Jon Kyl

Mr. KYL

Mr. KYL. Mr. President, I wish to also talk a bit today about why Republicans oppose raising taxes on anyone. President Obama and his supporters have repeatedly argued that tax increases will only affect a few of the wealthiest Americans, ``millionaires,'' the President claims, and people ``who can afford it,'' to use his words. First of all, I do not think the President should be pitting Americans against each other. Class warfare has no place in our debates. Americans agree with President Kennedy's formulation that a rising tide lifts all boats. Americans believe--it is our basic idea of a country--that we want everyone here to succeed, to do well, and not to pit one group of us against another group. We all aspire to be in the very top groups of whatever we are talking about, and because of the kind of country we have, we have that opportunity, and people do move from one income tax bracket up to the next one, for example, as we increase our incomes. So we do not want to punish anyone for being successful. That class warfare went out of style when the Cold War ended. I do not think it has a part in our debate. Second, his assertions about who will pay are patently false. Small business will be among the hardest hit by these tax increases. Let me explain why this is true because, as you have just heard, some on the other side tend to pooh-pooh this idea. The reason is this. Under the Internal Revenue Code, many small businesses are organized as passthrough entities, meaning they pay taxes at the individual income tax marginal rates. So if you and your wife or you and your husband own a small business, and you are a passthrough entity, you pay your small business income taxes as individuals. That is how this happens. You are not a corporation, you are paying your taxes as people, as individuals, the same as anybody else pays as an individual. Those who currently pay at either the 33 or 35 percent rate, which is the top two marginal rates, would, under the President's proposal, have their taxes increased so you would then be paying 36 or 39.9 percent, respectively, and if you add in the health care legislation-required taxes, it is closer to 42 percent. So you are going from 35 to 42 percent as an individual paying individual income taxes on the money you make through the small business you and your spouse own, for example. My colleague from Illinois says: Well, that does not apply to very many people. How many people does it apply to? What is 3 percent of the people with this kind of income? Almost 750,000 people. Almost 750,000, according to the Joint Committee on Taxation--not my number--estimates that in 2011, next year, just about 750,000 taxpayers with net-positive business income will have marginal rates of 36 or 39.6 percent under the President's proposal. That is 750,000 of the most productive small businesses in the country. The National Federation of Independent Business survey revealed that the businesses most likely to face a tax increase employ between 20 and 250 employees. So we are talking not about insignificant businesses but those that actually employ people. We also know that coming out of an economic downturn, the first jobs that are created are small business jobs. According to U.S. Census numbers, businesses with between 20 and 299 workers employ more than 25 percent of the entire workforce. So when we talk about, well, it is only 3 percent. Well, the question is, 3 percent of what? How many does that actually amount to? How many of the employees in the entire country does that mean? Twenty-five percent of the employees in the country is, by any measure, a significant chunk of folks. These are the people whom we want to raise taxes on? I do not think so. Some Democrats have been claiming these tax increases, as I said, would exempt 97 percent of small businesses. Well, let me shed a little bit of light on that number. In a recent Wall Street Journal article entitled, ``The Small Business Tax Hike and the 97 Percent Fallacy,'' two economists, well respected, Kevin Hassett and Alan Viard, explained that anyone who reports business income on Schedule C of their tax return is counted as a small business. So if someone makes a little money selling a product on eBay and reports that as business income, they are counted as a small business. What is the result? Obviously, we have a lot of folks counted as small businesses who are not really the kind of small businesses we think of as employing folks, these companies that employ between 20 and 299 workers. The other group just reports schedule C income and are not the kind of small businesses creating jobs. This is a very important number to keep in mind. According to the IRS, Hassett and Viard write, ``fully 48 percent of the net income of sole proprietorships, partnerships and S corporations reported on tax returns went to households with incomes above $200,000 in 2007. That's the number to look at.'' So when we talk about these small businesses, these corporations whose owners report their income as individual income, 48 percent of the net income of sole proprietorships, partnerships, and S corporations reported on tax returns went to people above the $200,000 mark. Those are the small businesses that are employing people. Those are the folks who will be hardest hit when this tax increase is put into effect. Frankly, it is many of these businesses that are the most profitable small businesses, and they are the ones that will be creating the new jobs to bring us out of the economic doldrums we are in. Americans know this. That is why I think the key to economic recovery being new jobs depends upon what we do to punish the people who create the new jobs. We don't need more government spending. That is the old plan of the Democrats. It has clearly failed. What we need is new jobs. The President recently proposed a package of temporary tax credits that includes, among other things, a writeoff for all business capital purchases in 2011. Obviously, this concedes the economic point that tax relief can spur job growth, but there is cognitive dissonance about what the rate increases will mean for small businesses. I turn again to an op-ed in the Wall Street Journal by Michael Fleischer who is a small business owner in New Jersey. He wrote an op- ed entitled, ``Why I am Not Hiring.'' We want to know the answer to that, if we are going to figure out how to help him hire more people. He added up all of the costs of government when he hires somebody new, particularly the tax cost. He also included regulatory costs and other mandates. His conclusion: A life in business is filled with uncertainties, but I can be quite sure that every time I hire someone my obligations to the government go up. From where I sit, the government's message is unmistakable: Creating a new job carries a punishing price. What price is he talking about, looking at this potential tax increase I have been talking about? He estimates over $75,000 to hire somebody who makes $44,000. So I think his cost was close to $78,000. That is the punishing burden we put upon businessmen such as him just to hire more people. Some big businesses can stand that. The small businesses that would bear the brunt of this tax increase cannot. That is precisely why small businessmen such as Michael Fleischer are not hiring today. Why would we increase the burden he bears in hiring more people? What we ought to be doing is ensuring that the tax rates that have been in effect now for 10 years can continue forward so people have certainty about what they will be paying, and those very small business folks who are hiring the people we want to go back to work would not have to pay an additional burden in the form of a higher income tax rate. The President and some of our friends on the other side have argued that if taxes don't go up, those in the top brackets will just save more; that will do little for job creation and economic growth. This is the one that really bugs me. It is as if we can't appreciate what happens when somebody saves money. Do my colleagues know of anybody who buries money in their backyard? I don't. Any person who saves money either puts it in a bank where it is lent out to somebody, usually a business so it can hire more people or buy equipment, or they invest in a stock or a bond, equities usually. What is that investment? It is providing capital to business. What does business do with capital? It either hires people or buys equipment, which generally requires people to make it, and therefore they get hired as well. The bottom line is, yes; it is fine for people who immediately go out and spend their money. That does have an indirect effect on job creation. If enough people spend enough money, somebody will have to go back to work to make the products. But the truth is, money that is saved has a direct impact on job creation because it directly provides capital to businesses so they can expand. Saving doesn't mean throwing one's money in a mattress or burying it in the backyard. It means investing it in our economy. If taxes go up, less money is available for those investments and for job creation. A final note: Supporters of the pending tax hikes have frequently cited the booming economy of the 1990s to strengthen their case. They say if the economy performed so well under President Clinton, what is the big deal about returning to Clinton era income tax rates? First, they don't want to return to Clinton era income tax rates on anybody except millionaires, these people who make over $250,000 a year. But in any event, the argument misses the point. The question is not whether it is possible to have strong economic growth with higher income tax rates, though it is less likely that occurs. Rather, the question is whether we should be raising taxes in the aftermath of one of the worst recessions where some people are talking about having a double-dip recession, and it is clear we are not out of America's worst financial crisis and recession since World War II. I don't know of an economist who says that is a good idea. Peter Orszag, the President's last OMB Director, just had a big op-ed in the New York Times in which he said this is not the time to raise taxes, when we still have these economic difficulties--on anybody. Indeed, the timing of President Obama's proposed tax increases could not be worse. I just cite the example of Japan during the so-called lost decade. They suffered a massive financial collapse in the early 1990s. One of the responses was to actually reduce taxes and boost economic activity. And it did. They began to come back. Then for reasons that elude me, they decided in 1997 to raise taxes again and, sure enough, the economy fell back into recession. I should think Japan's experience provides a cautionary tail about the dangers of increasing taxes amid a very shaky economic recovery. In their comprehensive survey of financial meltdowns across the globe, economists Carmen Reinhart and Kenneth Rogoff tell us that recoveries following such meltdowns are typically quite slow. The current U.S. recovery is no exception. America's unemployment rate has been above 9 percent for more than a year. Speaking to the Federal Reserve's annual symposium in Jackson Hole, Reinhart said that based on the history of past financial crises, it is conceivable that U.S. unemployment could stay at 8 or 9 percent for another 7 years. If that is the case, why on Earth would anybody be talking about raising taxes on anyone, most especially the small business folks who will be the first to hire coming out of this economic downturn? It is beyond me. Obviously, the way to avoid that bleak scenario is to reject the tax increases proposed by the President and some on the other side of the aisle.

