Jon Kyl

Mr. KYL

Mr. KYL. I am just about done propounding my request, but I am happy to yield.

Mr. KYL. Mr. President, I am happy to respond to my colleague that our proposal is to move forward with a bipartisan approach rather than the partisan approach which, of course, I opposed. In that regard, I, therefore, suggest that we simply extend existing law, which this Senate overwhelmingly supported just 6 months ago, for another 18 months, a proposal that had been made by the chairman of the Senate Finance Committee that would allow us to solve this problem not in a partisan way but in a bipartisan way. Therefore, I ask unanimous consent that the Senate proceed to the immediate consideration of a Senate bill which I will send to the desk. It is a clean 18-month extension of the December Medicare bill. I ask unanimous consent that the bill be read a third time and passed, and the motion to reconsider be laid upon the table.

Mr. KYL. Mr. President, might I conclude with a brief remark?

Mr. KYL. I wish to express disappointment. Again, we are trying to simply allow the Senate to move forward, in a bipartisan way, to resolve a problem we all need to resolve. This would extend the existing law for another 18 months, something that had been, in fact, proposed by the chairman of the Senate Finance Committee. I am disappointed we are not able to do this.

Mr. KYL

Mr. KYL. Madam President, as we began this day, the Senate had pending before it a very important piece of legislation addressing the necessity of extending some provisions in our current Tax Code that enable our businesses to compete with others abroad. There were tax provisions, for example, that provide tax credits for businesses that invest in research and development. I think everyone in this Chamber supports extending those important provisions of the Tax Code, yet we cannot consider the legislation and get it done. In addition, we have soon-to-be-pending important legislation on housing to deal with the crisis that has gripped this country in the last year or so. But instead of taking those matters up and debating them and getting the people's business done, we have taken some time out, pursuant to the Democratic leader's change in schedule here, to talk about change the Democrats would bring. It is important to note that Republicans are not in charge of the Congress. Democrats have a majority in both the House and Senate and have had for the last year and a half. I submit if Republicans were in charge today, we would be using this time on the Senate floor to be working on the people's business--at least the two items I mentioned before--rather than taking time out to have a debate about partisan political matters. But as long as we are talking about change that the Democrats would bring, I suggest we have no better place to turn to, to see exactly what that would be, than what the Democrats did do when they were in charge this year. It is the one piece of legislation they have succeeded in passing. It is a budget. What does the Democratic budget show us about what they would do if they were in charge for another 2 years? The first thing that is notable about this budget is it calls for the largest tax increase in the history of the world; in the entire history of this country. American families and the economy cannot afford this kind of change. The last thing you want to do in time of economic downturn is to raise taxes. Yet that is exactly what the Democratic budget would do. Every single taxpayer would face a tax increase in a little more than 2 years, unless Congress acted to affirmatively stop it. It would hit 116 million American households. This is not just a tax on the rich; every single American household. The child tax credit would be cut from $1,000 to $500 per child. The marriage penalty would be reimposed, so that many married couples would again pay higher taxes than they would have they had remained single. When Republicans were in charge, we created a 10-percent lower tax bracket to help those with lower incomes, reducing it from 15 percent down to 10 percent. That would be repealed. The bottom rate would once again go up to 15 percent, a 50-percent increase for our lowest income taxpayers. Every tax bracket above the 15-percent bracket would also be raised. A family of four with $50,000 in income would pay $2,300 more in taxes, according to the Senate Budget Committee. That is a lot of money if you are trying to save for your family or if you are worried about gas prices. The investment taxes we have in this country--it used to be, years ago, that was mostly for people who made more money. Now we know that American families saving for the future--seniors living on retirement incomes, people who have pension plans, the teachers' pension, whoever it might be--all would see dramatic tax hikes under the Democratic budget because these proposals hit investors, and over half of Americans are now investors. The capital gains rate would increase by a third, a 33-percent increase in the rate, and the dividends rate would jump an unbelievable 164 percent under the majority's plan. Let's talk about seniors who report dividend income. That is where a lot of their income comes from. Nationwide, according to the Joint Committee on Taxation, 67.6 percent of seniors reporting dividend income had adjusted gross incomes of less than $50,000. These are not rich people--people who make less than $50,000. That is who gets hit. How about capital gains? Same source--40.5 percent of all seniors reporting capital gains had adjusted gross incomes of $50,000 or less. We are not hitting the rich. We are hitting folks with incomes of less than $50,000 a year. How about the engine of the economy, the small businesses, the entities that create