Jon Kyl

Mr. KYL

Mr. KYL. Mr. President, I rise today to speak on the Patent Reform Act of 2011, which I understand will be retitled as the ``America Invents Act.'' When this bill was marked up in the Judiciary Committee in 2007 and again in 2009, I voted against it, and I submitted minority views to the committee report for the bill. In the 2009 committee report, Senators Russ Feingold and Tom Coburn joined me in identifying a set of issues that we felt needed to be addressed before the bill was ready for consideration by the full Senate. Chief among these were concerns about the bill's system of postissuance administrative review of patents. Senior career staff at the Patent Office had expressed deep misgivings about the office's ability to administer this system. In response, at the conclusion of the 2009 mark up, Chairman Leahy pledged to invite the Patent Office to work with the committee to address these concerns and to try to develop a system that the office would be able to administer. Chairman Leahy carried through on his pledge and held those meetings later that year. As a result, important changes were made to the bill, eventually resulting in a managers' amendment that was announced in 2010 by Chairman Leahy and then-Ranking Member Sessions. The 2010 managers' amendment, which is also the basis of the present bill, substantially addressed all of the concerns that Senators Feingold and Coburn and I raised in the 2009 Minority Report. As a result, I became a cosponsor of that amendment, and am proud to cosponsor and support the bill that is before us today. I will take a few moments today to describe the key changes that led to the 2010 breakthrough on this bill. But first, I would like to address an important aspect of the bill that has recently become the subject of some controversy. This is the bill's change to a first- inventor-to-file patent system. About two-thirds of the present bill has never been controversial and has been included in all of the various iterations of this bill ever since the first patent reform act was introduced in 2005 by Mr. Lamar Smith, who was then the chairman of the House Intellectual Property Subcommittee. Mr. Smith's 2005 bill, H.R. 2795, included the following proposals: it switched the United States from a first-to-invent patent system to a first-inventor-to-file system. The Smith bill enacted chapter 32 of title 35, creating a first-window, post-grant opposition procedure. It authorized third parties to submit and explain relevant prior art to the Patent Office with respect to an application before a patent is issued. The Smith bill amended the inventor's oath, and expanded the rights of assignees to prosecute a patent application under section 118. And it also eliminated subjective elements from the patent code, and included the first proposal for creating derivation proceedings. All of these elements of Mr. Smith's original 2005 bill are retained in the bill that is before us today, and are, in fact, the most important parts of the bill. And, until recently, these provisions had not proven controversial. After the announcement of the 2010 managers' amendment, however, members of the Judiciary Committee began to hear more from critics of the bill's move to a first-to-file system. Under current law's first- to-invent system, a patent applicant or owner has priority against other patents or applications, or against invalidating prior art, if he conceived of his invention before the other inventor conceived of his invention or before the prior art was disclosed. Under the first-to- file system, by contrast, the same priority is determined by when the application for patent was filed. Whichever inventor files first has priority, and third-party prior art is measured against the filing date, and is invalidating if it disclosed the invention before the date when the application was filed, rather than the date when the invention was conceived. In commentary that was published on Sunday, February 27, Mr. Gene Quinn, the writer of the IP Watchdog Web site, made some worthy points about the present bill's proposed move to a first-to-file system. Responding to critics of first to file, Mr. Quinn first noted that: in practical effect, we already have a first inventor to file system. For example, since the start of fiscal year 2005 on October 1, 2004, there have been over 2.9 million patent applications filed and only 502 Interferences decided. An Interference Proceeding occurs when multiple inventors file an application claiming the same invention, and is the hallmark of a first to invent system . . . . On top of the paltry 502 Interferences over nearly 7 years, a grand total of 1 independent inventor managed to demonstrate they were the first to invent, and a grand total of 35 small entities were even involved in an Interference. In other words, as Mr. Quinn notes, although the first-to-invent system is supposed to help the little guy, over the last seven years, only one independent inventor has managed to win an interference contest and secure the benefits of the first to invent system. And again, this is out of nearly 3 million patent applications filed over this period. Mr. Quinn's comments also debunk the notion that an interference proceeding is a viable means of securing first-to-invent rights for independent and other small inventors. He notes that: On top of this, the independent inventors and small entities, those typically viewed as benefiting from the current first to invent system, realistically could never benefit from such a system. To prevail as the first to invent and second to file, you must prevail in an Interference proceeding, and according to 2005 data from the AIPLA, the average cost through an interference is over $600,000. So let's not kid ourselves, the first to invent system cannot be used by independent inventors in any real, logical or intellectually honest way, as supported by the reality of the numbers above. . . . [F]irst to invent is largely a ``feel good'' approach to patents where the underdog at least has a chance, if they happen to have $600,000 in disposable income to invest on the crap-shoot that is an Interference proceeding. Obviously, the parties that are likely to take advantage of a system that costs more than half a million dollars to utilize are not likely to be small and independent inventors. Indeed, it is typically major corporations that invoke and prevail in interference proceedings. The very cost of the proceeding alone effectively ensures that it is these larger parties that benefit from this system. In many cases, small inventors such as start ups and universities simply cannot afford to participate in an interference, and they surrender their rights once a well-funded party starts such a proceeding. Mr. Quinn's article also responded to critics who allege that the present bill eliminates the grace period for patent applications. The grace period is the one-year period prior to filing when the inventor may disclose his invention without giving up his right to patent. Mr. Quinn quotes the very language of this bill, and draws the obvious conclusion: Regardless of the disinformation that is widespread, the currently proposed S. 23 does, in fact, have a grace period. The grace period would be quite different than what we have now and would not extend to all third party activities, but many of the horror stories say that if someone learns of your invention from you and beats you to the Patent Office, they will get the patent. That is simply flat wrong. Mr. Quinn is, of course, referring to the bill's proposed section 102(b). Under paragraph (1)(A) of that section, disclosures made by the inventor, or someone who got the information from the inventor, less than 1 year before the application is filed do not count as prior art. And under paragraph (1)(B), during the 1-year period before the application is filed, if the inventor publicly discloses his invention, no subsequently disclosed prior art, regardless of whether it is derived from the inventor, can count as prior art and invalidate the patent. This effectively creates a ``first to publish'' rule that protects those inventors who choose to disclose their invention. An inventor who publishes his invention, or discloses it at a trade show or academic conference, or otherwise makes it publicly available, has an absolute right to priority if he files an application within one year of his disclosure. No application effectively filed after his disclosure, and no prior art disclosed after his disclosure, can defeat his application for patent. These rules are highly protective of inventors, especially those who share their inventions with the interested public but still file a patent application within a year. These rules are also clear, objective, and transparent. They create unambiguous guidelines for inventors. An inventor who wishes to keep his invention secret must file an application promptly, before another person discloses the invention to the public. And an inventor can also share his invention with others. If his activities make the invention publicly available, he must file an application within a year, but his disclosures also prevents any subsequently disclosed prior art from taking away his right to patent. The bill's proposed section 102 also creates clear guidelines for those who practice in a technology. To figure out if a patent is valid against prior art, all that a manufacturer needs to do is look at the patent's filing date and figure out whether the inventor publicly disclosed the invention. If prior art disclosed the invention to the public before