Mr. KYL

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

Mr. KYL. Mr. President, I want to speak on the nomination of Jane Stranch--a vote we will be taking here in about 45 minutes--nominated to the Sixth Circuit Court of Appeals. It is always with a great deal of reluctance that I oppose a nominee for the bench. Most of the people who are nominated are nominally qualified, in that they have records as attorneys or sometimes as judges in lower courts, have recommendations from bar associations and the like. But occasionally it is necessary to oppose a nominee. And while I certainly acknowledge that Jane Stranch has the qualifications one would expect of a nominee for a court of this significance, I oppose her nomination because of a very troubling development that I see in several nominations. At some point I think it is important to draw the line and say that the President has got to be very careful not to nominate people who have--and in this case who have not--taken, in my view, a strong enough position against applying foreign law to interpret the American Constitution or to interpret American laws that apply to cases before them. We have seen this before in nominees, in then-Judge Sonia Sotomayor. When she had her Supreme Court hearing, several of us on this side of the aisle raised the question with respect to her position on foreign law. In many respects she said: Don't worry, I won't apply foreign law. Then in one of the cases in her first term as a Supreme Court Justice she did exactly that. We have raised the same question with regard to people such as Harold Koh and others. I want to quote one statement Ms. Stranch made to illustrate the point I am trying to make. At some point, unless Members vote against nominees who appear to take these positions, I suspect the President will keep on nominating people with these views and then wonder why we oppose them. So I am going to be clear about why I oppose this nominee, even though I am sure many of her other qualifications are fine. She said this regarding cases where foreign law was used: In these few cases, references to foreign law were made for such purposes as extrapolating on societal norms and standards of decency, refuting contrary assertions, or confirming American views. Roper [a Supreme Court case] specifically noted that the foreign law references were ``not controlling'' and were presented for the purpose of confirmation of the Court's conclusions. The problem with that statement--and while I appreciate the fact that she says foreign law is not controlling--is that the reality is foreign law has no place in the interpretation of the American Constitution and yet the Court continues to do that, with Justices continually saying it isn't controlling. If it is not controlling, why do it? Courts are supposed to look at precedent. What is precedent? Precedent is law that controls the case. There is no point in going outside of that and bringing in extraneous material. If it is not controlling, it is extraneous. If it is extraneous, it is redundant. Why bring it in? I appreciate her recognition that foreign law is not controlling, but interpreting the Constitution doesn't require the application of foreign law to develop material on societal norms or standards of decency or to refute contrary assertions, and it doesn't have any relevance in even confirming American views, as she said in her statement. If the American view of the Constitution is X, let's say, then it is X. That is the American view. And if it is agreed to by other countries, that is fine. If it is not, it is not the judge's business to inquire into it and wonder why it does agree or does not agree with the American view. I think that until enough of us register the view that we are not going to vote for judges who subscribe to the views Jane Stranch has articulated, as I said, I suspect the President will simply continue to nominate those individuals, and that is something I think the majority of us--certainly the majority of Americans--would object to. Again, I regret having to express my opposition to this nominee, but in order to render my objection to the kind of jurisprudence they mentioned, the only way I can do that, I gather, is to vote no, which is what I intend to do. Mr. President, I suggest the absence of a quorum.

Mr. KYL. The following Senators are necessarily absent: the Senator from Kansas (Mr. Brownback), the Senator from Wyoming (Mr. Enzi), the Senator from New Hampshire (Mr. Gregg), and the Senator from Alaska (Ms. Murkowski).

