Jon Kyl

Mr. KYL

Mr. KYL. I am happy to share the amendment, of course. I will withhold for a moment so the Senator can see what the amendment is, and perhaps we can move forward.

Mr. KYL. The following Senator is necessarily absent: the Senator from Kansas (Mr. Roberts).

Mr. KYL. Madam President, I ask unanimous consent to lay aside the pending amendment for purposes of offering an amendment.

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

Mr. KYL. Madam President, let me describe this amendment briefly and note that it is my understanding that when Senator Leahy is able to be on the Senate floor, it is his intention to suggest that we take this amendment by unanimous consent. It has been worked out with representatives on both sides of the aisle, but I would like to describe it briefly. This is an amendment relating to section 4 of the bill, which amends the False Claims Act. My amendment replaces the bill's proposed definition of the word ``obligation,'' which has important implications for the so-called ``reverse'' False Claims Act pursuant to which private parties may be held liable for failing to pay an obligation due to the United States. This amendment originally grew out of concerns about the underlying bill that were raised by the Chamber of Commerce and other business groups. Having reviewed those concerns, I have concluded that some of them could only arise under a strained reading of the bill. The bill's new definition of the word ``obligation,'' in particular, posed several problems. The original language spoke of ``contingent'' obligations. Such contingent or potential duties could include duties to pay penalties or fines, which could arise--and at least become ``contingent'' obligations--as soon as the conduct that is the basis for the fine has occurred. Obviously, we don't want the Government or anyone else suing under the False Claims Act to treble and enforce a fine before the duty to pay that fine has been formally established. It is unlikely that Justice would ever have brought suit to enforce a claim of this nature, but the FCA can also be enforced by private realtors who often may be motivated by personal gain and not always exercise the same good judgment that the Government usually does. To preclude such a reading of the act, my amendment strikes contingent obligations from the FCA's new definition of ``obligation.'' My amendment also makes a few other housekeeping changes to the definition of ``obligation.'' It removes the words ``quasi-contractual relationship.'' A ``quasi-contract'' is a remedy for a breach of duty, not an independent source of a duty. The amendment also makes clear that the words ``similar relationship'' only modify the words ``fee- based relationship'' and not the entire list of relationships that precede that term. Under some readings of the rule of the last antecedent, the comma in the committee-reported bill that preceded the words ``or similar relationship'' could be read to reverse the usual presumption of that rule and have the words ``similar relationship'' modify all of the words in that list. My amendment makes clear that ``similar relationship'' only modifies ``fee-based relationship.'' As a result of discussions with the sponsors of the bill, I have also agreed to allow my amendment to add duties arising out of regulations, rather than just statutes, to the list of obligations made actionable under the law. I declined, however, to also allow obligations to be enforced that arise out of a mere rule. The term ``rule'' is defined at section 551 of title V, and as that definition makes clear, the term is far too broad. It can include all manner of rules of which defendants would have no reasonable notice. Regulations, on the other hand, are published in the Federal Register in the Code of Federal Regulations, and so Congress can reasonably expect participants in regulated industries to have notice of them. Thus, as amended, the term ``obligation'' encompasses duties arising out of statutes and out of formal regulations published in the CFR. I might also say a few words about aspects of the definition of obligation that I ultimately concluded that it was not necessary to address in this amendment. At the Judiciary Committee's mark up of this bill, I circulated an amendment that would limit obligations arising out the retention of any overpayment so as to make clear that no obligation arises if the defendant is pursuing some type of administrative, judicial, or other process for reconciliation of alleged overpayments. The sponsors of the bill raised the concern, however, that such a safe harbor might immunize parties that intentionally and maliciously obtain an overpayment, and then spend years exhausting a reconciliation process, all in bad faith and knowing full well that they must repay the money, but earning interest on the overpayment in the interim. Apparently incidents like this have occurred, in cases involving sums that allowed the defendant to earn tens of millions of dollars in interest. The sponsors of the bill also noted to me that, under subparagraph (G)'s modification of the reverse False Claims Act, avoiding or decreasing an obligation is only actionable, in relevant part, if the defendant ``knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.'' Therefore, a good-faith pursuit of a reconciliation process would not be actionable. I asked my staff to research the meaning of ``knowingly and improperly'' to confirm that a person who pursues