the filing date, or if the inventor disclosed the invention within a year of filing but the prior art predates that disclosure, then the invention is invalid. And if not, the patent is valid against a prior-art challenge. Some critics of the first-to-file system also argue that it will be expensive for inventors because they will be forced to rush to file a completed application, rather than being able to rely on their invention date and take their time to complete an application. These critics generally ignore the possibility of filing a provisional application, which requires only a written description of the invention and how to make it. Once a provisional application is filed, the inventor has a year to file a completed application. Currently, filing a provisional application costs $220 for a large entity, and $110 for a small entity. One of Mr. Quinn's earlier columns, on November 7, 2009, effectively rebuts the notion that relying on invention dates offers inventors any substantial advantage over simply filing a provisional application. As he notes: If you rely on first to invent and are operating at all responsibly you are keeping an invention notebook that will meet evidentiary burdens if and when it is neces- sary to demonstrate conception prior to the conception of the party who was first to file. . . . [Y]our invention notebook or invention record will detail, describe, identify and date conception so that others skilled in the art will be able to look at the notebook/record and understand what you did, what you knew, and come to the believe that you did in fact appreciate what you had. If you have this, you have provable conception. If you have provable and identifiable conception, you also have a disclosure that informs and supports the invention. . . . [And] [i]f the notebook provably demonstrates conception, then it can be filed as a provisional patent application at least for the purpose of staking a claim to the conception that is detailed with enough specificity to later support an argument in a first to invent regime. In other words, the showing that an inventor must make in a provisional application is effectively the same showing that he would have to make to prove his invention date under the first-to-invent system. A small inventor operating under first-to-invent rules already must keep independently-validated notebooks that show when he conceived of his invention. Under first-to-file rules, the only additional steps that the same inventor must take are writing down the same things that his notebooks are supposed to prove filing that writing with the Patent Office, and paying a $110 fee. Once the possibility of filing a provisional application is considered, along with this bill's enhanced grace period, it should be clear that the first-to-file system will not be at all onerous for small inventors. And once one considers the bill's clean, clear rules for prior art and priority dates, its elimination of subjective elements in patent law, its new proceeding to correct patents, and its elimination of current patent-forfeiture pitfalls that trap legally unwary inventors, it is clear that this bill will benefit inventors both large and small. Allow me to also take a moment to briefly describe the concerns that Senators Feingold and Coburn and I raised in our 2009 Minority Report, and how the present bill addresses those concerns. Senators Feingold and Coburn and I proposed that the bill impose a higher threshold showing for instituting an inter partes, or post-grant review. This had long been a top priority for the Patent Office, both under the previous administration and under the current one. The Patent Office made clear that a higher threshold is necessary to weed out marginal challenges and preserve the office's own resources, and that a higher threshold would also force parties to front-load their cases, allowing these proceedings to be resolved more quickly. The present bill imposes higher thresholds, requiring a reasonable likelihood of invalidity for inter partes review, and more-likely-than-not invalidity for post-grant review. Senators Feingold and Coburn and I also recommended that the Patent Office be allowed to operate inter partes reexamination as an adjudicative proceeding, where the burden of proof is on the challenger and the office simply decides whether the challenger has met his burden. The present bill makes this change, repealing requirements that inter partes be run on an examinational model and allowing the PTO to adopt an adjudicative model. The 2009 Minority Report also recommended that the bill restrict serial administrative challenges to patents and require coordination of these proceedings with litigation. We also called for limiting use of ex parte reexamination to patent owners, noting that allowing three different avenues for administrative attack on patents invites serial challenges. The present bill does coordinate inter partes and post- grant review with litigation, barring use of these proceedings if the challenger seeks a declaratory judgment that a patent is invalid, and setting a time limit for seeking inter partes review if the petitioner or related parties is sued for infringement of the patent. The present bill does not, however, bar the use of ex parte reexamination by third parties. The Patent Office and others persuaded me that these proceedings operate reasonably well in most cases and are not an undue burden on patent owners. The present bill does, however, impose limits on serial challenges that will also restrict the use of ex parte reexamination. The bill's enhanced administrative estoppel will effectively bar a third party or related parties from invoking ex parte reexamination against a patent if that third party has already employed post-grant or inter partes review against that patent. Also, the bill allows the Patent Office to reject any request for a proceeding, including a request for ex parte reexamination, if the same or substantially the same prior art or arguments previously were presented to the Office with respect to that patent. Senators Feingold and Coburn and I also recommended that the PTO be allowed to delay implementation of post-grant review if the office lacks the resources to implement that new proceeding. The present bill includes a number of safeguards that are the product of discussions with the PTO. Among other things, the present bill authorizes a ramp-up period, allowing the office to limit the number of proceedings that can be implemented during the first 4 years after the new proceeding becomes effective. The 2009 Minority Report also recommended that treble damages be preserved as a meaningful deterrent to willful or calculated infringement of a patent. The present bill does so, eliminating the restrictive three-buckets approach and broad safe harbors that appeared in the bill in 2009. The report also recommended that the bill remove subjective elements from patent law, such as the various deceptive- intent elements throughout the code and the patent-forfeiture doctrines. The present bill effectively makes both changes. In fact, the 2007 bill had already been modified in mark up to eliminate the patent forfeiture doctrines, a point elucidated in that year's committee report and confirmed by a review of the relevant caselaw. This last point should also help address a question that Mr. Quinn raised in his column on Sunday regarding proposed section 102(b)'s use of the word ``disclosure,'' and whether it covers public use or sale activities of the inventor. I would have thought that the meaning of the word would be clear: a disclosure is something that makes the invention available to the public--the same test applied by section 102(a) to define the scope of relevant prior art. And ``available to the public'' means the same thing that ``publicly accessible'' does in the context of a publication. Subject matter makes an invention publicly accessible or available if an interested person who is skilled in the field could, through reasonable diligence, find the subject matter and understand the invention from it. Obviously, Congress would not create a grace period that is narrower in scope than the relevant prior art. Thus for example, under this bill, any activity by the inventor that would constitute prior art under section 102(a)(1) would also invoke the grace period under section 102(b)(1). As a result, the inventor would be protected against his own activities so long as he files within a year, and under the bill's ``first to publish'' provisions, he would also be protected by any other person's disclosure of the invention, regardless of whether he could prove that the other person derived the invention from him. The present bill is the product of almost a decade of hard work, including three Judiciary Committee mark ups, and the untold hours of work by Mr. Smith and other members of the House of Representatives that led to the introduction of the Patent Reform Act of 2005, the foundation of today's bill. This is a bill that will protect our heritage of innovation while updating the patent system for the current century. It will fix problems with current administrative proceedings, create new means for improving patent quality, and will generally move us toward a patent system that is objective, transparent, clear, and fair to all parties. I look forward to the Senate's passage of this bill and its enactment into law. I ask unanimous consent that Mr. Gene Quinn's columns of February 27, 2011, and November 7, 2009, with corrections of a few typos and enhancements of punctuation, be printed in the Record.

