korea is the illicit drug trade and the weaponry it sends to other countries. Where do countries such as Iraq get Scud missiles? North Korea. Where did Pakistan get some of its equipment? North Korea. Where do other countries get weapons of mass destruction? North Korea. If we impose sanctions that both prohibit the importation and the exportation of these items from North Korea, we can help to impose upon their regime an economic circumstance which might persuade them it is more beneficial to talk and to make promises they intend to keep than to continue on their present course of action. Another provision of the act would prohibit any nuclear cooperation agreement or type of nuclear interaction with North Korea unless and until the President made several determinations and sent them to the Congress and Congress approved of such an interaction or agreement by congressional action. We would also encourage the President to obtain multilateral sanctions including the blocking of remittances from ethnic Koreans to North Korea. That's the other source of hard currency, the remittances from North Koreans elsewhere in the world to their relatives in North Korea itself. But with regard to multilateral activity here, it is interesting to me that probably the most significant pressure that could be put on North Korea to begin complying with its commitments would come from China. China supplies approximately 80 percent of the fuel oil to North Korea. It provides over half of the food and fuel generally to North Korea. It has a long border with North Korea. It clearly would be called upon to help enforce sanctions if they were imposed. And it clearly would suffer, probably more than any other country, from any kind of nuclear explosion on the North Korean peninsula or any other explosion in which poison gases or nerve agents or biological agents of some kind were released from the atmosphere since the wind is prevailing south to north. China has a great deal to lose from North Korea acquiring a nuclear capability as well. In the first place, I don't think China wants other countries in the region to have nuclear weapons. China has those weapons, but I don't think it wants Japan to acquire those weapons. I don't think it would want South Korea or Taiwan to acquire nuclear weapons. I am not sure it would want the United States to extend its nuclear umbrella to South Korea, for example. All of those things could happen if North Korea is permitted to develop nuclear weapons. It seems to me, therefore, it is very much in China's interest to quietly, if that is the way they have to do it, but firmly dissuade the North Koreans from progressing with its nuclear development program. It is especially troublesome that very recently China has continued to supply North Korea with materiel and other assistance for the further development of North Korea's nuclear program. Again, without going into details, we are well aware of what China has been doing. The United States needs to come down very firmly against this kind of export from China to North Korea. Not only do I think we should argue to China what we believe is in China's best interests, but in other ways to exert what other kind of influence we can on China to stop this kind of activity and assist us working with the North Koreans to stop their program. To some extent, arguments similar to that relate to Russia, although Russia is not as close to North Korea as are the Chinese. But in both cases, both Russia and China could assist us. One of the things our bill urges is the development of those multilateral kinds of agreements and actions that would stop North Korea from furthering its program. We would also in this act do a variety of things which we think would help to put pressure on North Korea, in terms of democratization and in terms of liberalizing its country in general. For example, granting North Koreans refugee status in the United States, encouraging the executive branch to work with other countries to care for and resettle refugees from North Korea and provide money for that purpose. We would require Radio Free Asia to increase its broadcasting to North Korea to 24 hours a day and authorize whatever money is necessary to do that. We also believe it is important for Congress to actually take measures, including military reinforcements, if that is called for, and enhanced defense exercises and other steps as determined appropriate to assure the highest level of deterrence against North Korea. This is important for two reasons. First, there are those who called on us to bring our troops home from South Korea and, frankly, the temptation is great, when South Korean leaders basically talk about not wanting the United States in South Korea anymore, to do precisely that. Why should we have our own troops there when they allegedly do not want us there? Unfortunately, that's a shortsighted way of looking at the problem. If we are to put the pressure on North Korea to make dialog meaningful, the third way I was talking about, to back it up with some potential action, then you do have to have a military presence and demonstrate you mean it when you talk about the North Koreans needing to comply with their agreements. Therefore, it would be the wrong time to either remove our troops or suggest they are not prepared. Thus, the reason our bill calls for enhanced measures to ensure our deterrence in that area. What these provisions of the bill demonstrate is that there are a lot of alternatives in between just talk which, as I said, is cheap, and military action, which is to be avoided at all costs here because of the consequences of it. There are a lot of things we could be doing in between that. I have described in not very much detail what our bill provides in that regard, to just demonstrate there are a lot of things we could be doing to cut off its supply of hard currency, to isolate it, and to put pressure on North Korea to begin to comply with the agreements it has made in the past. Some might say this is provocative. Frankly, I don't think it is very provocative. It is certainly not as provocative as having to resort to military force. It seems to me it is also not provocative to let the North Koreans know there are