reconciliation of an overpayment in good faith could not be held liable under the reverse False Claims Act. The answer that I received is that the term ``knowingly and improperly,'' though infrequently used in the caselaw, is consistently construed to mean that a person either acted with bad intent or that he employed means that are inherently tortious or illegal. For example, the State of Massachusetts uses the standard of ``knowing and improper'' to determine whether a business competitor's inducing a third party to breach a contract constitutes tortious interference with contract. See Boyle v. Boston Foundation, Inc., 788 F.Supp. 627 (D. Mass. 1992); Restuccia v. Burk Technology, Inc., 1996 WL 1329386, at *3 (Aug. 13, 1996). And as the cases giving content to the Massachusetts standard make clear, under that test the ``[d]efendant's liability may arise from improper motives or from the use of improper means.'' United Truck Leasing Corp. v. Geltman, 406 Mass. 811, 816 (1990) (quoting Top Service Body Shop, Inc. v. Allstate Ins. Co., 283 Or. 201, 209-210 (1978). See also United Truck Leasing at pages 816-817, quoting other cases as construing this standard to require an ``improper purpose or improper means.'' The Top Service Body Shop case, quoted by the Massachusetts court, further elaborates, at footnote 11, on what types of means constitute ``improper means.'' These are noted to commonly include ``violence, threats or other intimidation, deceit or misrepresentation, bribery, unfounded litigation, defamation, or disparaging falsehood.'' In the False Claim Act context, this list may include other improper means, but ``improper means'' must be means that are malum in se--that is, means that are inherently wrongful and constitute an independent tort. Though less carefully considered than the Massachusetts intentional- interference jurisprudence, other judicial uses of the words ``knowing and improper'' confirm that the term would not reach good-faith exhaustion of procedures for reconciling an overpayment. In the Matter of Banas, 144 N.J. 75, 81 (1996), for example, reprimands a lawyer for ``knowingly and improperly retaining--his client's--$5,000 payment.'' And the court makes clear that it bases this conclusion on a previous finding that the lawyer ``knew from the beginning that the purpose of the payment'' was to satisfy a condition that he had not met. See Banas at 80. In another attorney-sanctions case, In re Aston-Nevada Limited Partnership, 391 B.R. 84, 102 (D. Nev. 2006), the court found that the lawyer ``repeatedly, knowingly, and improperly'' misused particular words in his filings, and then emphasized that the lawyer's ``prevarications and misstatements were deliberate and not careless.'' Given that the words ``knowingly and improperly'' have a fixed meaning that, at the very least, requires either improper motives or inherently improper means, the changes made by this bill cannot be read to make actionable the retention of an overpayment when the defendant is pursuing in good-faith the exhaustion of a reconciliation procedure. It is with this understanding that I have declined to insist on further qualification of the bill's predication of liability on the retention of an overpayment. Finally, as a matter of usage, I would note that, contrary to the wording of the bill's new definition of ``obligation,'' duties arise from contracts and the like, not from ``relationships.'' The bill's language is somewhat Oprahfied in this regard, but given that the sponsors have accommodated me on other, more substantial issues, I did not think it worth forcing a rewording of the provision to address this problem. Other groups have also suggested the bill's new definition of the word ``claim,'' by encompassing situations where money is spent or used ``to advance a government program or interest,'' could make actionable under the False Claims Act any garden-variety overbilling or underpayment of a contractor by a subcontractor if some Federal money is involved in the project. I think this is an unreasonable reading of the bill that is precluded by the committee report, as well as by common sense. The report makes clear that the purpose of the new definition of ``claim'' is to overrule the Totten and Allison Engine cases and preclude application of a formalistic presentment requirement of an unnecessary intent requirement, and to restore the previous understanding of the law. And that previous understanding, as well as common sense, dictate that a particular transaction does not ``advance a Government program or interest'' unless it is predominantly federal in character--something that at least would require, as the report notes in footnote 4, that the claim ultimately results in a loss to the government. Obviously, the government does not intend to make actionable under the FCA any garden-variety dispute between a general contractor and a subcontractor simply because the general receives some federal money. On the other hand, if the transaction is still predominantly Federal in character, and the false claim results in a loss to the government, recovery under the FCA should not be precluded simply because the claim was not directly presented to the government, or because the malfeasant did not specifically intend to defraud the government. Madam President, I ask unanimous consent to lay aside this amendment for the purpose of calling up four other amendments pending at the desk, and those numbers are 986, 987, 988, and 989.