Mr. KYL

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

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

Mr. KYL

Mr. KYL. Mr. President, Elena Kagan is intelligent, well spoken, personable, and schooled in the law. She is skilled in the art of argument, perhaps to a fault. Ignoring her own advice in the now famous University of Chicago Law Review article, she did not testify meaningfully before the Judiciary Committee, concealing and disguising her views and playing the same game of ``hide the ball'' as some who went before her, albeit with more skill. Probably because she criticized the practice so directly, many expected her to set a different standard. Others have asked whether Judiciary Committee hearings have been rendered largely free of substance and what, if anything, can be done about it. The former Judiciary Committee chairman, Arlen Specter, who lamented that Ms. Kagan, during her testimony, had not ``answered much of anything,'' went on to say this: It would be my hope that we could find some place between voting no and having some sort of substantive answers. But I think we are searching for a way how Senators can succeed in getting substantive answers, as you advocated in the Chicago Law Review, short of voting no. I confess that, similar to Senator Specter, I don't know how we can force nominees to be forthcoming except through our votes. To be clear, my threshold for supporting a nominee does not require answering how one would vote on issues sure to come before the Court, nor necessarily expressing agreement or disagreement with decisions or Court opinions. It is possible to learn much about a nominee's approach to judging without committing one to a specific position in future cases. What we should expect, however, is candor and a willingness to honestly discuss background and general constitutional principles, approaches to judging and writings and matters within the nominee's background that bear on the nominee's suitability for the bench. In explaining why I could not vote for now-Justice Sotomayor, I said I thought she was disingenuous with the Judiciary Committee. Obviously, reaching such a conclusion precludes support, notwithstanding other qualifications for the position. Reluctantly, after analysis of her testimony, weighed with her past writings, statements, and actions, I have reached the same conclusion regarding Elena Kagan. Exhibit A is her insistence on redefining her position on military recruiting on Harvard campus. Her ``separate but equal'' defense and attempt to downplay the steps she took to undermine the legal policy of don't ask, don't tell were, ultimately, unbelievable. It is almost unfathomable, for example, that someone with Ms. Kagan's considerable legal acumen could have, as she asserted, always thought we were acting in compliance with the Solomon amendment. Ms. Kagan tried to convince the Judiciary Committee that her actions against the military were a justifiable response to a policy she viewed as discriminating against homosexuals. But as Senator Sessions noted, her stand against homosexual discrimination was not universal. She did not speak out, for example, when Harvard accepted $20 million from a member of the Saudi royal family to establish a center for the study of Sharia law, even though under Sharia law ``sexual activity between two persons of the same gender is punishable by death or flogging.'' Her decision to punish the military for a policy adopted by Congress is especially perplexing, given her failure to express concern over or take action against the establishment of a center to promote a legal system linked to the abuse of homosexuals, women, and others. Exhibit B is her astonishing legal definition of what she meant in her effusive praise for Justice Marshall's vision of the role of the Court, presumably to avoid the obvious conclusion that she agreed with his activist approach to judging. Justice Marshall had an enormous influence on our jurisprudence, starting with his advocacy before--and most especially with--Brown v. Board of Education. But no serious student would argue that he didn't try to push the law as far as he could in furtherance of his philosophy. Indeed, consider the comments of another former Marshall clerk, liberal law professor Cass Sunstein, who now serves in the Obama administration, who has said this: A serious commitment to Marshall's vision of constitutional liberty would entail an extraordinary judicial role, one for which courts are quite ill suited. He has also acknowledged: Even if the best substantive theory calls for something like Marshall's vision, institutional considerations would argue powerfully against it. Ms. Kagan's attempt to define Justice Marshall's philosophy as meaning only that he wanted everyone to have equal access to the courts is--there is no other word for it--disingenuous. Because Ms. Kagan apparently embraces his philosophy but feared public acknowledgment of that would confirm the concern that she would be a results-oriented judge, she fudged. In doing so, she confirmed the suspicion and compounded the problem with deceptive testimony. Exhibit C is the explanation of several of her bench memos to Justice Marshall, insisting they did not contain her views but were merely a channeling of his. Ms. Kagan offered this explanation of her memo categorizing litigants as ``good guys'' and ``bad guys,'' another memo stating that the government was ``for once on the side of the angels,'' and a memo expressing fear that the Court might ``create some very bad law on abortion and/or prisoners' rights.'' Reading these memos, one gets the sense that Ms. Kagan was not simply channeling her boss but was instead expressing her own personal policy views on matters before the Court and that they had as much to do with who the litigants were as what the issues were. Ms. Kagan also attempted to recast her praise of Israeli Supreme Court Justice Aharon Barak, who, in the words of the Associated Press, is widely acknowledged as someone who took an activist approach to judging. Well, that is exhibit D. Judge Richard Posner described Judge Barak's history on the Israeli Supreme Court as ``creating a degree of judicial power undreamed of even by our most aggressive Supreme Court justices.'' Under his leadership, the Israeli Supreme Court aggrandized its own power far beyond what even many of those on the left would view as acceptable in America. To cite one example of Justice Barak's judicial philosophy, he wrote a judge's role ``is not restricted to adjudicating disputes in which parties claim that their personal rights have been violated'' but rather ``to bridge the gap between law and society.'' Well, bridging gaps, clearly, and using the law to address societal problems is not the job of the courts. That is a political approach. Ms. Kagan claimed, during her hearing, that her praise for Justice Barak had nothing to do with his leftwing judicial philosophy. But an examination of her statements tells a different story. In 2002, Ms. Kagan praised Aharon Barak for ``presiding over the development of one of the most principled legal systems in the world.'' In 2006, she again heaped professional praise on Justice Barak, calling him her ``judicial hero.'' Ed Whelan, who is a noted legal commentator, summarized this event well: Kagan begins by referring to the portraits of four ``great justices'' with whom Harvard Law School has been associated-- Brandeis, Holmes, Brennan, and Frankfurter. But, she says, ``the Harvard Law School association of which I'm most proud''--more proud, that is, than of the associations with Brandeis, Holmes, Brennan, or Frankfurter--``is the one we have with President Barak of the Israeli Supreme Court. And then she continued: I told President Barak, and I want to repeat in public, that he is my judicial hero. He is the judge or justice in my lifetime whom [sic], I think, best represents and has best advanced the values of democracy and human rights, of the rule of law and of justice. During her confirmation hearing, Ms. Kagan, under oath, testified that she admired Justice Barak for his role in: . . . creating an independent judiciary for Israel. . . . not for his particular judicial philosophy, not for any of his particular decisions. That testimony cannot be squared with her public declaration that Justice Barak ``is the judge or justice in my lifetime whom [sic], I think, best represents and has best advanced the values of democracy and human rights, of the rule of law and of justice.'' Exhibit E is Ms. Kagan's answer to whether she is a legal progressive. Her statements, again, were designed to cloud her views. Vice President Biden's Chief of Staff, Ron Klain--who served as chief counsel of the Senate Judiciary Committee, Chief of Staff to Attorney General Reno, and Chief of Staff to Vice President Gore--has known Ms. Kagan as far back as 1993, when they worked together on the Ginsburg hearings. At Ms. Kagan's hearing, Senator Sessions pointed out that after Ms. Kagan was nominated, Mr. Klain said: Elena [Kagan] is clearly a legal progressive. I think Elena is someone who comes from the progressive side of the spectrum. She clerked for Judge Mikva, clerked for Justice Marshall, worked in the Clinton administration, worked in the Obama administration. I don't think there's any mystery of the fact that she is, as I said, of more of the progressive role than not. Senator Sessions then asked Ms. Kagan: Do you agree with the characterization that you're a legal progressive? She replied: I honestly don't know what that label means. So Senator Sessions pressed Ms. Kagan: I'm asking about his firm statement that you are a legal progressive, which means something. I think he knew what he was talking about. He's a skilled lawyer who's been in the midst of the great debates of this country about law and politics, just as you have. And so I ask you again: Do you think that is a fair characterization of your views? Certainly, you don't think he was attempting to embarrass you or hurt you in that process. She again dodged with an answer that strains credulity. I love my good friend, Ron Klain, but I guess I think that people should be allowed to label themselves. And that's--you know, I don't know what that label means and so I guess I'm not going to characterize it one way or the other. So a nominee to the highest Court in the land and a former dean of one of the Nation's most prestigious law schools insists that she doesn't know what the term ``legal progressive'' means. But later in the hearing, Senator Graham mentioned that Greg Craig, President Obama's first White House Counsel, had praised Ms. Kagan. Mr. Craig said: [Elena Kagan] is largely a progressive in the mold of Obama himself. So Senator Graham asked: Would you consider them, your political views, progressive? Then Ms. Kagan acknowledged that, yes, her ``political views are generally progressive.'' It is hard to believe Ms. Kagan knows what a political progressive is but not a legal progressive. Exhibit F: Her attempt to redefine her views in the letter sent to Judiciary Committee on November 14, 2005, in which she objected to the Graham-Kyl-Cornyn amendment dealing with treatment of enemy detainees. Her characterization of our approach as being similar to the ``fundamentally lawless'' actions of ``dictatorships'' was clearly, I believe, injudicious and revealed the fervor of her position, much like her characterization of the don't ask, don't tell policy as ``a moral injustice of the first order,'' and it could suggest a viewpoint that she would have a hard time laying aside if similar questions ever came before her as a Supreme Court Justice. Her attempt to distance herself from the obvious application of her views to places other than Gitmo--obvious because her letter bemoaned the ``serious and disturbing reports of the abuse of prisoners in Guantanamo, Iraq and Afghanistan''--and issues other than conviction and sentencing--even though her letter stated that our amendment ``unfortunately'' would ``prohibit challenges to detention practices, treatment of prisoners, adjudications of their guilt and their punishment''--suggests either that she was uncomfortable defending her position or she wanted to preserve her right to sit on such cases in the future or both. The attempt to obscure positions she had previously stated was, I believe, an attempt to run away from those positions and mislead the committee. Exhibit G: Ms. Kagan's doublespeak on the question of same-sex marriage. Prior to her confirmation as Solicitor General, when she was not restricted, as judicial nominees are, in her ability to comment on issues that may come before the courts, Senator Cornyn asked Ms. Kagan a direct question about her personal views: Do you believe that there is a fundamental constitutional right to same-sex marriage? Her answer then seemed clear. She wrote: There is no Federal constitutional right to same-sex marriage. But at the hearing, when I asked Ms. Kagan to confirm her views on this subject, she distorted both Senator Cornyn's question and her answer. She told me Senator Cornyn had asked whether she could ``perform the role of the Solicitor General'' and vigorously defend DOMA, given her opposition to don't ask, don't tell. When I pointed out that Senator Cornyn's question was about a constitutional right to same-sex marriage, not DOMA, Ms. Kagan then asserted that her answer to Senator Cornyn--that ``there is no Federal constitutional right to same-sex marriage''--intended to convey that she ``understood the state of the law and accepted the state of the law.'' Having reinterpreted her previous answer, she then told me that, as a Supreme Court nominee, it would not be ``appropriate'' for her to share her