almost all of the new jobs in our country, half of which are women owned? More than 75 percent of all filers in the top tax bracket report small business income. So you increase that tax bracket and you are increasing the taxes on small businesses. You are not increasing the taxes on corporations. Small businesses would have a higher tax rate than corporations. It would go from 35 percent to 39.6 percent. Is that change we want in America? I think not. Raising taxes on small businesses will hurt their ability to grow and create good-paying jobs. They create 70 percent of all new jobs in America and it would make it impossible for them to provide health insurance and other benefits to their employees. Let's look to Senator Obama's tax plan. A look at his Web site reveals some interesting things. First, he has no plans to prevent these tax increases I talked about from going into effect. His proposal is to give a $500 tax credit per worker. So rather than preventing these increases in taxes I talked about, he would promise a $500 tax credit--up to $1,000 per family--only if you had an income of less than $75,000. We believe the first order of business ought to be to prevent this massive tax increase called for in the Democratic budget. Senator Obama would allow this $2,000 per family tax hike to go into place and in exchange would give each worker $500. Obviously, the Government picks up the other $1,500 and the reason is because of the spending that Senator Obama and the Democratic majority would engage in. The budget I talked about before, interestingly enough, has almost to the dollar an increase in spending equaling the increase in taxes, so you know precisely what the plans are here if Democrats have another 2 years in power. I think most Americans would prefer the $2,000 in tax savings under the Republican proposal to the $500 tax credit under Senator Obama's proposal. Again, change that I do not think the American public would benefit from. How about the capital gains tax increase that Senator Obama proposes? I talked about capital gains before. It affects seniors. It affects people with incomes of less than $50,000 a year. He says he might allow that rate to go back up to 28 percent and--increasingly he said this-- even if it were proven that it would not collect $1 more in revenue for the Federal Government. He said, instead, he would do it--this was during the April ABC debate--for fairness. But I am asking here, is it fair to punish investment? Our tax system treats capital gains at a lower rate because they have already been taxed once before. They have been taxed when the business earned the money and they are taxed again when the investor in that business has an asset and has to pay the taxes on it. This lower rate mitigates that taxation. That is fair. What is not fair would be to take that rate up to 28 percent. That is not change that would help the American people. I think most Americans understand that to help business we need to help those who invest in business. That is what helps the economy grow. That is what creates jobs. It is what increases our standard of living. Then there is one other proposal that Senator Obama proposes, perhaps as a result of the negative reaction to the increase in capital gains even if it produces less revenue. He says he ``would propose to eliminate all capital gains taxes on startup businesses to encourage innovation and job creation,'' according to his Web site. That I can agree with. But if the policy is good for startup businesses to encourage innovation and job creation, why wouldn't it be good for all of the other small businesses too? My wife had a small business. She is not just starting one up; she used to have one. She wouldn't be able to take advantage of that, but somebody just starting one would? What is the fairness in that? If it is good enough for those who are starting up, it ought to be good enough for those who can create more jobs and improve our economy. Finally, he has a proposal on the payroll tax to increase taxes, which money would presumably go into the Social Security trust fund to be spent by the Congress, since there is no way to protect the money in a lockbox. We tried that before. So since Social Security taxes are not needed today, not all of them, to pay for Social Security benefits, the difference between what we collect and what we have to pay out to seniors is simply spent by Congress. This would be another tax increase, not for seniors in retirement, but for Congress to spend. It would increase on all incomes above $250,000. It is capped right now at $102,000 in income. The reason is because Social Security taxes are capped relative to the level of benefits. Benefits are also capped. If you ever break that tie, then you are going to have a welfare program rather than the Social Security program. That would not be change that is good for America. I yield the floor.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from New Mexico (Mr. Domenici) and the Senator from Arizona (Mr. McCain).

Mr. KYL

Mr. KYL. Mr. President, I do object. I wonder if I may make one brief comment.

Mr. KYL. Mr. President, I wish to make the point that when we do extend unemployment benefits, if we do, the Senate needs to weigh in on its ideas about how it ought to be done, for one thing. The House- passed bill, which I don't think we want to consider, eliminates the 20-week work requirement which has been the law now since 1981. So theoretically someone could work a very short period of time and be entitled to this 13-week extension, something I don't think we want to change. As a result, we would like the Senate to weigh in and get it done the right way. For that reason, I have to object to bringing the House bill up at this time.