Mr. KYL. I would urge my colleagues to fully participate in this debate, come to the floor with any questions or comments they have, and at the end of this process Chairman Leahy will finally be rewarded with a bill that will bear his imprimatur and support, a bill that will be extraordinarily important to the future well-being of the people of the United States of America.

Mr. KYL. I ask unanimous consent that the order for the quorum call be rescinded.

Mr. KYL. I thank the chairman of the committee.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from New Hampshire (Ms. Ayotte), the Senator from Arkansas (Mr. Boozman), the Senator from Oklahoma (Mr. Inhofe), the Senator from Arizona (Mr. McCain), the Senator from Kentucky (Mr. Paul), and the Senator from Pennsylvania (Mr. Toomey).

Mr. KYL

Mr. KYL. Madam President, first, I ask unanimous consent that the cloture vote on the underlying bill occur at 2 p.m. today.

Mr. KYL. The following Senator is necessarily absent: the Senator from Louisiana (Mr. Vitter).

Mr. KYL. Madam President, very briefly, the Senator from Texas is correct. No one who was directly involved in these negotiations is pleased with the outcome. Some will say that must be a pretty good outcome then. One of the things we did in order to enable us to come to agreement is defer a big issue. That issue will have to be resolved in conference. It is the issue of how the additional flights that are being allowed under this legislation will be allocated among the various air carriers. Ordinarily, an agency will make a decision based upon criteria the Congress lays out in the underlying legislation; otherwise, their decisions can be challenged as arbitrary and capricious. It is up to us to devise what those standards are. We were not able to agree on them. It is one of the things we will have to try to come to an agreement with each other about and then articulate a position with our House colleagues in conference. This pertains both to the original or first- year tranche as well to the second-year tranche. I hope my colleagues and I can continue to work together in the spirit of cooperation to devise good criteria so the last piece of this legislation can be put into place.

Mr. KYL. The following Senators are necessarily absent: the Senator from Tennessee (Mr. Corker) and the Senator from Arizona (Mr. McCain). Further, if present and voting, the Senator from Tennessee (Mr. Corker) would have voted ``yea.''

Mr. KYL

Mr. KYL. Mr. President, I wish to agree with the comments made by our colleague from California, the chairman of the Intelligence Committee, and urge all our colleagues, in the time that will exist between now and the time we are able to take up this matter again, to accept her invitation to be briefed and to appreciate some of the things that our intelligence community goes through in order to try to protect the American citizens. The points she made are all valid from my service on the Intelligence Committee. I am aware of what she has been talking about. I would just like to repeat three things. I will not bother to go into all the detail because she made the points very well. Roving wiretaps--the name does not sound very good--are simply the recognition that today you have a lot of throwaway cell phones. It used to be you had one telephone hanging up in the kitchen or someplace, so when the police got a warrant to tap your telephone, that was the only phone you had. Now these guys take phones, use them once, throw them away, and then get another one or they have access to lots of different phones. It is simply a recognition that today people use lots of different phones rather than one, and, therefore, the warrant applies to any of the phones of a particular individual. The ``lone wolf'' terrorist exception Senator Feinstein explained very well. I wrote that provision. It applies to people who do not have a card in their wallet that says: I belong to al-Qaida or I belong to some other terrorist group. We understood that in some cases there will be people such as Moussaoui who you are not sure are actually affiliated with any particular group, but they are still planning a terrorist activity and, therefore, you want the ability to check them out. Third is the business records. This is the only one there has been any controversy about. It allows the government to get a court order to obtain business records that are either held or generated by third parties. You want to find out, for example, if Mohamed Atta stayed at the such and such motel the night before he went to the airport to conduct the terrorist attacks of 9/11. That will help to prove the chain of evidence to prosecute other people or for us to be able to know exactly how that attack occurred. So you go to the motel and say: Could we see who checked in last night. That is not a big deal. For most agencies of the Federal Government, you do not even have to go to court to ask the question. But out of an abundance of caution, before the government can actually go to the motel and say: Can we see your record, they have to go to court to get approval to do that. So the PATRIOT Act actually sets a higher hurdle in trying to get these business records in terrorism investigations. In addition to that, there are only three top officials at the FBI who are authorized to request court orders for the information. So the point is this: These are the only three provisions that are sunsetted and that we have to reauthorize. If people have objections to other parts of the act, such as has been expressed here, then their argument is not with the reauthorization of these three provisions but with the underlying law. In any event, I suppose they will have plenty of time to raise those questions when we debate this further in the next couple of months. I urge my colleagues to support this short-term extension. In the meantime, prior to the rest of the debate we will have to check with the folks at the Intelligence Committee who can answer any questions colleagues may have about how this act is intended to operate and then check with the FBI and other law enforcement officials to see how it works in its operation. I yield the floor.

Mr. KYL

Mr. KYL. Madam President, I commend Senator Paul for his diligent work to try to bring spending in line with our Nation's fiscal realities. His amendment reduces the overall authorization level for the Federal Aviation Administration to $14.719 billion. That is the authorized level for fiscal year 2008. That is down from $17.526 billion, which is proposed under the 2011 bill. To put this in perspective, it is a 19- percent increase in just 3 years. If we continue to have those kinds of increases, it is not going to be sustainable given our large and growing debt. Holding spending to 2008 levels is not so outrageous or unworkable as has been portrayed. By reducing the top line amount, the amendment provides the Secretary of Transportation with the necessary discretion to make the appropriate reductions to the related FAA accounts. Not all of them, for example, are safety accounts. So priority could be given to those matters. There is an argument that could be made that since this is an authorizing bill rather than an appropriations bill, the overall funding levels do not matter. But authorization bills do establish guideposts for the Appropriations Committee. In this case, the spending reductions reflect limits on how much will be appropriated out of the airport and airway trust fund. Additionally, a portion of FAA's funding comes from the general fund of the U.S. Treasury. Imposing spending cuts to this authorization bill also provides a tiny but still necessary signal to other Members of the body, the administration, and the financial markets that the United States is prepared to begin dealing with our pending budgetary catastrophe. The simple fact is that the United States is $14 trillion in debt and running an annual deficit of $1.6 trillion. Our record level of debt is equal to $45,500 per American citizen and $127,500 if we just count the taxpayers in America. Each day the United States pays another $1.273 billion in interest alone on this debt. To be clear, the amendment could result in a reduction of some FAA services. This is a reality that setting the tough spending priorities will cause some services potentially to be trimmed and certainly unnecessary functions to be eliminated. But I do not think the debate over this amendment can occur outside the context of the difficult spending decisions that we are going to need to consider in the next several weeks. We literally have to start somewhere, and almost everywhere is going to require some sacrifice. The House of Representatives will consider cuts to the FAA funding levels this week and, likewise, this body will be required to do the same. I appreciate the work that Senator Paul has done and hope that my colleagues will strongly consider supporting his amendment. I suggest the absence of a quorum.

Mr. KYL

Mr. KYL. Mr. President, last week we were all celebrating what would have been the 100th anniversary of Ronald Reagan. There was a piece in the Wall Street Journal by one of the economists who advised Ronald Reagan, Arthur Laffer, which I think recounts and discusses probably as good as any other summary I have ever seen the contribution Reagan and his administration made to the economy of the United States. Therefore, I ask unanimous consent to have printed in the Record the article from the Wall Street Journal dated February 10, 2011.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Missouri (Mr. Blunt), the Senator from South Carolina (Mr. DeMint), and the Senator from South Carolina (Mr. Graham).

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Tennessee (Mr. Alexander). Further, if present and voting, the Senator from Tennessee (Mr. Alexander) would have voted ``yea.''

Mr. KYL. The following Senator is necessarily absent: the Senator from Tennessee (Mr. Alexander). Further, if present and voting, the Senator from Tennessee (Mr. Alexander) would have voted ``yea.''

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Oklahoma (Mr. Coburn) and the Senator from Utah (Mr. Hatch).

Mr. KYL. The following Senators are necessarily absent: the Senator from Oklahoma (Mr. Coburn) and the Senator from Utah (Mr. Hatch).