personal views on the subject, since such a case may come before the Court. It strikes me that Ms. Kagan was, at the time of her nomination to be Solicitor General, trying to create an impression--apparently a false one--that she did not personally believe the Constitution could be read to include a right to same-sex marriage. That leads to Exhibit H: her involvement, while serving as Solicitor General, in a case concerning the constitutionality of the Defense of Marriage Act, DOMA. When nominated for the job of Solicitor General, Ms. Kagan emphasized in her opening statement the ``critical responsibilities'' that the Solicitor General owes to Congress, ``most notably the vigorous defense of the statutes of this country against constitutional attack.'' Later, Ms. Kagan reiterated that she could represent the interests of the United States ``with vigor, even when they conflict with my own opinions. I believe deeply that specific roles carry with them specific responsibilities and that the ethical performance of a role demands carrying out these responsibilities as well and completely as possible.'' Ms. Kagan even cited former Solicitor General Ted Olson's defense of the campaign finance laws as an example of the way a Solicitor General should approach the job. She said, ``I know that Ted Olson would not have voted for the McCain-Feingold bill, but he . . . did an extraordinary job of defending that piece of legislation. . . . And that's what a solicitor general does.'' Yet, there is substantial reason to doubt that Ms. Kagan genuinely carried out her obligation to ``vigorously defend'' a Federal statute in district court, the Defense of Marriage Act. In response to questions at her Supreme Court hearing, Ms. Kagan acknowledged that she was involved in two district court cases involving DOMA. Her personal involvement in these cases was itself unusual as she admitted in response to written questions: ``In the normal course, the [Solicitor General's] Office does not participate in district court litigation.'' Her involvement would not have necessarily raised concerns were it not for the position that the government advocated in the cases. In the first case, Smelt v. United States, the Department of Justice filed a brief that, as part of its so-called ``defense'' of the DOMA statute, admitted to the court that ``this Administration does not support DOMA as/matter of policy, believes that it is discriminatory, and supports its repeal.'' How can a lawyer mount a ``vigorous'' defense of a statute while declaring the statute to be discriminatory? But it gets worse. The Justice Department's brief also asked the court to ignore one of the strongest arguments in support of DOMA--namely that traditional marriage serves as a valuable vehicle for encouraging responsible procreation and childbearing. The brief asserted that the government ``does not believe that DOMA is rationally related to any legitimate government interests in procreation and child-rearing.'' It is clear that the Justice Department's brief, which was supposed to be filed in support of the DOMA statute, in fact undercut the law's constitutionality. As one legal scholar and proponent of same-sex marriage said about the Justice Department's argument: This new position is a gift to the gay-marriage movement, since it was not necessary to support the government's position. It will be cited by litigants in state and federal litigation, and will no doubt make its way into judicial opinions. Indeed, some state court decisions have relied very heavily on procreation and child-rearing rationales to reject SSM [same-sex marriage] claims. The DOJ is helping knock out a leg from under the opposition to gay marriage. The Smelt case was later dismissed by the district court for other reasons. And that brings us to the second DOMA case in which Ms. Kagan was involved--Gill v. Office of Personnel Management. In Gill, the Justice Department again offered the same half-hearted defense of DOMA and repudiated its strongest legal arguments. This time, however, the district court seized on the Justice Department's rejection of the procreation and child-bearing rationales and found that DOMA was unconstitutional. Ed Whelan, the noted legal commentator and a former principal deputy of the Office of Legal Counsel, has explained that the decision in Gill ``would be ridiculous but for DOJ's abandonment of Congress's stated justifications for DOMA. Under proper application of the very deferential `rational basis' review, for example, it would be enough to recognize that it would have been reasonable for Congress in 1996 to regard traditional marriage as a valuable vehicle for encouraging responsible procreation and childbearing.'' Although Ms. Kagan admitted being involved in both Smelt and Gill, she refused to tell us her role in the deliberations. In response to written questions, Ms. Kagan did admit that her participation in Smelt was ``sufficiently substantial'' that she would recuse herself should the case come before the Supreme Court. But this promise itself was disingenuous because the Smelt case had already been dismissed, so there was no chance that it would come before the Supreme Court. On the other hand, the Gill case may very well make its way to the Supreme Court, but Ms. Kagan did not promise to recuse herself from participating in it, despite her involvement in formulating the Justice Department's flawed defense of DOMA in the case. We will likely never know what Ms. Kagan's advice was in these cases. What we do know is that Ms. Kagan has a history of ignoring the law when it conflicts with the gay rights agenda. We also know that she took the unusual step of getting involved in these district court cases challenging DOMA. And we know that the Justice Department went out of its way to abandon one of the fundamental rationales for the DOMA statute, which resulted in a court, for the first time ever, ruling that DOMA was unconstitutional. On the basis of these facts, I believe that any reasonable observer would question whether Ms. Kagan kept her promise to us that she would ``vigorously defend'' Federal statute as Solicitor General. Exhibit I is her dubious explanation of why, in another case that she handled as Solicitor General, she declined to appeal the Ninth Circuit's adverse ruling in Witt v. Department of the Air Force, a case challenging the constitutionality of the government's don't ask, don't tell statute. At her hearing, Ms. Kagan claimed that allowing the Ninth Circuit decision to stand, and accepting a remand and trial in district court, would provide the Supreme Court with a ``fuller record'' and would help the government ``show what the Ninth Circuit was demanding that the government do'' to defend don't ask, don't tell. But a review of the Ninth Circuit opinion and the record in the case shows that Ms. Kagan's explanation was disingenuous. The Ninth Circuit itself had already said what the government would need to prove for the Federal law to survive--there was no need to develop a ``fuller record'' or seek further clarification from the courts. Ms. Kagan's decision to let the case return to the district court ensured that members of the military would be subjected to invasive and humiliating trials in the Witt case and in all other challenges against don't ask, don't tell--trials in which soldiers would be compelled to testify against their comrades, discuss their views of a fellow soldier's sexual practices, and watch as the unit's personnel files become fodder for lawyers trying to condemn what is supposed to be a military-wide policy. The government rightly argued before the trial court that such trials are guaranteed to destroy unit cohesion--the very thing that Congress sought to protect when it passed the don't ask, don't tell statute. And the trial court records show that Kagan knew in advance that the trial process would harm the military's interests. But she decided to thrust the government into exactly the position the military's lawyers most wanted to avoid, perhaps to keep in place, and insulate from Supreme Court review, a Ninth Circuit ruling that places don't ask, don't tell policy in jeopardy. In addition to my concerns that Ms. Kagan was less than candid with the Judiciary Committee, I am also concerned about her leftist ideology and the potential it will influence her judging. I will discuss three areas of concern. First, is her defense of the brief filed in Chamber of Commerce v. Candelaria. It takes a clever lawyer to argue that the Court should take this immigration case, but not Lopez-Rodriguez v. Holder on the traditional reasons for granting certiorari. In Candelaria, she asked the Supreme Court to strike down an Arizona law that permits the State to suspend or revoke the business licenses of companies that knowingly employ illegal aliens. She did this even though Federal law expressly authorizes States to enforce immigration laws ``through licensing'' and even though the courts that have considered the issue have determined that States could do precisely what Arizona did. Yet, in Lopez- Rodriguez, another immigration case, she refused to appeal a decision by the Ninth Circuit that permits ordinary deportation hearings to be bogged down by long legal fights over the admissibility of clear evidence that a person is illegally here. Unlike Candelaria, the Ninth Circuit's decision in Lopez-Rodriguez was in conflict with the decisions of other courts--including the Supreme Court--involved a significant constitutional issue. It is difficult not to conclude that Ms. Kagan's actions in these two cases were driven less by the law, and more by political expediency. My second concern about ideology is that Ms. Kagan has shown she may hold a limited reading of the second amendment, even after the Heller and McDonald cases. When asked whether the right to bear arms was a ``fundamental right,'' Ms. Kagan said, ``I think that that's what the court held in McDonald.'' She also said that the holding was ``[g]ood precedent going forward.'' Of course, there is a record of nominees describing the holding of a case and proclaiming that it is ``good precedent,'' only to vote to overturn or distinguish that precedent once they ascend to the bench. Justice Sotomayor did just that on this issue. But we need not rely on cynicism to demonstrate that Ms. Kagan may not view the recent second amendment precedents as settling the question of whether gun ownership is a ``fundamental right.'' Generally speaking, when a constitutional right is ``fundamental,'' any government restriction of that right is subject to ``strict scrutiny'' by the courts. But at her hearing, Ms. Kagan left open the possibility that some other, lesser standard of scrutiny should apply to second amendment restrictions. She said that ``going forward the Supreme Court will need to decide what level of constitutional scrutiny to apply to gun regulations.'' This does not sound like a commitment to the principle that the second amendment guarantees a fundamental right. When weighed with her well-documented work in the Clinton administration to advance gun control legislation, I believe there is a justifiable concern that Ms. Kagan would vote to construe Heller and McDonald as narrowly as possible. Third, I am concerned that Ms. Kagan sees few, if any, limitations on Congress's authority to regulate behavior, or interstate commerce. In a remarkable exchange, Senator Coburn asked Ms. Kagan whether it would be constitutional for Congress to pass a law requiring Americans ``to eat three vegetables and three fruits every day.'' Although Ms. Kagan said that such a law sounded ``dumb,'' she refused to say that such a law would be unconstitutional. In fact, during the course of the exchange, Ms. Kagan repeatedly emphasized that a court analyzing such a statute should ``read the [commerce] clause broadly'' and give ``real deference'' to Congress. I agree that the commerce clause gives the Congress substantial authority, but it does not give Congress unlimited authority. That Ms. Kagan was unwilling to say a law requiring the consumption of produce is beyond Congress's authority suggests she would vote to uphold statutes that exceed the boundaries of the commerce clause. Stretching the commerce clause gives too much power to Congress. Finally, it is worth noting that Ms. Kagan came to the Senate with a lack of legal and judicial experience, especially when compared to other recent nominees. Some have reached back 40 years to compare Ms. Kagan's experience to that of Chief Justice Rehnquist, the last nominee without prior judicial experience confirmed to the Supreme Court in 1972. William Rehnquist, however, spent 16 years as a practicing litigator in my home State of Arizona and 2 more years as Assistant Attorney General, Office of Legal Counsel, a position that was later held Justice Scalia 1974-1977 and that, according to the Department of Justice, ``typically deal[s] with legal issues of particular complexity'' and ``provides authoritative legal advice to the President and all the executive branch agencies.'' In contrast, Ms. Kagan's law practice is confined to two years in private practice shortly after law school and 1 year as the Solicitor General. Her limited experience is not by itself disqualifying, but it did increase the importance of her hearing. Had she answered questions in an honest and straightforward manner, we might have a better basis to know what kind of judge she would be. But instead, Ms. Kagan either dodged questions or gave what were clearly disingenuous answers intended to mask her views. She also failed to make the case that her political ideology would not influence her judging. For all of the reasons I have discussed, I cannot support her nomination.