Mr. KYL. I move to lay that motion on the table. The motion to lay on the table was agreed to. Amendment No. 985

Mr. KYL. Mr. President, I will describe this amendment in one sentence so as not to be more confusing than it otherwise would be. It is clearly a technical amendment and has strong support on both sides. It modifies the bill's definition of the term ``obligation'' as used in the reverse False Claims Act to exclude contingent obligations, thus precluding the possibility that conduct that makes a defendant liable for a penalty or a fine could become actionable under this law before that fine is actually established or assessed. I believe the amendment is agreed to on both sides.

Mr. KYL. The following Senator is necessarily absent: the Senator from Kansas (Mr. Roberts).

Mr. KYL. I will explain. The other three amendments are precisely the same, except they have a different dollar amount in them. I will ask for their consideration later, or for their introduction at a later time. At this point, I defer to the Senator from Oklahoma if he is ready.

Mr. KYL

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

Mr. KYL. Mr. President, I rise in opposition to Ambassador Christopher Hill's nomination to serve as the next U.S. Ambassador to Iraq. As Senator Brownback and I stated in a letter to Secretary of State Clinton regarding Ambassador Hill's nomination: Our role as United States Senators is not to choose the President's envoys. However, in the exercise of the Senate's constitutionally mandated role of advising and consenting to nominations, we are required to judge the qualifications by ambassadorial candidates on several levels, not least their past record of dealing with our own branch of government. I do not believe Ambassador Hill has the requisite experience to be our Ambassador to Iraq at this critical time in that young democracy's history. Beyond that, serious allegations have been made by members of the press as well as Members of this body that call into question Mr. Hill's ability to follow orders and his willingness to be forthcoming and truthful with the Senate itself. I believe these allegations merit much more rigorous review. Many of my colleagues believe that Iraq is at a critical and fragile juncture and that now is no time to delay the installation of our Ambassador to that country, and to them I say I could not agree more. However, I would also say to them it is even more critical that we send an Ambassador who has the proper experience for the tough task ahead of him. We should be sending someone who understands the complex and unique historical, cultural, and tribal intricacies of those with whom he will be interacting and negotiating. We should be sending someone who speaks their language, literally. We should be sending someone who, over their distinguished career at the State Department, has at least had one assignment to the Middle East. Ambassador Hill has had none. At no time during his 32 years has he had an assignment there, nor does he speak Arabic. Surely, the State Department has at least one distinguished diplomat who has career experience in the Middle East. Some of my colleagues argue that Ambassador Hill's experience in Kosovo and Bosnia give him crucial experience solving complex problems of ethnic civil wars. After 6 years of, I would hope, lessons learned, I am sure my colleagues would agree with me that we should not approach the cultural and ethnic nuances in Iraq with a same-thing-only- different diplomacy. I certainly hope the Obama administration is not taking a one-size-fits-all approach to the world. Iraq's history is not that of Kosovo or Bosnia. Its cultural and ethnic makeup is completely unique. We need someone who understands Iraq's history, culture, and, yes, language. That is why the choice of Ambassador Ryan Crocker was so inspired--a diplomat who, over his career at the State Department, had been assigned to Iran, Qatar, Lebanon, Egypt, Syria, Afghanistan, and Pakistan--all before he took on his assignment as Ambassador to Iraq. In addition, he spoke Persian and Arabic. Much of our recent success in Iraq is because of Ambassador Crocker's lifetime of knowledge and understanding of Iraq and its neighbors' cultural and ethnic history. While I don't expect a carbon copy of Ambassador Crocker, I do assert again that surely the State Department has to have at least one distinguished diplomat with relevant experience in the Middle East. If it doesn't--if its bench for Iraq is one diplomat deep--we need to find out what is going on over at the State Department. Moreover, I worry what signal it sends--when coupled with the recent campaign rhetoric--of our commitment to sustain the hard-fought gains of the surge by sending an ambassador to Iraq with no experience in the region. What message does that send to Iraqi leaders who are nervous that the U.S. commitment to finish what we started has ended? In addition to his lack of Middle East experience, recent press reports about Ambassador Hill's conduct as head of the U.S. delegation of the six-party talks on the North Korean nuclear issue raise serious doubts about his fitness to serve in such a sensitive position as Ambassador to Iraq. Twice, Ambassador Hill allegedly disobeyed orders from the President and Secretary Rice not to engage in any bilateral meetings with the North Koreans. According to Stephen Hayes of the Weekly Standard: On July 9, 2005, [Secretary of State] Rice had given approval for a trilateral meeting with the Chinese and the North Koreans in an effort to get the North Koreans to return to the six-party talks on their nuclear program. . . . The Chinese didn't show up, as they had promised. Hill nonetheless met alone with the North Koreans and gave them an important propaganda victory. We cannot afford to have diplomats exceeding their authority and engaging in freelance diplomacy when they see fit and in direct opposition to the wishes of the President and the Secretary of State. That is why Senator Brownback and I wrote to Secretary Clinton and asked her to provide us with all relevant cables and correspondence regarding Ambassador Hill's instruction for these two meetings so that we can establish the facts. These matters could have been cleared up by now if the State Department had responded to the letter that Senator Brownback and I sent. It has not chosen to do so. We have no response. Finally, Senator Brownback raised questions about Ambassador Hill's truthfulness to the Senate. The Senator spoke to this matter. The position of U.S. Ambassador to Iraq is among the most sensitive missions we have in the world at this time. It is critical that ambassadors follow the letter and spirit of the orders given by the President and the Secretary of State. It is equally important that anytime an ambassador gives assurances to the Senate that something will be carried out, or certain actions will not be engaged in, that those assurances be rock solid. Mr. President, for the reasons I have articulated--and I associate myself with the remarks of Senators Brownback and McCain--I regret that I cannot support Christopher Hill's nomination to replace Ambassador Crocker as U.S. Ambassador to Iraq.