Mr. KYL

Mr. KYL. Madam President, yesterday I spoke on one of the reasons for the repeal of this legislation; that is to say, the support for the amendment to repeal the health care legislation that is pending before us. Today I wish to speak about a couple other reasons to support that amendment. One of the things that was said in the campaign to pass the health care bill was that those who liked their current health care would be able to keep it. But as we know now and as we pointed out prior to the bill's passage, provisions in the law would cause many Americans and will cause many Americans to lose their coverage. That is why the administration is now giving out waivers for some of the bill's most burdensome provisions. I wish to speak for a moment about these waivers the administration has granted and the problems that the waivers reveal with the bill as a whole. So far, the administration has granted 729 waivers. All of these are temporary. They protect companies and labor unions from one of the bill's most onerous mandates--the phasing out of annual caps on costs paid by insurers. Another four waivers were granted to States applying on behalf of insurers. According to the administration, waivers may be granted if the applicant can show that a ``large increase in premiums'' or a ``significant decrease in access to coverage'' would occur absent a waiver. So far, the waivers cover 2,283,106 people. That is more than 2 million people whom the administration has had to protect from its own bill. All of these waivers were granted to limited benefit plans, or so- called mini-med plans. About 1.4 million Americans have these mini-med plans, including many part-time employees who work in the restaurant and retail industries. These plans are low cost and usually have an annual cap on costs the insurer would pay out. Under the Obama plan, these plans would be outlawed. A phaseout on annual caps begins this year. Starting this year, plans cannot impose an annual limit of less than $750,000. That threshold gets progressively higher, until 2014 when ObamaCare will prohibit annual caps altogether. What this does, of course, is create an incentive for employers who currently offer mini-med plans below the $750,000 threshold to drop their coverage completely until the employer mandate and penalties become effective in 2014. They can either comply with the requirements of the health care law or pay a fine for each employee. The employees caught in this mess who currently have coverage through mini-med plans will have to hope in the meantime that their employer can get a waiver; otherwise, those employees will have to wait until 2014 and buy a government-approved policy from the new insurance exchanges or hope that their employer is in compliance with the many employer requirements in the bill. McDonald's, for example, which offers mini-med plans to many of its employees, received a 1-year waiver. The company warned that absent a waiver, 30,000 employees could lose their current coverage and would be left ``without an affordable, comparably designed alternative until 2014.'' It is not clear what will happen when the 1-year waiver expires. That is another part of the problem. The waivers are often given on the condition that the recipient brings itself into compliance during the waiver period. Whether the waiver renewals are available is unclear. As with many other provisions of ObamaCare, the uncertainty for businesses surrounding annual cap waivers is immense. While the waivers are welcomed by those who benefit, they represent a poor way to run the government or health care. When the government picks which entities will have to abide by the law and which ones will not, it is literally picking winners and losers. That is not the recipe for objective or wise policymaking. It is called discrimination. I will note that a large number of these waivers were being given to the administration's political allies. Unions, for example, many of which praised the bill's passage, are a major beneficiary. Of the 733 waivers granted, 182 went to unions. That is a quarter of all the waivers, even though unionized workers make up only 7 percent of the private workforce. Many of the unions applying for waivers are the very same that were full of praise upon passage of ObamaCare. In its press release praising passage of the bill, the Service Employees International Union gushed that ``it is a new day.'' About 6 months later, Local 25 SEIU applied for a waiver from the annual limits limitation for 31,000 of its members. It was granted 2 weeks later. Apparently, it is a new day-- just not for 31,000 SEIU members. Similarly, when the bill was enacted, the American Federation of Teachers referred to it as an occasion where ``morality trumped greed.'' Six months later, its New York City affiliate obtained a waiver affecting 351,000 individuals. In the recent column in Forbes magazine, law professor Richard Epstein explains the dangers of administrative discretion related to waivers and how the waiver process can undermine the rule of law: Waivers are by definition an exercise of administrative discretion that benefits the party who receives its special dispensation. Nothing in Obamacare explains who should receive these waivers or why. The dangers from this uncertainty are enormous. . . . Without major steps to overhaul or repeal Obamacare, government by waiver will become standard operating procedure to the detriment of us all. This is a bill that was written behind closed doors, creates a huge uncertainty and problems for job-creating businesses and their employees, and now waivers are being dispensed by the administration to protect almost 2.3 million people from the very law it fought so hard to get passed. These developments are yet more confirmation that the law is deeply flawed and one more reason why it should be repealed in its entirety. The second issue I would like to speak to is the fact that under this law, there are substantial increased costs, but they are being masked by the way the bill has been written, and the calculations, therefore, some have suggested, would actually result in a savings of $230 billion. This is only plausible if you believe the way this bill was written was an honest way of stating its costs. It is not that the CBO has done anything wrong in its calculations, it is that it was told how to calculate certain things. The bill's authors said: Never mind what the reality or truth is, here is how you will calculate the cost of it. The CBO, as a functionary, did exactly that to come up with a number. But former CBO Director Douglas Holtz-Eakin recently cowrote an article, along with Joseph Antos and James Capretta, explaining that the bill's purported deficit reduction is based on ``budget gimmicks, deceptive accounting, and implausible assumptions used to create the false impression of fiscal discipline.'' The fact is, repeal will not add to the deficit. The bill itself is the budget buster, not repeal. I am in favor of full repeal of the so-called Affordable Care Act. There are many problems with this bill and many reasons to support repeal. Today, I want to talk about cost. A central talking point from the bill's supporters has been that the bill, intended to cover 32 million Americans, will reduce the deficit by about $230 billion, according to the Congressional Budget Office. Therefore, repeal will increase the deficit by the same amount. Maybe this sounds plausible--but only until you study these numbers more closely. Only in Washington could the ``cost'' of repealing a massive entitlement program add to the deficit. This is not because of anything the Congressional Budget Office did wrong. Remember, when the Congressional Budget Office calculates these estimates, it is required to accept every assumption it is given, however unrealistic such assumptions are. That's how the authors of ObamaCare got CBO to produce such a favorable number. Indeed, former Congressional Budget Office director Douglas Holtz- Eakin recently cowrote an article, along with Joseph Antos and James Capretta, explaining that the bill's purported deficit reduction is based on ``budget gimmicks, deceptive accounting, and implausible assumptions used to create the false impression of fiscal discipline,'' and that repeal will not, in fact, add to the deficit. The bill itself is the real budget buster. Not repeal. Let me walk through the false assumptions and gimmicks Holtz-Eakin and his co-authors describe. First, as Republicans pointed out again and again before the bill's passage, the bill's original $938 billion pricetag does not reflect the true 10-year cost. That estimate was generated using 10 years of taxes to pay for 6 years of subsidies. Remember, while the taxes begin this year, the subsidies don't kick in until 2014. So, the 10-year cost of the bill's full implementation is actually about $2.3 trillion. Second, there is an additional entitlement program within this new entitlement: the so-called CLASS Act, a new, government-run, government-funded program for long-term care, intended to compete with long-term care plans provided by private insurers. Participants would pay into the system for 5 years before they start collecting benefits. So, for at least the first 5 years, the program would generate surplus receipts for the government. But eventually, outflows would exceed receipts. This is why the chairman of the Senate Budget Committee referred to the CLASS Act as ``a Ponzi scheme, the kind of thing that Bernie Madoff would have been proud of.'' This is a bailout waiting to happen. As Holtz-Eakin, Antos, and Capretta write, ``CLASS Act hitched a ride on the Affordable Care Act for one reason only: Premiums are collected in the first 10 years, but no benefits are provided. Voila, it creates the perception of a $70 billion deficit reduction. . . . Only in Washington could the creation of a reckless entitlement program be used as an `offset' to grease the way for another entitlement program.'' Third, is the illusory savings from cuts made to Medicare's health- care providers, which would bring payments below those made to Medicaid providers. We know that the network of doctors and hospitals willing to see Medicaid patients is constrained in part because of low reimbursement rates. Accordingly, about 15 percent of America's hospitals and physicians would have to stop seeing Medicare patients to help curtail their losses, although the bill assumes that seniors would not see any change in their care. Holtz-Eakin, Antos, and Capretta write, ``The idea that Medicare could pay less than Medicaid is such sheer folly that Congress will rapidly reverse course. The truth is these cuts cannot be relied upon for anything.'' In addition, the bill double counts these so-called Medicare ``savings,'' claiming that they can both shore up Medicare's solvency and help pay for ObamaCare. Fourth, ``a central CBO assumption'' about how many Americans will get federal health care subsidies ``could be disastrously off the mark.'' Today, about 111 million Americans are eligible for subsidies through the new insurance ``exchanges'' if they don't have an employer-based plan. But the bill assumes that only 19 million would receive these subsidies. This assumption fails to take into account the incentive the bill creates for certain employees to find their way onto the exchanges, rather than accept coverage from their employers, if offered. As the authors note, ``the new subsidies are so generous that low- and moderate-income workers come out way ahead if they get paid in cash, not benefits, and move to the new entitlement.'' If only the 35 million lowest paid workers jump onto the new entitlement, Federal spending will rise by another $1 trillion in the first decade alone. So, those are four reasons that the purported cost estimates for this bill are simply wrong or misguided. It's clear that the claims that the bill will reduce the deficit, or else increase it upon repeal, do not hold up upon close inspection. Repeal is not a threat to the budget; to the contrary. The real budgetary threat is ObamaCare itself. For these reasons, and many others, I support full repeal of this bill. Again, there were four basic false assumptions that were built into the legislation in the way it was drafted, which theoretically demonstrate a savings of money through the adoption of the legislation, as the authors point out, but which actually result in not a savings but an increase in the Federal budget deficit. One of these has to do with the fact that taxes are collected for 10 years, but costs only accrue over 6 years. Obviously, you are going to get some money that way. But after that first 6 years, you have to count the costs as well as the revenue taken in. Another is the inclusion of the so-called CLASS Act, which has been described by some as a Ponzi scheme--actually, by the chairman of the Senate Budget Committee--because it collects all the money upfront and doesn't pay out any benefits. Once you have to pay out benefits, there will be a cost. That is a way to show that you are taking in money and you are not spending it. But it is a dishonest way to write the bill. Third, the way the cost of Medicare was calculated. The $500 billion savings is not a savings at all but rather goes to pay for other parts of the bill. It doesn't help Medicare at all. It only works if, as the Congressional Budget Office said, Congress actually follows up with the cuts to hospitals and physicians, which nobody believes Congress would have the courage to do. Finally, there are the subsidies and exchanges calculations, which, as I pointed out in these comments, are woefully understated, as a result of which it is likely we will have a significant budget deficit rather than a savings as a result of this legislation. In fact, repeal of the bill is going to save taxpayers money. The legislation is what costs money. Think about this: How can you cover an additional 30 million people--or however many will be covered by this-- without increasing costs? It can't be done. It would not be done under this legislation. In addition to the reason I talked about yesterday-- the cost of Medicaid to the States--and the two points here today and the fact that these waivers are being granted in a discriminatory way only demonstrates that the underlying bill is not a good idea and that the cost calculations are way off. I hope my colleagues will take this opportunity to follow the advice of the American people and vote to repeal ObamaCare.