consequences to violating agreements they have made with the rest of the world. If we are not able to back up these agreements, then why ever have agreements in the first place? Why couldn't any country simply get out of the NPT and say, We didn't really mean it when we signed up? The United Nations charter itself--I have forgotten the exact chapters; I think it is chapters 6 and 7--provides for the imposition of international norms of behavior in cases where the peace of the world is threatened by a particular country. That applies directly to North Korea in this case. So we have the ability to act as an international group of nations, in addition to unilaterally in the case of the United States. But I would also say to those who say this is dangerous and provocative, that's the same thing people criticized Ronald Reagan for when he talked about the Evil Empire, Russia. It was the pressure the United States put on Russia in the latter stages of the Soviet Union, during which time the President not only built up our military to create a strong deterrence to any military action by the Soviet Union but also began to expand our push for democratization and freedom in Eastern Europe and in the outlying areas of the Soviet empire. Many think it was the combination of those factors that caused the Soviet Union to break up, the combination of a strong deterrence on our part, the peace-through-strength concept of Ronald Reagan, but also the declaration that it was an evil empire, the assistance to Lech Walesa, the characterization of the country and all of the eastern satellite countries of the Soviet Union as evil and nondemocratic and abusive of human rights, the Jackson-Vanik amendment. Those actions, over time, I believe, had a very salutary effect on the people in the Soviet Union and caused them to eventually conclude they could not confront the democratic nations of the world. As a result, Russia has been the product, fortunately for the people of Russia, of that kind of push. I do not think you create a more dangerous or provocative situation here. I think in the case of North Korea you begin to lay the groundwork for the North Koreans to become a democratic society that can actually take care of its people and not starve them to death and engage in the human rights abuses it has in the past. Let me just quote something Ronald Reagan wrote to himself. This is in a book called ``Reagan's War.'' It is talking about the philosophy Reagan had in dealing with the Soviet Union, but I think it is relevant to North Korea as well. In his diary the President wrote the following with respect to a meeting that had been convened, an emergency meeting of the NSC. He jotted these notes to himself about his goal with respect to Poland. He said: I took a stand that this may be the last chance in our lifetime to see a change in the Soviet empire's colonial policy re Eastern Europe. We should take a stand and tell them unless and until martial law is lifted in Poland, the prisoners were released and negotiations resumed between Walesa and the Polish government, we would quarantine the Soviets and Poland with no trade or communications across their borders. Also tell our NATO allies and others to join us in such sanctions or risk an estrangement from us. Bearing in mind that all know what the result of President Reagan's policies were, I think that is the same philosophy that should animate our policy today toward North Korea. We should not be seen as vacillating. Some have characterized the administration as vacillating. We should be sure the positions we are taking are clear-cut, firm, and no one can mistake what our intentions are, as the first step. Second, we should adhere to the President's policy of forcing North Korea to promptly and verifiably dismantle its nuclear enrichment program. And third, Congress can play a role in this by enacting legislation of the kind I have described that would not only create the conditions for more democratization in the country by granting refugee status to political refugees, broadcasting into North Korea the message of freedom to its people, but also squeezing economically the military leaders of the country to deny them the hard currency they are currently using to build up this nuclear capability, to prevent them from exporting these weapons of mass destruction to other countries. Just as a final point, such an export limitation or quarantine as part of the sanctions that could be imposed here would not only deny the economic reward to the North Koreans from the production of this material, but it could result in an interdiction of such material if in fact they are going to try to send it some place else. Remember that shipment from North Korea that was recently intercepted going into Yemen. This kind of sale of weapons of mass destruction by North Korea, therefore, if interdicted, would not only deny the country the hard currency that it uses for its nuclear program but perhaps ultimately more importantly would prevent this kind of equipment from getting into the hands of terrorists or terrorist nations that mean us harm. This is the approach we believe is appropriate for the United States to take. Neither military action nor just plain talk, but a dialog backed up by firm, positive, constructive actions on the part of the United States would put a lot of pressure on North Korea and would hopefully bring countries such as China and Russia along with us to help us put pressure on North Korea to cause it to come to meaningful agreement with the United States that is verifiable and that would result in peace in the region and the dismantlement of dangerous nuclear weapons they have been building. We will be introducing this legislation next week. I appreciate the support Senator McCain has provided in putting this legislation together, and I look forward to visiting with my colleagues and getting sponsorship of the legislation with an early commitment to get it passed by this body and sent on to the President. I yield the floor.

Mr. KYL. I ask unanimous consent to have printed in the Record a very well thought-through op-ed piece called ``Don't Rule Out Force,'' penned by Dennis Ross, which appeared in today's Washington Post newspaper.