Mr. KYL

Mr. KYL. Mr. President, I would like to speak for a few moments about a memorandum that was received in the offices of Senator Charles Grassley, pursuant to a request of the Department of Homeland Security, which has, unfortunately, raised a lot of questions about the administration's commitment to enforcing congressional law. It is undated, but the memorandum is 11 pages. It is on the stationery of U.S. Citizenship and Immigration Services. It is a memorandum to Alejandro N. Mayorkas, the Director, from four individuals within the USCIS. The subject matter is described as ``Administrative Alternatives to Comprehensive Immigration Reform.'' After reading these 11 pages, I have to ask the question whether this administration, frustrated by the fact that Congress has not acted to pass comprehensive immigration reform, is now considering an end-around the Congress by administrative action through reinterpretations, definitions, rules, and regulations, changing guidelines and the like--in other words, administrative actions to accomplish what cannot be accomplished because Congress is in no mood right now to adopt comprehensive immigration reform--in effect, to use the phrase in the memorandum, a ``nonlegislative version of amnesty.'' I hope this memorandum, which is designated a ``draft,'' will be thoroughly explained by the administration and will be disavowed in terms of an intention to do an end run around Congress. I am hopeful that some hearings can be held so the authors of the memorandum, or the Director, can explain why this memorandum would be written in the first place and what they intend to do about it. The purpose of the memorandum is described as follows: This memorandum offers administrative relief options-- To, among other things-- reduce the threat of removal for certain individuals present in the United States without authorization. In other words, illegal aliens. The summary of the memo reads: In the absence of comprehensive Immigration Reform, USCIS can extend benefits and/or protections to many individuals and groups by issuing new guidance and regulations, exercising discretion with regard to parole-in-place, deferred action and the issuance of Notices to Appear and adopting significant process improvements. Then they go on to summarize a variety of changes by which they can accomplish these purposes. Just to quote a few here: ``USCIS could reinterpret two 1990 General Counsel Opinions. . . .'' They could change the definition of ``dual intent.'' They could modify removal procedures in the public interest--strategically, they note. They could ``issue guidance or a regulation lessening the `extreme hardship' standard.'' I quote from the ``Options'' part of the memo: The following options--used alone or in combination--have the potential to result in meaningful immigration reform absent legislative action. Indeed, they do. This would be a way for the bureaucrats within the administration to change Congress's intent by redefining terms, issuing guidelines, rules and regulations, and practices which would result in the same thing they would like to achieve in the form of comprehensive immigration reform, including, among other things, amnesty for illegal immigrants. But they could do all of this without Congress ever having passed a single law. Just to go through some of the other things they talk about here, they could allow certain TPS applicants who entered without inspection--that means they entered the country illegally--to adjust their status. They could expand the meaning of ``urgent humanitarian reasons.'' One of the things they could--and I will quote it here: To address these issues, OP&S is currently examining the feasibility of policy options so that individuals would not be deemed to have triggered the bar upon departure with prior authorization from DHS. These options include possibilities reexamining past interpretation of terms such as `departure,' and `seeking admission again.' '' I know these are terms we can find in the dictionary, but these creative bureaucrats are in effect saying: We can define these terms in a more creative way and therefore allow a lot more illegal immigrants to stay in the country indefinitely. They say: To increase the number of individuals applying for waivers and improve their chances of receiving them, CIS could issue guidance or regulation specifying a lower evidentiary standard for extreme hardship. If you don't like the law, you simply lower the bar. We could do that, they say, and allow more people to stay here. They do note a couple of problems in doing these things. On page 10, they say: While it's theoretically possible to grant deferred action to an unrestricted number of unlawfully present individuals, doing so would likely be controversial, not to mention expensive. Well, they are right about that; it would be controversial indeed. One of the reasons they note is in the final page of the memorandum, when they say--and I am quoting again: Rather than making deferred action widely available to hundreds of thousands and as a nonlegislative version of amnesty, USCIS could tailor the use of this discretionary option for particular groups such as individuals who would be eligible for relief under the Dream Act, an estimated 50,000; or under section 249 of the act, registry, who have resided in the U.S. since 1996; or, as of a different date, designed to move forward the registry provision now limited to entries before January 1, 1972. In other words, pick a date and say that everyone after that date can stay in the United States legally even though they gained entry illegally. Mr. President, this is highly disturbing. Because what you have is the administration explaining that well, A, this is only a draft; and, B, we have not adopted any of these recommendations yet; and, C, we probably would not do it for everyone who is here illegally. Well, I would hope not, but I would hope the administration would be a little more forthcoming about its intentions. This is what fosters suspicion among the American people that the administration is not serious about enforcing our laws and that they want to try to accomplish an end run around the Congress by administrative fiat. It is the kind of situation that fosters a lack of confidence in the transparency of this administration, which was supposed to be the most transparent in history, when we have to find out only through a process of a member of the Judiciary Committee literally forcing them to cough up this memo of what they are thinking about. It is obvious from the language of the memo that a great deal of thought has been put into this, and it has gone throughout the Department of Homeland Security, when they talk about different groups having studied different options. This is the kind of thing that causes people to wonder about the administration's commitment to enforcing the law. Finally, it is one of those things which ironically--or paradoxically--has caused people to back away from the notion of comprehensive immigration reform, because of the notion that the administration has been less than anxious to secure the border and enforce the law and, as was told to me on one occasion, the theory being that if we ever secure the border, then there will be less impetus to pass comprehensive immigration reform. If your goal is comprehensive immigration reform and amnesty or you call it whatever term you want to there, letting people stay in this country who came here illegally, if that is your goal, and it does not appear the Congress is going to act on that anytime soon, then you resort to the tactics that are employed here by these employees at DHS. Let's figure out ways by reinterpreting commonly used phrases, by issuing new guidelines, by changing 1990 legal opinions, by other means that can be accomplished administratively, we will accomplish, in their words, a nonlegislative version of amnesty for at least specific groups of people, depending upon what date you want to use or what specific phraseology you want to use. This is why the American people do not trust Washington in general and why they have grave reservations about this administration's commitment to enforcing the law relating to illegal immigration. A final point I would like to make is the decision that was rendered by the Federal district judge in Arizona on the now infamous Arizona law. I was troubled by one of the aspects of it because it reflected an argument the U.S. lawyers presented in court, which, in effect, was Arizona has no business trying to help the Federal Government enforce our immigration laws, among other reasons, because the Federal Government has decided--bear in mind, this is the executive branch of the Federal Government, not Congress, but this administration has decided to enforce the law selectively; that is to say, using its discretion; that is to say, not always enforcing it. What would be some of the reasons you would not enforce it? Well, one of the main arguments they used--and the judge referred to this--is that we have to keep in mind the sensitivities of other governments-- what do they think about our enforcement of our law; that there are legitimate foreign policy reasons why the administration might not want to enforce a congressionally enacted statute. I find this to be remarkable. Of course, in dealings with foreign nations, every State Department, every President has to be careful to try to win friends and influence people. But I do not think that you make a deliberate decision not to enforce a law that Congress has passed, which the American people clearly want enforced, simply because people in the Government of Mexico are unhappy if the law is enforced. That is obviously the country we are talking about because the Mexican Government itself intervened in the litigation to make exactly that point. So, again, is it any wonder the American people wonder about this administration's