Mr. KYL

Mr. KYL. Mr. President, I have joined my colleagues to introduce legislation to amend the Endangered Species Act of 1973 to remove the gray wolf. The Endangered Species Act has proved a failure for wolf conservation. I believe Congress must pave the way for a new State- based approach. Since the listing of the gray wolf as endangered in 1976, the Federal wolf recovery programs have been in continuous litigation. The latest Federal district court decision returning the Rocky Mountain gray wolf to the Endangered Species List despite a population in excess of agreed upon recovery goals was the last straw. It is evident now that science is not driving recovery; rather, judicial decisions and consent agreements with special interest groups are dictating the fate of wolves and impacted communities. Despite the authorities and responsibilities conveyed to States by Congress under section 6 of the Endangered Species Act, State wildlife agencies have become mere bystanders in wolf management under this paradigm. Take the Mexican gray wolf in the Southwest. The U.S. Fish and Wildlife Service, USFWS, has not been able to revise the recovery plan for that wolf in 28 years. Why? Because of the litigious nature of activist organizations. Another attempt to overhaul the program and develop a recovery plan is under way, but USFWS estimates that plan is at least 4 to 6 years away, assuming no litigation. We can't expect the public or the wolves to continue to wait. Acceptance of wolves on the landscape requires preventing, mitigating and responding to livestock depredation and nuisance issues on public, private and tribal lands. It requires trust and implementation of solutions collaboratively developed by local stakeholders. It's time to give States the chance to demonstrate that they can make wolf conservation work for both people and wolves. Restoring wildlife is not new to States or tribes. In my home State of Arizona, the Game and Fish Department has been very successful in collaborative conservation. A great example is the Southwestern bald eagle. The Game and Fish Department's intensive interagency management of this species has increased its numbers and prevented its listing. The Arizona Game and Fish seeks to apply this proven approach to wolf conservation. This bill, if enacted, would give them the opportunity. I ask unanimous consent that the following documents be printed in the Record in support of this legislation: a letter from the Arizona Game and Fish Department dated December 7, 2010, and a resolution adopted by the Western Association of Fish and Wildlife Agencies dated January 9, 2011.

Mr. KYL

Mr. KYL. Madam President, I wish to commend my colleague from Texas, a former Texas Supreme Court justice, for analyzing the legal issues, as he has just done. It is yet another indication of why it is time for us to start over. I join him in urging repeal and replacement of this health care bill. I would like to speak briefly about yet another reason why this needs to be done, and it is a very specific example. It concerns my home State of Arizona. There are other States that are in the same position, but I can speak to the specifics with respect to my own State. It has to do with just one of the many burdensome new mandates. In this bill, as we know, there are mandates on individuals to purchase insurance, for example, as my colleague was just saying. There are mandates on families and companies and mandates on States as well. I wish to talk about the mandate on States, with respect to the Medicaid provisions of the bill, which is called the maintenance of effort mandate or MOE mandate. Let me describe what that is. The maintenance of effort requirement forces an unfunded Medicaid mandate on States by denying them the full ability to manage their Medicaid Programs to fit their own budgets and their own unique Medicaid populations. This is a huge problem because Arizona, along with most other States, is experiencing a dire budget crisis. Our State has lost over 300,000 jobs in the last few years, and revenue collections are down by 34 percent since the start of the recession. In the 2010 fiscal year, Arizona collected about $3 billion less in gross revenues than it did just 3 years prior in 2007. During this same period, enrollment in Arizona's Medicaid Program has increased by 44 percent. Think of that. More than 1.3 million Arizonans are now covered by Medicaid. That is more than 20 percent of the entire population of our State. Ordinarily, the State would be able to dial back that coverage in order to fit within its budget. But believe it or not, the ObamaCare law that was passed prevents a State from managing its own Medicaid Program by determining who is going to be covered by that program. Right now, the Arizona Medicaid Program consumes almost 30 percent of the State's general fund spending. That is an increase of 17 percent over 4 years ago. So Arizona could, as I said, dial this back, except for one thing; that is, ObamaCare. As our Governor, Jan Brewer, noted in a recent letter to Speaker Boehner: The growth in Arizona Medicaid spending is a key cause of our state budget crisis and is unsustainable. . . . We cannot afford this increase without gutting every other state priority such as education and public safety. So the Arizona legislature has taken steps to address this. They have now cut $2.2 billion in spending from a $10 billion budget, but that does not go far enough to address the rest of their budget problems. Despite these cuts, the budget shortfall is projected to be $1.2 billion in the next fiscal year. So let me describe how this maintenance of effort requirement or mandate affects Arizona's budget. In 2009, the Federal Government imposed a mandate on States by which States could not change their Medicaid eligibility standards or methodologies and procedures in place on July 1, 2008. This sounds identical to the maintenance of effort requirement in ObamaCare, but there is one crucial difference: The Federal Government's maintenance of effort stimulus requirement--the requirement I am talking about that was in the stimulus bill--was funded by the Federal Government. So the State was not adversely affected from a budget standpoint. Under the stimulus, the States received an enhanced Federal share of their Medicaid costs. But under ObamaCare, the maintenance of effort requirement is still there, except that the States have to pick it up. They are stuck with an unfunded mandate. So even though States such as Arizona cannot afford their current Medicaid obligations, ObamaCare has forced an extension of the maintenance of effort requirement until 2014 but without providing any assistance to pay the exorbitant costs. In June of 2011, when stimulus funds expire, Arizona's share of its Medicaid Program will increase by an astounding $700 million. The annual cost of the mandate is almost $1 billion, which is simply unaffordable. This problem is especially acute for Arizona and a handful of other States because we actually expanded Medicaid eligibility for childless adults beyond Federal requirements. So Arizona, in an effort to cover more people, by law, included additional people in the Medicaid coverage--adults without children. Rather than allow States such as Arizona to cut back to the level of other States--for example, to forgo that coverage at least for now--the health care law, ObamaCare, freezes in all of the existing disparities. So there are big differences between or among the States, depending upon how liberal, in effect, their coverage is. We have tried to do our best to find ways to ameliorate the problem. We have devoted more resources toward Medicaid fraud prevention. There have been some very difficult decisions made, for example, including reimbursing health care providers with less money. As my colleagues can imagine, that hasn't gone over well. Even more controversial and very sad: Arizona has stopped Medicaid funding for several kinds of transplant surgeries effective October 1. This is actually a kind of rationing that is required by ObamaCare. The State cannot afford to provide the most expensive procedures and, therefore, it has to cut them back, all because they are prevented by law from dialing back the coverage of these adults without children. So the one place where they can cut is transplants--a very sad day, as I said. There is nothing good to say about it. Nobody is pleased with the outcome, but there is no other option. But even that option obviously doesn't save enough money to forestall this budget crisis. Many of those who have been critics of the decision with respect to transplants have failed to tell the whole story which is that the Governor had to make that difficult decision because the health care reform bill eliminated a key option that she otherwise would have had to dial back the coverage to the level of other States. Before enactment of the President's health care bill, the Federal Government and States were partners in health care delivery. Now States are merely a financing mechanism for the Federal Government's demands. What States need is permanent reduced Medicaid demand by way of authority to reduce eligibility standards for their Medicaid programs. As I am suggesting, all Arizona wants the authority to do is dial it back to where other States are. Governor Brewer recently made a formal request to HHS Secretary Sebelius for a waiver from the maintenance-of-effort provision. Since the administration has granted over 700 waivers to companies and labor unions, one can only hope that the same fairness will be provided to States that are much more crucial partners to the Federal Government in the delivery of health care. Under the terms of the waiver request, Arizona would preserve Medicaid coverage for 1 million Arizonans who represent the core of Medicaid's mission--the aged, disabled, the blind, pregnant women, and children. I support the Governor's request and I urge the administration to grant the waiver. But ultimately, only repeal of this law will provide permanent relief to all of the States such as Arizona and all of the other States similarly situated. So I am strongly in support of the amendment that provides for repeal and replacement with something that will work and will not punish our families, our residents, and our States.