Mr. KYL. Mr. President, if I might further address the majority leader then, I have several concerns. I highlighted one.

Mr. KYL. I appreciate that. I think there are some issues the Senate wishes to modify in the proposal. The offer to work together is a fair one, and that is how we ought to proceed.

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Arizona (Mr. McCain).

Mr. KYL

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

Mr. KYL. Mr. President, in a couple of hours we are going to be voting again on cloture and we will be making a choice between two different points of view. We did this 2 weeks ago, a week ago last Thursday, and the result was that cloture was not invoked on the House- passed so-called tax extenders package, and I think the same result will end up being the case this evening. It is essentially a choice between the Democratic leadership trying to do this in a partisan way by simply bringing up the House bill and trying to push that through, or getting together, as we have done in the past, in a bipartisan way, to ensure that the tax provisions we all support and we all want extended into law are done in a way that does not require that taxes be increased in some other part of the Tax Code. Republicans do not believe it makes sense to keep existing tax policy right where it is by having to raise taxes in another part of our economy, sometimes on the very same people who are paying the tax we are extending. Extending current tax policy is not a tax cut. Extending current tax policy is just that, it is maintaining the status quo, and we don't believe we should have some rule, in effect, that says when we continue exactly what we have in tax rates, somehow or other we have to raise other taxes in order to pay for that. That doesn't make any sense. It is basically the difference between two philosophies. The Republican philosophy starts with the proposition that money belongs to the people--we the people--and we send a certain amount of that back to Washington and to our States to help run a government that we all understand we need to pay for. But originally the money belongs to the people. And the question is, How much can the people afford to give up? In times of economic downturn, such as we are facing today, it is not wise policy to take a lot of money from the private sector. In fact, we made a decision, the President and the Congress, to actually give back some of that money to the taxpayers. It was the tax rebate, the so- called stimulus package. Some people have already received their $300 or $600 checks. The idea is when we have an economic situation such as we do today, you don't take more money from the people. If anything, you try to help them keep what they have. There are those on the other side, however, the Democratic side, who have a different view. They start with the premise that the Federal Government and how much money it has and how much money presumably it needs--and if the Federal Government needs more money because Congress is spending more money--then where else are we going to get it? Well, we have to take it from the people. If the Federal Government has a tax rate or a tax policy, such as a research and development tax credit that expired last year and we want to continue to provide that for this year, these people believe we need to tax the private sector. We need to tax taxpayers more money in order to, in effect, make up for the extension of that research and development tax credit. Now, we don't think you have to make up for anything. You are keeping it exactly where it is today. You are not cutting taxes, you are keeping taxes right where they are. The other side says, no, we have a rule called pay-go, and it means even if we keep taxes exactly where they are today, we have to raise taxes to, in effect, pay for that. It is a nonsense policy. It hurts the private sector, it hurts businesses, it hurts American families, and it is the last thing you want to do in a time of economic downturn. That is why we have two different philosophies here. Our philosophy tonight says vote no on this cloture petition, because at the end of the day we all understand we are going to extend the current tax policy, we are going to extend the research and development tax credit and all of the other similar policies, but we don't have to raise taxes to do that. So we are not going to do that. There is an easy way and a hard way, in other words, to get this done. There are some other things wrong with the House bill. Even if that were the basic debate, there are some other reasons why we wouldn't want to take up the bill that is coming to us from the House in the first place. For one thing, it doesn't do something very important, and that is to extend the relief from the alternative minimum tax, or the so-called AMT. This was a tax originally designed to hit millionaires and it ended up, in effect, hitting everybody else. In fact, this year there are something like 23 million people--23 million filers--who would be affected by the alternative minimum tax if we did not once again relieve them from that liability. So each year we pass a bill that says you don't have to worry about paying the AMT this year. Actually, last year it was 23 million and this year it is 25 million more taxpayers who will face an unwelcome tax increase, averaging about $2,000 of tax liability. That, again, is absolutely the wrong policy in a time of economic downturn. Frankly, it is the wrong policy anytime. There is another thing wrong with the House bill. It includes a $45 billion tax increase on certain businesses. We want people to be able to do business overseas as well as here in the United States. It is good for us when we have businesses competing abroad. About $45 billion of