Mr. KYL. I am happy to yield.

Mr. KYL. Mr. President, I want to talk today about a subject that is very much on our minds--the subject of North Korea and the threat North Korea poses to the entire world because of its development of weapons of mass destruction, including nuclear weapons, and the fact it is the world's largest proliferator of those kinds of weapons. Next week, Senator McCain and I will be introducing a bill called the North Korea Democracy Act of 2003. The purpose of this legislation is to establish American policy, from a congressional standpoint, that will help us to move North Korea toward a more democratic regime and forego the development of these weapons of mass destruction and the proliferation of them as well as missiles throughout the world. As we are all very much aware, today, right now, North Korea is ruled by a leader and leaders who have cheated on agreements in the past not to produce these weapons, and has really brought the world to the brink of military conflict, and has removed itself from numerous agreements it had earlier entered into, which have constrained its activities to date. As a result, the United States is presented with a challenge of what to do in North Korea that has a very short timeline on it, a challenge in which, as one pundit put it, ``the clock is ticking.'' Just as an aside, we know we have to deal with countries such as Iraq as well. Iraq is one of the fronts of the war on terror, and we are all aware of the fact the President has been preparing for the potential for military action should Saddam Hussein not comply with the U.N. resolutions that require him to come clean on his weapons of mass destruction program and to dismantle those weapons. The President has made it clear that while he is proceeding for those preparations with regard to Iraq, that he also understands the importance of dealing with the problem of North Korea, because North Korea has nuclear weapons already, we believe, and because of its recent actions, it could create more nuclear weapons quite quickly and, from our past understanding of North Korea's policies, could begin to sell those weapons to other countries. To not put too fine a point on it, think about the prospects of dealing with a Libya or an Algeria or a Syria or a Sudan or a country such as these that bought a nuclear weapon from North Korea. It is a very troubling prospect, indeed. Yet in a matter of months--not years, not some time way down the line, but literally in a matter of a few months under the current program in which it is engaged--North Korea could develop nuclear weapons and sell them to countries such as those I have mentioned. Of course, it could also sell a weapon to a terrorist organization, other than a state that sponsors terror. This is, indeed, a troubling prospect, and that is why I say the clock is ticking. That is why it is important for the United States to have a very firm policy, a very clear policy for dealing with this and for the Congress to be engaged in the development of that policy; hence, the reason for the introduction of this legislation. I will set the stage with what this threat is, what the U.S. policy has been, what our current strategy is with respect to dealing with North Korea, and then I will describe in a little more detail the bill about which I am talking. The President has said that the centerpiece of our policy with respect to North Korea is that it must promptly and verifiably dismantle its nuclear enrichment program. Of what exactly is the President speaking? In the past, North Korea created a plutonium enrichment facility that produced only 5 megawatts of electricity, so it was clearly not something to produce power for the country of North Korea--in fact, it requires coal to operate--but was for producing fissionable material to put into nuclear weapons. In 1994, North Korea agreed that it would no longer produce fissionable material from that facility and that it would not produce any other fissionable material. That plant was put into a standby mode, in effect, and the International Atomic Energy Agency, IAEA, was permitted to install devices that would monitor the compliance of that commitment, as well as people who were onsite to verify compliance. In the interim, North Korea began to develop a uranium enrichment project in deep underground facilities in North Korea. North Korea began this program and only recently 'fessed up to the fact that it had been engaging in this program for a long time. It, too, is in violation of agreements that North Korea had entered into, including the Nuclear Non-Proliferation Treaty, or the NPT. North Korea today, I believe, announced it was, in fact, withdrawing from the NPT. It had been threatening to do so for some time. At the time it developed this fissionable material, North Korea was a signatory to the NPT. Throughout the last several years--and we do not know precisely how long--North Korea had been developing a clandestine nuclear fissionable program with which to build nuclear weapons. We believe that as a result of the previous program, as well as perhaps what might have been developed in the uranium program, North Korea does, in fact, possess nuclear capability at this time. The exact number of weapons we believe they have is a classified number. That is what the President was talking about when he said that North Korea must promptly and verifiably dismantle its nuclear enrichment program--both the plutonium enrichment program, which it has now restarted, as well as the uranium fissile material program that it has recently admitted to possessing. I mentioned the NPT, but North Korea has also agreed in other fora to not produce these kinds of weapons. Another agreement that it entered into was the North-South Declaration on the Denuclearization of the Korean Peninsula. It also in 1994, as part of what is referred to as the agreed framework with the United States, forsworn the development of any of these nuclear weapons. There are actually four specific different agreements