Mr. KYL

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

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent to speak for such time as I may consume.

Mr. KYL

Mr. KYL. Mr. President, subject to the unanimous-consent request, I asked a moment ago to exceed the 10-minute limit.

Mr. KYL

Mr. KYL. Mr. President, as some of us predicted, problems are already arising from the Senate's ratification of the New START treaty last December. The Russians just ratified it, and their interpretation of its meaning and obligation is different from ours. That is going to cause problems. I will also discuss this afternoon the President's fiscal year 2012 budget in the areas of nuclear modernization and missile defense, both of which were closely tied to the Senate's support of the New START treaty. First, what the Russians are saying about the treaty. The Russian State Duma and the Federation Council, which is their counterpart to the Senate, last week passed its Federal law on the New START treaty, and that is the Russian equivalent to our resolution of ratification. That document demonstrates there is a significant divergence of views between the two countries on several key provisions and core principles of the New START treaty. For example, Russian officials continue to assert, despite statements from the Obama administration and despite the Senate's legally binding positions to the contrary, that various treaty provisions, including in the preamble, constrain U.S. military options regarding missile defense and conventional prompt global strike. Far from supporting the touted ``reset'' in its relations, this lack of meeting of the minds is a ticking time bomb for disruption of our relations. First, regarding missile defense. The Senate unanimously adopted an amendment to the resolution of ratification providing that the New Start preamble does not impose a legal obligation on the parties. The Senate's principal concern and rationale for this provision was the language in the preamble linking offensive forces to missile defenses, a clear attempt by the Russians to foreclose future qualitative and quantitative improvements to U.S. missile defense capabilities. Contrary to the U.S. position, Russian officials have recently declared that the preamble is an integral part of the treaty and is thus binding on the parties. Russian Foreign Minister Sergey Lavrov has stated: There are a few problems, one of the main ones being the assertion contained in this [Senate floor] statement that the correlation between strategic offensive and defensive weapons, reflected in the treaty, is not legally binding for the U.S. and Russia because it is stipulated in the preamble. This thesis cannot be defended by lawyers. Contradicting President Obama's December 18 letter on missile defense to Senators Reid and McConnell and the Senate's resolution of ratification, Foreign Minister Lavrov further contends: The content of the treaty unequivocally points to the correlation between strategic offensive weapons and missile defense, it is set out in the preamble, whereas the text of the treaty contains an article that allows either party to withdraw in the event of an emergency. We are convinced that the implementation of the full-scale global missile defense by the U.S. will be precisely such an emergency. These statements stand in apparent contradiction to the resolution of ratification adopted by the Senate. On the point concerning the legality of the preamble, which includes the unfortunate linkage between offensive arms and missile defense, the Russian Federal law on the New START ratification highlights the importance that Russia attaches to the preamble and this linkage between missile defense and strategic offensive arms, and it introduces a new issue: The possibility of ``understandings'' between the parties not revealed to the Senate. Here is what article 4, paragraph 1 of the Russian law says: The provisions of the preamble of the New START treaty shall have indisputable significance for the understanding of the Parties intentions upon its signature, including the content of the terms agreed between them and the understandings without which the New START treaty would not have been concluded. In this connection, they must be considered in toto by the parties in the course of implementing the New START treaty. Because of these ``terms'' and ``understandings,'' article 4 goes on to state that the Russian Federation shall exercise its right to withdraw from the treaty in the case of extraordinary events, including the ``deployment by the United States of America, another state, or a group of states of a missile defense system capable of significantly reducing the effectiveness of the Russian Federation's strategic nuclear forces.'' So now the Russian Parliament is clearly on record that the deployment of the U.S. national missile defenses or missile defense deployments in conjunction with our NATO allies could be cause for Russian withdrawal from the treaty. Since Russia opposed the deployment of 10 ground-based interceptors in Poland, it is likely to oppose as well the planned deployment of land-based SM-3 missiles in Romania and Poland capable of intercepting Iranian ICBMs. This provision of the Russian law is fundamentally incompatible with the U.S. understanding of the treaty and with current U.S. plans to deploy these U.S. defenses in Europe and to deny U.S. national missile defenses as the President affirmed to us in his December 18 letter. The administration should immediately work to resolve this dispute with the Russians. Otherwise, the United States would be willfully perpetrating a future collision course between Russia and the United States. I am sending a letter to Assistant Secretary of State Rose Gottemoeller which raises this issue and asks for clarification of the assertion that there were understandings between the negotiators not reflected in the public record. The President will have to decide whether to exchange the instruments of ratification with the Russian Federation with this discrepancy extant--and the others that I will briefly touch on. I am not aware of a bilateral treaty that is entered into force where such a divergence of views existed. Perhaps there is clarification on these matters in some secret cable or in another part of the classified negotiating record. The administration's stubborn refusal to share these materials with the Senate has denied Senators the answer. Part of the Corker-Lieberman amendment to the treaty also requires the administration to communicate to Russia at the time of the exchange of instruments of ratification that it is the policy of the United States to continue development and deployment of U.S. missile defense systems, including qualitative and quantitative improvements to such systems. I urge the administration to consult with the Senate to ensure that our intent is accurately conveyed before exchanging this policy statement and the instruments of ratification. The resolution of ratification also makes clear that missile defense will not be on the table in any future treaty. Understanding No. 1 makes clear that no limits on U.S. missile defenses can be achieved through the New START treaty, including the Bilateral Consultative Commission it creates, without the advice and consent of the Senate which, if I have anything today about it, will not be forthcoming. There is also declaration No. 1 which states: Further limitations on the missile defense capabilities of the United States are not in the national security interests of the United States, and the LeMieux amendment, which made it the policy of the United States not to include defensive missile systems in any negotiations with Russia on tactical nuclear weapons. The administration might have created the impression with Russia that the United States would discuss missile defense, whether in the Tauscher-Rybakov track of secretive side negotiations--the full extent of which the administration is hiding from Congress--or by agreeing to the preamble language, or article V, section III, in contravention of section 1251 of the fiscal year 2010 Defense authorization bill. With regard to Under Secretary Tauscher's side negotiations, I note that the Russians know more about the U.S. position and these negotiations than the Senate does, which brings to mind again article 4 of the Russian Federal law on ratification which states that the ``provisions of the preamble of the New START treaty shall have indisputable significance for the understanding of the Parties' intentions . . . including the content of the terms agreed between them and the understandings without which the New START treaty would not have been concluded.'' What understandings are these? Is this referring to something beyond the text of the treaty and the preamble? Unfortunately, the Senate is unaware of such understandings because we have been denied access to the negotiating record. There is the potential here for a major confrontation between the Senate and the administration if the administration does not immediately make a full disclosure to the Senate on these matters. The Senate's action in the resolution of ratification should also make clear that