commitment to enforcing the law, when one of the key arguments it raises in the litigation is that we do not want to have to be under a standard of complete enforcement of the law because we have some other considerations we need to take into account. The judge says: I will agree with that and therefore say that the State of Arizona cannot insist on complete enforcement of the law because the Federal Government may have reasons not to totally enforce it. That is a troubling proposition to me, among other things, because Congress has not interpreted the law in any way other than we wrote it; namely, enforce it. That brings up the final point. Congress passed, as part of our immigration laws, a requirement that the Department of Homeland Security respond to inquiries by Federal, State, and local officials who call in about the status of individuals whom they have stopped, for example, at a traffic stop or who they may have reason to believe are in the country illegally, and they respond to about 1 million of those inquiries a year. They have 152 employees to do it. The Federal Government actually argued in the case, believe it or not, that the reason Arizona had to butt out and not try to help the Federal Government enforce the law was because it would result in a lot more inquiries about the legal status of people and they could not handle anymore inquiries; their capacity was only 1\1/2\ million a year; they are up to 1 million; and they only have 152 people in this unit responding to these inquiries, so they could not possibly accept this burden. As a result, the judge ruled that the U.S. Government would be harmed in such a way that she had to grant an injunction. It would be irreparably harmed as a result of Arizona enforcing the statue. The question, obviously, occurred to me: Well, why do we not hire a few more people to answer these inquiries? I calculated it might cost about $15 million to double the number of people, and certainly this law is not going to double the number of inquiries. But say you doubled the number of people to 300 instead of 150. That solves that problem. In other words, people in the U.S. Government, under this administration, seem to be looking for reasons not to enforce a law. That is wrong. We take an oath to uphold the law. When Congress passes a law, we intend it to be enforced. Yet you have this administration, this Justice Department, making arguments as to why the law cannot or should not be completely enforced. Is it any wonder my fellow citizens in Arizona and others around the country want someone to do what they can to try to enforce the law? If the U.S. Government will not do it, then maybe we should start to get our States involved. I agree, it is better to have the U.S. Government do it. It should be our obligation. But if our own administration is not willing to do it to the letter of the law, and if they are willing to abide by employees who spend their time writing memos such as this, to show how to get around the law, to grant a ``nonlegislative version of amnesty,'' then clearly something is wrong, and I think Congress has to speak up. If you reward illegality, you are going to get more of it. When this administration tries to find ways to keep people in the country who came here illegally by virtue of redefinitions and guidelines and changing opinions that go back to 1990, it suggests to me we are simply inviting more illegality, and we should not do that. So I am going to join my colleagues on the Judiciary Committee in asking for hearings on this matter, to find out why this is being done; hopefully, to confirm that they do not intend to move forward with this but, in any event, to try to reestablish with the American people that their government in Washington does represent them, it does want to carry out their intent expressed in properly enacted legislative laws, and that, once and for all, we can make a commitment in this country that the American people have been asking for for a long time now that when it comes to our immigration laws, the Federal Government is committed to enforcing them. Until that is done, we are not going to make progress on all the other issues relating to immigration reform that so many people have asked for. As a result, we would do well to examine this issue carefully and then reach the appropriate conclusions. If we need more money, if we need more personnel, $15 to $20 million is a drop in the bucket of this administration's $3 trillion budget. We can clearly afford to hire a few more people to do the job, if that is the government's real concern about the immigration laws; otherwise, we should have these employees come and explain why they think it is within their purview to get around the law, in the absence of congressional action. I suggest the absence of a quorum.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Georgia (Mr. Chambliss), the Senator from Oklahoma (Mr. Coburn), the Senator from New Hampshire (Mr. Gregg), the Senator from Alaska (Ms. Murkowski), and the Senator from Louisiana (Mr. Vitter). Further, if present and voting, the Senator from Alaska (Ms. Murkowski) would have voted ``yea.''

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Texas (Mrs. Hutchison), the Senator from Wyoming (Mr. Enzi), the Senator from Oklahoma (Mr. Inhofe), the Senator from New Hampshire (Mr. Gregg), the Senator from Oklahoma (Mr. Coburn), and the Senator from Kansas (Mr. Brownback).

Mr. KYL

Mr. KYL. Mr. President, first of all, I wish to thank the Republican leader, Senator McConnell, for his expertise and leadership on this issue. Secondly, as several of my colleagues have pointed out, the DISCLOSE Act is a direct assault on the first amendment right to free speech. Protecting political speech, guaranteed by the Bill of Rights, is one of our most sacred responsibilities. This is a partisan bill drafted behind closed doors by current and former Democratic campaign committee leaders. It is obviously written to disadvantage Republicans and favor special interests supportive of Democrats. The closed-door process under which the DISCLOSE Act was written contradicts its supporters' professed goal of transparency. It is a partisan rewrite of campaign finance laws without hearings, without testimony, without studies, without a markup--again, written behind closed doors with the help of lobbyists and special interests. The problems it purports to address are purely hypothetical since there have been no elections since the Citizens United case. I have seen no evidence of any abuse in the current election cycle. This legislation is an attempt to change the rules to protect incumbent candidates from criticism of unpopular decisions and positions. I know none of us like to be criticized, but we must uphold the right of others to criticize us. Even those of us who opposed the Bipartisan Campaign Reform Act--BCRA but also known by the name McCain-Feingold--recognize that its authors sought to avoid any partisan advantage. The new rules then applied to everyone, and they only applied after the subsequent election. The same cannot be said for the DISCLOSE Act. It is 117 pages in which the bill's authors pick winners and losers, either through outright prohibitions or restrictions that are so complex they achieve the same result. The effort is too political, benefiting traditional Democratic allies, such as labor unions, while placing burdensome restrictions on for- profit organizations and the associations that represent them. Let me give you one example regarding the union exemptions. The new law applies to government contractors but not their unions or unions with government contracts or government unions. It is obviously discriminatory. As Leader McConnell has asked, where in the first amendment does it say that only large and entrenched special interests get the ``freedom of speech''? Here is what the AFL-CIO president, Richard Trumka, said about the bill in April: Congressional leaders today took a vitally important first step to begin to address the Supreme Court's recent decision in Citizens United v. Federal Election Commission. The AFL- CIO commends these efforts and supports increasing disclosure and reexamining some current campaign finance rules. . . .It is imperative that legislation counter the excessive and disproportionate influence by business. Well, they have made sure it does. Unlike BCRA, the DISCLOSE Act has an effective date of 30 days after enactment. In other words, proponents want people to stop political speech now, before the midterm elections in November. Hundreds of diverse organizations oppose this bill, from the ACLU to the chamber of commerce. Let me just quote two. Here is a letter from several hundred of the Nation's leading trade association and business groups: By attempting to silence corporations' voice in the political process while enabling unions to retain their enormous influence, Schumer-Van Hollen is a patently unconstitutional threat to the elections process. Schumer-Van Hollen is a direct attack on the rights of the business community and the role our organizations play in the national political dialogue. And a letter from the National Right to Life organization: The overriding purpose is . . . to discourage, as much as possible, disfavored groups, such as the [National Right to Life Committee], from communicating about officeholders. . . .This legislation has been carefully crafted to maximize short-term political benefits for the dominant faction of one political party, while running roughshod over the First Amendment protections for political speech that have been clearly and forcefully articulated by the Supreme Court. So I hope my colleagues will recognize the damage they are doing to political discourse in violation of the first amendment that is a result of the legislation that has been drafted here for purely political advantage and will oppose the DISCLOSE Act.