that North Korea is currently in violation of as a result of these two nuclear programs with which it is engaged. When we confronted the Koreans last September with the fact that we were aware of the development of its uranium enrichment program, at that point North Korean leaders threatened to pull out of the NPT and, as a result of that, the United States and the other nations that had been involved in the agreed framework on the Korean peninsula agreement decided the violation of these accords could not be rewarded with continued sale or providing of heavy fuel oil or other products to North Korea, as a result of which the last shipment, I believe, went to North Korea in September or October. That was part of the quid pro quo for North Korea forswearing these nuclear programs. We said: We will build nuclear facilities for you; we will provide you with fuel for your current facilities, including this heavy fuel oil; if you will continue to forswear those nuclear weapons, we will continue to supply that material and that fuel to you. Once they threatened to pull out of the NPT and agreed they were in violation, we stopped those fuel oil shipments. That is what brought the current controversy to a literal boiling point when the Korean leaders said they would pull out of the NPT ostensibly because we cut off the fuel shipments, and, of course, it was the other way around. The question is what to do at this point with the North Korean leaders having not only threatened now to pull out of the NPT, but actually giving notice that they pulled out, and their admission they have been in violation of these other agreements. There have basically been three schools of thought. One school of thought is we should actually engage in a military attack on the plutonium facility which has been restarted by North Korea. Some people who worked in the Clinton administration, and perhaps President Clinton--I am not sure--actually said that was part of President Clinton's threat against North Korea: That if they ever started that facility again, we would bomb the facility. I do not know if that was conveyed to the North Koreans. I do not know whether we ever would have done so. The problem with military activity is that North Korea is a country that today possesses a very large number of rockets and artillery pieces, as well as missiles, all of which could very quickly, within a matter of minutes, literally kill millions of people in the area of Seoul, Korea, only 30-some miles away from the DMZ. It is a good example, by the way, of why, if we are going to have to deal with Saddam Hussein, it is better to do it today when he does not pose that kind of threat to us than tomorrow when he might, just as North Korea does today. So, the military option, while probably not one that should be taken off the table, is one that is fraught with peril and difficulties. North Korea could very probably cause great destruction not only on South Korea, killing South Koreans and American servicemen, about 37,000 of which are stationed in South Korea, but also, if they desire to do so, could strike Japan and possibly even Hawaii. Its missiles are that well developed. Because of that, the potential for military action, while it probably should never be taken off the table because we do not know just how serious North Korea will be with its aggression, is not one most experts believe should be threatened as a means of making North Korea comply. At the other end of the spectrum are those who say we should talk with North Korea. There are two problems. One, it has been tried and found to have failed. North Korea is willing to talk, but it is not willing to make concessions or, if it does make concessions, it is not willing to keep them. So talk alone is clearly, at least in my view, not a solution to this problem. Originally, North Koreans said if you will talk to us, then we can get a dialog going that will actually result in our compliance with these agreements. But as soon as the Secretary of State hinted maybe the United States would talk, all of a sudden there are new conditions. As a matter of fact, it is reported in the news media that the North Korean leaders said they were going to pull out of the nuclear nonproliferation treaty today--unless we would resume fuel oil shipments to them. This is the point. That is the way the North Koreans talk. They are always bargaining. They will talk to you today if you will give them something today; otherwise, no dice. And the problem is you give it to them and then even if they have made a commitment, we find they will break it. So the North Koreans are not exactly the kind of partners you can rely upon and negotiate. For the same reason, we are not negotiating with Saddam Hussein or the al-Qaida. We do not believe it is in our best interest to negotiate with the North Koreans. So talk alone will not solve the problem. Somewhere in between military action and talk there has to be a solution to this problem. As I pointed out, the clock is ticking. We do not have a long time to wait. So even though the legislation I will be describing in a moment contains components that would gradually pressure North Korea to become more democratic, to become more peaceful, to eschew its weapons of mass destruction and stop its nuclear program, the question is whether even this kind of approach can take hold quickly enough to force North Korea to stop before it develops the nuclear weapons and gets them in somebody else's hands. That is the real question. So, even this middle ground, this third wave, as I call it, has the potential of not working if North Korea believes it can gain enough time to build these nuclear weapons and sell them to somebody else or build them and threaten to do that as a way of extracting concessions from us. That is the problem. I don't want to get too specific about the timing. I will say that in a matter of months, much less than a year, North Korea could develop a number of nuclear weapons. That is the kind of timeframe we are talking about.