Mr. KYL. The following Senator is necessarily absent: the Senator from Kansas (Mr. Roberts).

Mr. KYL

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

Mr. KYL. The following Senator is necessarily absent: the Senator from Alaska (Ms. Murkowski).

Mr. KYL. The following Senator is necessarily absent: the Senator from Alabama (Mr. Sessions).

Mr. KYL

Mr. KYL. Mr. President, I ask for the yeas and nays.

Mr. KYL. Mr. President, the Senate just voted to support estate tax relief set at $5 million per person to be exempted and at no more than a 35-percent rate. The Durbin amendment creates a point of order unless you have a rate of at least 45 percent and a $3.5 million per person exempted amount. It is directly contrary to what we just voted for. Were this to be adopted, you would have two absolutely contradictory instructions--one for a $5 million exempted amount; the Durbin amendment, $3.5 million. Having voted the way we did, the Durbin amendment should be defeated. To the extent that it suggests there should be other tax relief, I stipulate to that, I am all for it. But the point of order relates to anything above the $3.5 million or below the 45-percent rate. I urge my colleagues to vote against it.

Mr. KYL. It is.

Mr. KYL. Mr. President, during these recent budget debates, I have been reminded that some in Washington used to mock President Reagan for the ``rosy economic scenarios'' they said his budgets relied upon. But never--until now--has any President's economic model differed so fundamentally from those predicted by most independent analysts. President Obama's budget chief, Peter Orszag, predicts that from 2010-2013 the economy will grow 4 percent a year. But the blue-chip economic forecasters say it is much lower--about 2.7 percent. That is a big difference when we are talking about hundreds of billions of dollars. President Obama claims his budget will halve the deficit by 2014. But the way it gets there is by first running up a huge deficit and then cutting that number in half. The Congressional Budget Office now projects a $1.669 trillion deficit in 2009 that will bottom out at $658 billion in 2012, which is still more than 40 percent above the highest deficit during the Bush administration. But the Congressional Budget Office also says the deficits accumulated by Obama's budget will then surge to $9.2 trillion in 2019. President Obama has said he will cut taxes for 95 percent of Americans. But his budget would raise taxes by $1.4 trillion over 10 years. It not only lets some of the existing tax rates expire--thus raising taxes--but implements a colossal energy tax that will impact every American household--regardless of income--and is estimated to drop an additional $3,168 annual bill on every family, on top of its existing energy costs. Remember, candidate Obama told us that under this energy plan, ``electricity rates would necessarily skyrocket.'' Why is this a good idea? Economic historian John Steele Gordon draws this analogy to an energy tax in the recent issue of Commentary magazine: ``If passed it will act on the economy as a whole exactly the way a governor acts on a steam engine, increasingly resisting any increase in revolutions per minute. . . . The more the economy tries to speed up the more [this tax] will work to prevent it from doing so.'' Think about the incongruity between the growth predicted in President Obama's budget and the policies his budget would partially implement. This budget would saddle American taxpayers, businesses, and industry-- everyone--with a bevy of new tax increases and regulations that, once enacted, will unavoidably harm job creation and growth by making it more expensive for businesses to hire and by removing money from the private economy and transferring it to Washington. How can our economy recover with the Government hampering job creation and growth? Facts are stubborn things, as President Reagan used to say. We know that raising taxes in time of recession has never helped the economy grow. Why would this time be different?