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Nevada (Mr. Ensign).

Mr. KYL

Mr. KYL. Mr. President, I suspect my colleague, the senior Senator from Arizona, will have something in response to say to my friend from Iowa. But what I wish to talk about is a comment Secretary of the Treasury Geithner made on television yesterday, in which he said he thought it would be a good idea to raise taxes in this country and that he didn't think income taxes on the higher two of the five tax brackets will hurt economic growth. He also said he supports allowing the top capital gains rate to be increased by 25 percent, from 15 to 20 percent. I want to talk about that for a few minutes today. In this country, we have two goals: job creation and economic growth. We also want to reduce our Federal deficit and ultimately the Federal debt. So how do we promote investment? There are two basic theories. One theory is that if we spend a lot of money that we borrow from countries such as China on programs such as the stimulus program, we can create economic growth and jobs. That has not worked. We have 3 million more people out of work today than when the stimulus package was put into effect. In fact, unemployment was supposed to be 8 percent or so now with the stimulus package, and, of course, it is 9.5 percent and with no relief in sight. The other way to do this is through investment by businesses, both large and small businesses. I think most economists believe that if businesses have capital to invest, they can hire more people, create more output or productivity, and therefore produce both growth and jobs. So what we should be doing is promoting job creation and economic growth through private investment. How do we promote that? I know one thing you do not do, especially in bad economic times, is raise taxes. The last thing any business, especially a small business, needs--when you are asking them to hire more people--is to say: By the way, would you also give some money to Uncle Sam above what you are already contributing? We need it, and you can put off hiring that person you were going to hire for your business until later. We know that is not how you promote economic growth. You should not raise taxes, as I said, especially in a time like this. Secretary Geithner said he did not believe higher taxes would hurt economic growth. So I checked on what the President's chief economist said--Christina Romer, Chairwoman of the President's Council of Economic Advisers--to see whether she agreed with Secretary Geithner. Well, it turns out she very much disagrees. In a paper that has just been published in the June 2010 issue of the American Economic Review called ``The Macroeconomic Effects of Tax Policy Changes,'' she writes, among other things, the following--I am quoting now from page 764: Our estimates suggest that a tax increase of 1 percent of GDP reduces output over the next three years by nearly three percent. The effect is highly statistically significant. So output or growth is reduced by nearly 3 percent just over the next 3 years. She says on page 797: The key results-- And we are talking about the impact of tax changes on consumption and investment, which are the two key components to growth. She says: The key results are that both components decline, and that the fall in investment is much larger than the fall in consumption. In response to a tax increase of one percent of GDP, the maximum fall in personal consumption expenditures is 2.55 percent. . . . just slightly less than the maximum fall in GDP. The maximum fall in gross private domestic investment is 11.19 percent. . . . So think of it: Just raising taxes by 1 percent of GDP results in a decrease--or she calls it a fall--in gross private domestic investment of over 11 percent. So not only are you not contributing positively to investment and therefore hiring, but you are cutting it by 11 percent during this same period. She says on page 781: In short, tax increases appear to have a very large, sustained, and highly significant negative impact on output . . . the more intuitive way to express this result is that tax cuts have very large and persistent positive output effects. So there you have it: Tax cuts promote economic growth. Tax increases depress economic growth. They create a fall in both investment and consumption and therefore output, and the result is statistically significant. Secretary Geithner is wrong. Raising taxes will have a highly significant, negative impact on job creation, investment, and economic growth in our country. President Kennedy agreed with this a long time ago. He once said: An economy constrained by high tax rates will never produce enough revenue to balance the budget, just as it will never create enough jobs. The reason I quoted that is because the second goal we have--to reduce budget deficits and public debt--is often used as an excuse by those who want to raise taxes, saying: Well, we reduce debt by raising taxes. As President Kennedy said, if you have high tax rates, you are never going to produce enough revenue to balance the budget. You balance the budget with economic growth. The more growth you have, the more revenue is produced because people are making more money and they are paying more taxes. We know that historically. This is not in doubt. During times of economic growth, when people are doing well, revenues to the Treasury increase. In times like today, revenues are decreased. You are not going to be able to balance the budget in this kind of a situation by simply raising tax rates because--what did we just show a moment ago--raising tax rates depresses job creation, economic growth, investment. So you cannot do it by raising taxes. Indeed, I think my colleagues on the other side of the aisle have exposed themselves a little bit here because they never seem to have a concern about the deficit when it comes to spending. That is why they were able to spend over $1 trillion in an economic stimulus package and not pay for a variety of other things for which they increased spending. I thought the most interesting example was last week when they refused Republican offers to pay for the $34 billion cost of extending unemployment insurance. All of us wanted to extend unemployment insurance. That was not in doubt. The question was, Should we pay for it with offsets in spending elsewhere? In a $3 trillion budget, we said: There are a lot of places you can get the money, starting with unspent stimulus funds. So we could have paid for or offset the $34 billion cost of extending unemployment benefits. That was our proposal. The Democratic side said: No. We will not extend unemployment benefits unless we can add to the debt in doing so. We are going to vote no unless it adds to the debt. In the House of Representatives, the comment was made that they were philosophically opposed to paying for or offsetting the cost because they did not want to get into a position where they would have to find a way to do that in the future. So they rejected an offer that was made by at least one Democratic Senator to use some stimulus funding to offset the cost of unemployment benefits. No, they said, we don't want to do that. We do not want to offset the costs in any way. We want to add to the debt. So it seems a little hypocritical now for colleagues to come to the floor and say: Oh, we have this big deficit problem. We don't want to add any more to the debt. Let's raise taxes. Then they have the temerity to say to Republicans--who say, we do not want to raise taxes on anybody, on corporations, on businesses, large, small, individuals, or anybody else--to say: Well, then, in that case, you are going to have to raise taxes on somebody because the budget assumes the tax rates that currently exist are going to be increased next year. So if you are going to increase those tax rates for some people--let's say the top two brackets--how are you going to pay for that? We say: What is to pay for? Taxes should not be raised. They should not be raised on anybody. Several of our colleagues on the other side of the aisle are apparently in agreement with that. This is not the time to raise taxes on anybody. But in any event, if you say: Well, we have to raise taxes to reduce the budget deficit, then why just raise taxes on the top two income tax brackets? That would raise, over 10 years, $682 billion. But if you raise taxes on everybody, you could raise taxes by $2.731 trillion. Well, the obvious answer is, well, we wouldn't want to pay for that. We wouldn't want to offset the cost of that. But you have to figure out a way to offset the cost if we raise taxes on the upper two brackets. It is a circular argument that I suggest both makes no sense and is hypocritical. The bottom line is this: Small businesses will get killed by an increase in the rates of income tax--the so-called upper two brackets. Twenty million people are employed by small businesses that pay their taxes in those two brackets. As a result, what you are going to do is inhibit the growth of our small businesses. An increase in the top effective rate--this is from Douglas Holtz-Eakin--from 35 percent to 42 percent would lower the probability that a small business entrepreneur would add to payrolls by roughly 18 percent. So I think all of us realize that raising taxes, especially in those top two brackets, will inhibit growth because small business owners will have to pay the tax rather than hire someone. As I said before, according to the NFIB, there are more than 20 million workers in those firms directly targeted by the higher marginal rates. We would have to, in effect--and this came as a result of statistics presented to us by Senator Snowe, who is also on the Finance Committee--you would need to have economic growth of 5.8 percent--about twice as much as we have today--in order to return to a 5-percent unemployment rate by 2012. To get there by 2013, you would have to have an annual growth rate of 5 percent to get back to 5 percent unemployment. Well, how are we going to increase growth by that much? I come back full circle to my original point: Our goal is economic growth and job creation. You do not get there by raising taxes. So when my colleagues start talking about raising taxes on anybody--from the death tax to the capital gains tax to marginal rates--my question to them is, Given the fact that the Chairwoman of the President's Council of Economic Advisers has been so clear that this will inhibit job creation and economic growth, why would you want to do that? Why would you want to inhibit economic growth and job creation? The better way, if we are really interested in reducing the deficit, as we should be, is to begin to slow down the spending so that eventually we are not spending more than we take in. I will close with this point: Last Friday, the White House announced that it turns out the deficit for next year is going to be $1.47 trillion. That is about three times higher than the highest deficit with President Bush, and that was when the Democratic Congress was appropriating the money. The year before that, it was less than $200 billion. In fact, the exact deficit the last year Republicans were in control of the Congress and President Bush was President was $160 billion--$160 billion. That was 1.2 percent of GDP. For next year, it is going to be $1.47 trillion--$1.471 trillion--or 10 percent of our GDP. The answer is clear: The way to reduce our deficits and reduce our debt is by reducing spending. The way to economic growth is by not increasing taxes. So I hope my colleagues will consider this as we begin to debate the plans to finally achieve economic growth and job creation for the United States.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from South Carolina (Mr. DeMint) and the Senator from Missouri (Mr. Bond). Further, if present and voting, the Senator from South Carolina (Mr. DeMint) would have voted ``nay.''