it will not accept any further linkage between offensive nuclear reductions. I am pleased to note a recent product of the Arms Control Association, called ``Strategic Missile Defense: A Threat to Future Nuclear Arms Reductions,'' that seems to agree with my point. In its recent analysis, this group correctly observed that the United States will continue to require exempting strategic missile defense from treaties. Now, while the Arms Control Association seems to believe this is a mistake, I am pleased the Senate sent a message so unmistakable that even the arms control community comprehended it. The administration will have an opportunity to prove whether its statements of support for missile defense, including the President's December 18 letter, were mere rhetoric or actual policy, beginning when it submits the fiscal year 2012 budget request. Initial press reports hint that the Defense Department is anticipating yet another reduction in funding for missile defense programs over the next 5 years, despite funding plans that are already about $4 billion below what was envisioned by the last administration for fiscal years 2010 through 2013. This is inconceivable given the funding shortfalls increasingly apparent in the President's own plans for improving U.S. missile defenses as well as four phases of the phased adaptive approach to missile defense in Europe. It appears that elements of the administration's phased adaptive approach for missile defense are already falling behind, and the President's budgets for missile defense have almost guaranteed the atrophy and obsolescence of the only national missile defense system we now have. If these reports are accurate, it would belie the President's commitment to missile defense, which was central to Senate support for the New START treaty, and suggests the Senate was misled during its consideration of the treaty. With regard to Conventional Prompt Global Strike--remember, this is the concept where U.S. intercontinental range missiles could substitute a conventional warhead for a nuclear warhead for prompt delivery to a place far away on the globe in a time of emergency--Senators' concerns were not limited to missile defense, as I said. We also talked about this Prompt Global Strike issue in connection with the START treaty. Referencing this capability, Foreign Minister Lavrov told the Russian Duma: The [U.S.] Senate's resolution claims that the treaty does not apply to new kinds of nonnuclear strategic weapons that could be developed in the future. But this is not true. Then he also stated: We find unacceptable the unilateral American interpretation of the treaty, according to which future strategic range systems with non-nuclear warheads not meeting the parameters stated in the treaty shall not be regarded as new types of strategic offensive weapons covered by the treaty. Likewise, Russian Federal law states in article 2, paragraph 7: The question of the applicability of the provisions of the New START treaty to any new kind of strategic-range offensive arms should be resolved within the framework of the Bilateral Consultative Commission . . . prior to the deployment of such new kind of strategic-range offensive arms. Hence, Russia is rejecting the U.S. understanding on strategic range nonnuclear weapons systems contained in the Senate's resolution of ratification, which states: . . . nothing in the New START treaty prohibits deployments of strategic-range non-nuclear weapon systems. In other words, conventional Prompt Global Strike. The President must make this fact plain to both Russia and the Senate when he provides the report on the conventional Prompt Global Strike systems to the Senate prior to entry into force of the treaty. It mocks the very idea of a U.S.-Russian arms control pact if such a disagreement--Russia's rejection of a formally adopted U.S. understanding--is allowed to stand. Let me mention telemetry. In response to Senators who raised concerns about the inadequacy of the verification and telemetry provisions in New START, the administration essentially said: Not to worry; the treaty permits each side to exchange telemetry on up to five tests per year. As could have been expected when the administration capitulated to Russian demands concerning telemetry, the Russian Federal law now prohibits ``providing to the United States of America telemetric information about the launches of new types of intercontinental ballistic missiles and submarine ballistic missiles.'' That is exactly what treaty opponents predicted. As a result, we will know less about new Russian systems than under the previous START verification regime. At the very least, Russia's action in its federal law to deny the United States telemetry on this future missile development will place greater burdens on our national technical means to monitor the development of new Russian ballistic missiles. The denial of telemetry from new delivery systems poses a material risk by aiding Russia's potential for breakout from the treaty limits, which is, of course, a central concern of the Senate in conditions Nos. 2 and 4 of the resolution of ratification. Finally, the Russian Foreign Minister seems to have taken aim at the Senate's condition that negotiations begin within a year to address the disparity in tactical nuclear weapons between Russia and the United States. In noting the imbalance in conventional forces, plans to deploy weapons in space, and U.S. global missile defense plans, Russian Minister Lavrov stated: It is possible to hold future negotiations only with due account of all these factors and after the fulfillment of the New START. Clearly, Russia is not interested in beginning such negotiations anytime soon. The Foreign Minister has proven correct those Senators who cautioned that after this treaty was ratified, the United States would lose whatever leverage it had to address nonstrategic nuclear weapons. Assistant Secretary Gottemoeller appears to take seriously the Senate's instruction in this regard, even referring to it as her ``marching orders.'' I trust she views equally the Senate's ``marching orders'' that a subsequent treaty not deal with U.S. missile defenses. I am not aware of an example where the United States has ratified a bilateral treaty in the face of clear evidence that there is no meeting of the minds on key treaty terms. While New START was under Senate consideration, administration officials continually spoke about how critical the treaty was to ``reset'' relations with Russia and how the completed treaty manifestly improved relations between the two countries. This can be the case, however, only if the parties actually agree on the fundamentals of the treaty's meaning. Now let me speak to the anticipated 2012 budget for nuclear modernization. The Senate, in condition 9 of the resolution, linked its support for the New START treaty on a clear commitment to ``ensuring the safety, reliability, and performance of its nuclear forces.'' This commitment requires full funding to ensure a robust Stockpile Stewardship Program, a modernized nuclear weapons production capability, and the development of new nuclear delivery systems to replace the aging nuclear triad of bombers, submarines, and ICBMs. If in a given year funding fails to meet the 10-year plan or required levels of resources are greater than the 10-year plan, the President is required by condition 9 to submit a report on how the administration will remedy the shortfall, the project requiring funds and the level that is required, the impact of the shortfall on nuclear readiness, and whether it is in the national interest to remain a party to the treaty. We must codify the requirement to provide an annual update to section 1251, requiring the administration to annually provide updated assessment of the levels of funding required to maintain and modernize the stockpile. And the administration has agreed this is necessary. As it currently stands, the administration's proposed 10-year budget for nuclear weapons activities, as promised in the update to the section 1251 report, takes a critical first step toward nuclear weapon sustainment and modernization. It proposes an $85 billion budget for weapons activities over 10 years, from 2011 through 2020, and describes the critical near-term requirements of at least $7 billion in 2011 and $7.6 billion in 2012. To be successful, the modernization program must have the complete backing of the President, the Armed Services Committees and the Appropriations Committees, as well as the full House and Senate. These budget requests will allow the laboratories and plants responsible for nuclear weapons to begin a slow recovery from the neglect that has been crippling their ability to address real issues as our current stockpile ages. The administration must, however, continue to review and revise its estimates for the modernization program and follow through on its commitments to obtain this funding from the Congress. This modernization program must address the past, the present, and the future of our nuclear weapons complex. For example, the Stockpile Surveillance Program evaluates the current condition of our aging stock. This program has been seriously underfunded in