Mr. KYL

Mr. KYL. That would be included within this list we have, however, with or without the side by side?

Mr. KYL. Of course.

Mr. KYL. Mr. President, last fall, in a debate with my Arizona colleague, Senator McCain, President Obama decried the ``orgy of spending and enormous deficits'' that occurred under President Bush. At a recent press conference, the President told us that America must shun the ``borrow and spend'' policies of the past and embrace plans to ``save and invest.'' I agree that we have to curtail Government spending now to protect future generations from historic debt. So why, after denouncing deficit spending, is President Obama proposing to borrow and spend more than any President ever? His budget is not only the biggest in history; it also creates more debt than the combined debt under every President since George Washington. Senator McCain told us during the campaign that spending and deficits are two sides of the same coin, that President Obama's spending promises would raise deficits to unsustainable levels; and that huge tax hikes--and not just for the wealthy--would be required to pay for it all. Now, the President's own Office of Management and Budget Director Peter Orzag has confirmed what Senator McCain said all along, that: the budget will lead to ``rising debt-to-gross domestic product ratios in a manner that would ultimately not be sustainable.'' Let's consider some numbers to put that into perspective. Last year we had a $459 billion deficit. The Congressional Budget Office now projects it will more than triple this year, to $1.669 trillion deficit. This budget will double the public debt in 5 years and triple it in 10. This budget does not contemplate one-time investments followed by years of reduced spending. Instead, billions in new outlays will continue indefinitely. So it is not just about massive spending, but about the permanent accruement of power in Washington. After bottoming out at $658 billion in 2012--a level still more than 40 percent above the highest deficit during the Bush administration-- the Congressional Budget Office projects the total debt to increase to $9.2 trillion in 2019, or 82.4 percent of GDP! The Washington Post recently editorialized, ``President Obama's budget plan would have the government spending more than 23 percent of gross domestic product throughout the second half of the this decade while collecting less than 19 percent in revenue.'' Is this the legacy we want to leave for the next generation? Unprecedented debt? And let's not forget the finance charges. Beginning in 2012 and every year thereafter, the Government will spend more than $1 billion per day paying finance charges to holders of U.S. debt. What does this mean for the average American family? Federal spending on finance charges for our Government's debt will be about $1,500 per household for 2009. Under President Obama's budget, this number would soar to nearly $5,700 per household by 2019. The interest on the national debt would be so big that it would be the largest single expenditure item in the budget by 2019. Then there are the tax increases this budget contemplates. President Obama said he will cut taxes for 95 percent of Americans. But his budget would raise taxes by $1.4 trillion over 10 years. It not only lets some of the existing tax rates expire--thus raising taxes--but implements a new $646 billion energy tax that will impact every American household--regardless of income--and is estimated to increase energy costs for every family by $3,168 annually. And it's described as a ``down payment,'' meaning there is more to come. What about President Obama's suggestion that this deficit spending constitutes ``investments'' for the future? Most of us would agree that short-term deficits are sometimes necessary to help finance future prosperity. As Stephen Moore writes in the latest Weekly Standard, ``The 1980s deficits were probably one of the highest-return investments in American history. We bought a victory over the Evil Empire in the Cold War and borrowed to finance reductions in tax rates that launched America's greatest period of wealth and prosperity: 1982- 2007.'' But much of the new spending in this year's budget is not what the IRS or a well-run business would classify as an investment. Most of it is earmarked for services whose long-term value is difficult to measure. I'll quote Stephen Moore's article again: ``The debt we are now incurring is paying for windmills . . . new cars for federal employees, weatherizing homes, high-speed trains to nowhere, and the like. It buys almost nothing of long-term economic benefit.'' Senator McCain was right. President Obama has promised to spend so much that we are looking at record deficits and tax increases on everyone just to start paying for it all. We need to get a handle on this budget before it is too late.

Mr. KYL. I thank the chairman, and I ask unanimous consent to lay aside the pending amendment for the purpose of offering an amendment.

Mr. KYL. Mr. President, at this time, I call up amendment No. 793, relating to comparative effectiveness research.

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