Mr. KYL. Mr. President, I rise simply to insert into the Congressional Record two very interesting pieces from the Arizona Republic. The first is an op-ed, a column, by Bob Robb, who is one of the most erudite columnists I have ever read. He comments on the financial regulatory reform bill saying, among other things, that this new financial stability oversight council that is created under the legislation will have total control over what a lot of banks and businesses do. He describes this as being able to tell a company not only what capital it needs to maintain, but what products or services it can offer. It can even order a company to divest some of its holdings or lines of business, and even take over the company with the intent of completely liquidating it, and in many cases even without the ability to contest these decisions in court. He laments the fact that there will be no rules-based regulation of capital markets anymore; predicts it will be doomed to failure, and also talks about the beginning of the end for an independent Fed, which has significant responsibilities under this law, which he believes, and I agree, are inconsistent with its primary task, the entity in our country that is supposed to take care of the monetary policy of the country. The other piece is an article in the Arizona Republic of July 21. I will quote from the first three paragraphs: State and university employees with families can expect to see their monthly health insurance costs rise as much as 37 percent next year, depending on the type of plan they choose. It goes on to say: The Department of Administration-- That is to say, of the State of Arizona-- cites Federal health reform as the reason the State's health plans will carry greater expenses and higher premiums for its members. This is the latest example of the effect of the health care reform legislation on insurance premiums which are going to be rising around the country. But I did not expect them to rise 37 percent on our State employees next year. I ask unanimous consent that the column by Robert Robb and the newspaper article dated July 21 in the Arizona Republic be printed in the Record.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from South Carolina (Mr. DeMint) and the Senator from Missouri (Mr. Bond). Further, if present and voting, the Senator from South Carolina (Mr. DeMint) would have voted ``nay.''

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, in the Rose Garden on Tuesday, President Obama stood with three long-time job seekers and reminded us that out- of-work Americans want to find work, and no one here, of course, questions that. I hear every day from Arizonans who look for a job day after day, week after week. They are just getting by. I realize that few things can be more frustrating and demoralizing than struggling to find a job and that the effects of unemployment for families are deep and severe. President Obama would have the American people believe congressional Republicans have been blocking an extension of unemployment benefits in order to make some political point. He accused us of this again on Tuesday and claimed we are refusing to help out-of-work Americans. I wish to set the record straight. This is not a dispute about extending unemployment benefits. There is broad bipartisan agreement that we should do that. Republicans have voted several times in the past to extend benefits. I have. The dispute, rather, is over who should pay for those benefits. Should we finance this $34 billion obligation in the short term with a loan from a foreign government and pass the tab on to our kids and grandkids or should we pay for it now by cutting other Federal spending? That is the question. It is a matter of who is going to pay for the benefits we provide to people. I do not think we should be sending that tab to our kids. I believe we should pay it now. This is our generation. This is our problem today. We have an obligation to help take care of our fellow citizens when they are in time of need. We should find a way to pay for that. Our kids and grandkids are going to have their own problems in their day. We do not need to compound those problems by adding our obligations to those that they will need to deal with. Republicans have offered an array of constructive solutions to the problem, proposals to pay for what we are spending, including using unspent money from the President's failed stimulus package. Almost half that money remains available. We have tried five times to pass an extension of unemployment benefits that does not add to the debt. But our Democratic colleagues have repeatedly rejected our proposals. So the principal they are defending is not the need for unemployment insurance extension, it is that they will not pass a bill unless it adds to the debt. They will not pass a bill to extend unemployment benefits unless it adds to the debt. The extension likely would have passed weeks ago if Democrats had simply agreed to pay for it now by cutting other Federal spending. In this $3 trillion budget that we have, obviously, there are plenty of places for us to find the offsets. Our national debt has been increased again and again during this recession. That creates long-term burdens for everyone--the employed, the unemployed, and generations to come. While President Obama argues that we have increased the debt in the past to pay for other items, I will note that we were not in the middle of a debt crisis back then, for one thing. I suggest we pass a bill that is paid for now and recalibrate efforts to encourage private sector job creation. As unemployed Americans know, while unemployment benefits provide a lifeline, they are only a temporary fix. They are not a substitute for new private sector jobs. I will venture a guess that everybody who is unemployed today would much rather have a job tomorrow than another check from the government for unemployment benefits. So what do we do to create jobs and get the economy moving again? Well, you do not do it by borrowing more money. The President's job- creation initiatives have been a bust. Since his enormous stimulus bill passed in February of 2009, the private sector has lost over 2 million jobs. While there has been some anemic economic growth since the recession started, employers are still clearly reluctant to hire. That probably has to do with the reality that businesses, both small and large, look down the road. They see massive tax increases beginning next year, on top of all the new regulations imposed by this administration. They hear about a proposed national energy tax and proposed new pro- union policies. So they are reluctant to take a chance on the future because of all the uncertainty and the burdens we have already placed upon them. The key to job creation, and thus helping unemployed Americans, is having stable and sound policies in place for employers to make long-term decisions. More spending, taxing, regulating, and debt are not the answers. I would hope we can find a way to extend unemployment benefits without asking our children to pay the tab for this generation's problems. I yield the floor and I suggest the absence of a quorum.

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

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

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

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

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

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

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Idaho (Mr. Crapo).