recent years, resulting in a decreased confidence in our nuclear weapons. This is not my assessment but, rather, the assessment of some of the premier authorities on nuclear weapons--the Directors of the nuclear weapons laboratories. It is likewise the conclusion of the bipartisan Congressional Commission on the U.S. Strategic Posture. Likewise, budget requests must allow for the continuation of current life extension programs, including the W-76, which is currently in production, the B-61, which is rapidly nearing its end of life but continues to be required for both strategic and tactical roles, and the W-78, which will require a very extensive and challenging life extension to correct aging issues and incorporate higher standards for safety and security. These three planned programs will likely not be completed until the end of the 2020 decade. As it stands, there does not appear to be capacity in the complex to insert the long-range strike option warhead production in the next decade, which will be needed to replace our current W-80 warheads and air-launched cruise missiles. As we are the only nuclear weapons state without a nuclear weapons production capability, restoring the health of our current weapons is critically important. Finally, the balanced program must prepare us for the future by improving the quality of our facilities, many of which are Cold War- and even Manhattan Project-era facilities. Design and engineering development of the chemistry and metallurgy replacement nuclear facility and the uranium processing facility should be accelerated to the extent possible, construction estimates should be properly evaluated, and completion of these facilities should be aggressively pursued for their completion by 2020. This is another so-called marching order for the administration. It is difficult to overstate the importance of these facilities to our future national security. The opportunity exists to push these programs forward. For example, the recent exchange of letters between the Senate appropriations leaders and the President shows that the commitment must be bipartisan and must include both Congress and the administration. Notably, the Senate Appropriations Committee leaders, Senators Inouye and Cochran, and the Energy and Water Development Subcommittee leaders, Senators Feinstein and Alexander, stated on December 16, 2010, that ``funding for nuclear modernization and the National Nuclear Security Agency's proposed budgets should be considered defense spending, as it is critical to national security.'' And they state that ``this represents a long-term commitment by each of us, as modernization of our nuclear arsenal will require a sustained effort.'' The President responded on December 20, 2010, with a commitment to support the $85 billion budget, and he also committed to an annual update to the section 1251 report. Here is what he said: I recognize that nuclear modernization requires investment for the long term, in addition to this one-year budget increase. That is my commitment to Congress. It must be our commitment to hold the President to his word and to likewise provide our full support for nuclear weapon modernization. Finally, on nuclear delivery systems and the President's commitment to missile defense, first, we expect to see significant funding for the next-generation nuclear ballistic missile submarine and follow-on heavy bomber, which the administration now seems to support, although it has not yet confirmed that the United States intends the bomber to be capable of a nuclear standoff mission, as well as a final decision that the follow-on to the air-launched cruise missile will be nuclear capable. Finally, we expect to see greater clarity with respect to the administration's intention to maintain the ICBM leg of the triad after the Minuteman III reaches the end of its life. I expect the administration's commitment to these delivered platforms to become increasingly evident in the Defense Department's 2012 budget request as promised in the update to the section 1251 report. Modernization of the delivery platforms must parallel the commitment to the nuclear weapons. To continue to use Ms. Gottemoeller's formulation, this is another ``marching order'' from the Senate for the administration. The President made clear his commitment to missile defense during the course of the Senate's consideration of the New START treaty, as I mentioned before. In his December 18 letter to Senators Reid and McConnell, he wrote: As long as I am President, and as long as Congress provides the necessary funding, the United States will continue to develop and deploy effective missile defenses to protect the United States, our deployed forces, and our allies and partners. The President reiterated what the Senate made clear in the resolution of ratification--that the New START treaty places no limitations on the development and deployment of our missile defense programs--and he stated that he ``will take every action available to me to support the deployment of all four phases'' of the planned missile defense deployments in Europe. The Secretary of Defense also indicated during a Senate Armed Services Committee hearing on December 17 that the Department was looking at an increase in missile defense funding for fiscal year 2012. As I said before, however, initial press reports hint that the Department of Defense is anticipating a reduction for missile defense programs over the next 5 years. Any cut to the missile defense budget would be especially shocking in light of President Obama's commitments to the Senate. Likewise, it would be absolutely indefensible in view of Secretary Gates's recent comment that North Korea was within 5 years of being able to strike the United States with an intercontinental ballistic missile and that ``with North Korea's continuing development of nuclear weapons . . . North Korea is becoming a direct threat to the United States.'' Indeed, the recent discovery of a clandestine enrichment site in North Korea raises significant concern about our ability to estimate the pace at which that country is developing nuclear and ballistic missile capabilities--and should make us think twice as well about our estimate of Iranian nuclear and ballistic missile capabilities. Also troubling are recent statements by senior military officials, including the commander of U.S. forces in the Pacific and the Director for Naval Intelligence, suggesting China's anti-ship ballistic missiles, designed to target U.S. aircraft carriers, are now nearly operational. This new anti-ship ballistic missile, combined with Beijing's current and growing arsenal of short and medium-range ballistic missiles, threatens to alter the strategic balance in Asia by potentially grounding Pacific-based U.S. air forces and sinking U.S. ships out to a range of 1,000 nautical miles--not to mention the ability to strike U.S. allies and friends in the region. The Russian Parliament provided its interpretation of the treaty and preamble in its Federal Law on Ratification, and it is clearly at odds with the Senate's resolution of ratification in several key respects, including missile defense and conventional prompt global strike. To say that their interpretation is not legally binding on the United States is to miss the point, which is, as many of us said during debate over New START, that because there is no meeting of the minds on these matters, the potential for disputes and increasing tension between the two sides is likely. What was to serve as a vehicle for ``reset'' may, in fact, serve to promote increasing discord. In fact, the first indication of this may have occurred last week, when the U.S. and its NATO partners met with Russia to find common ground on missile defense cooperation. In advance of that meeting, the Russian President threatened ``either we agree to certain principles with NATO, or we fail to agree, and then in the future we are forced to adopt an entire series of unpleasant decisions concerning the deployment of an offensive nuclear missile group.'' If this is the language of reset, I wonder what the tone might have been had we not agreed to New START? As it turns out, Russia appears to have rejected the NATO approach. Mr. President, we will watch carefully to ensure the administration fulfills its 10-year commitment to nuclear modernization, starting with the fiscal year 2012 budget request, and that nuclear reductions called for under the New START treaty do not outpace the commitment to modernization. We must make certain, too, the administration modernizes our national missile defense system to stay ahead of increasing threats; provides the necessary direction and funding to ensure full, timely deployment of missile defense assets in Europe to address the growing Iranian threat; and directs the Missile Defense Agency to develop defensive countermeasures to the anti-ship ballistic missile capability of China. Finally, we must resurrect the Reagan vision of defensive missile defense capabilities based in space, which is the only truly effective means for protecting the Nation and its deployed forces.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison) and the Senator from Arizona (Mr. McCain).