new tax increases will be piled on those businesses with two particular provisions of the House bill, in effect amounting to double taxation of the people working for those businesses when they are working abroad. Without getting into the details of that, we all understand what those two provisions are. They deal with deferred compensation from certain employers who would be treated less favorably than other employers in the United States, and delaying the implementation of some new tax rules that would allow worldwide interest for foreign tax credit purposes. Again, given the fact that we are in an economic downturn right now, why would we want to raise taxes, particularly on those industries we are encouraging to do business abroad to help bring more revenues into the United States? Again, these two provisions would make the United States less competitive, not more competitive. Incidentally, the administration has indicated it would veto the bill if these tax increases are in there. Obviously, we want to get these tax extenders done, and therefore don't need the delay of a Presidential veto, Congress sustaining the veto, and having to start all over again. Another thing wrong with the House tax package is it only extended the expiring provisions, such as the research and experimentation tax credit, for 1 year, notwithstanding that we prefer that be done for 2 years--for the year in which they have already expired and for next year as well. It also included some new tax earmarks. What are some of these tax earmarks? One is it requires that projects financed with the so-called new clean renewable energy bonds be subject to the prevailing wages requirement of the Davis-Bacon Act. What this, in effect, says is if you have a Federal project here, you are going to have to pay a much higher wage rate to the people doing the work. The net result of the construction project is it is far more expensive than it would be if you could simply bid it out under normal bidding processes. Many reputable studies have estimated that Davis-Bacon inflates Federal construction costs by anywhere from 5 percent to 39 percent. I have seen that right in my own home State of Arizona. Rather than paying the Davis-Bacon wage rate for a small Federal facility in southern Arizona, they decided to use existing mobile homes--which was totally inadequate, but at least it saved money from having to do the Davis-Bacon construction add-ons. So if we are going to create an incentive to build more renewable energy production, I am not sure why at the very time you would want to intentionally increase the project's costs by subjecting it to Davis-Bacon. Another problem with the bill--a new tax earmark, in effect--is it creates a new standard deduction for property taxes, but it is essentially an indirect transfer because it does not prohibit local governments from raising their taxes, entirely offsetting any benefit to local taxpayers. In other words, it says you can offset certain State taxes. It doesn't prevent the States from increasing those taxes, so that in effect all of the taxpayers around the country are subsidizing the State that raised its taxes. The CBO suggests that, in general, the deduction for State and local taxes is a subsidy to wealthier communities. It deters States from financing local services with nondeductible things like user fees that are much more efficient. Another thing the House bill does, another one of its tax earmarks, is to include an unprecedented tax earmark for New York. Tax credits are, by design, intended for individuals and businesses that actually pay taxes, not cities that do not pay taxes. But in this bill, there is an explicit tax credit for the city of New York, which does not pay taxes. How does it work? What they propose to do is give a tax credit of $2 billion to build a new rail line from Lower Manhattan, even though New York has no Federal income tax liability. What they would do in effect is relieve the State from its payroll tax liability. All employers have to pay a payroll tax. What this would do is, when the city of New York pays payroll taxes for people on its payroll, the Federal Government would pay back the city. That is a very bad precedent, and it should not be included in this legislation. But my favorite of all--we have not done enough for trial lawyers. It seems we need to help the poor, struggling trial lawyers, whose faces we have seen frequently, recently, in publications such as the Wall Street Journal, because they have been indicted and are going off to jail. But we need to help these trial lawyers because it seems it costs them a lot of money when they prosecute these class actions, on which they make hundreds of millions of dollars. They have to hire witnesses. They have to put out other money as expenses. That used to be a violation of ethics. When I went to law school, it was called champerty and maintenance. You couldn't do it. It was unethical for lawyers to pay the upfront expenses of these lawsuits because lawyers were explicitly not deemed to be businesses but, rather, professions. I do not know when the law profession failed to be a profession, but apparently it has because now the trial lawyers want a usual and ordinary business expense deduction for the expenses of these contingent-fee lawsuits. It is $1.6 billion. I don't think the American taxpayers need to be subsidizing trial lawyers to the extent of $1.6 billion, but it is in this bill, and it is another reason we should not agree to take up this bill--that is to say we should deny cloture on this bill. There is a perfectly good alternative here; that is, bipartisan negotiation that would do similar to what we did last year, to provide the expiring tax relief here another year or two of extension, to extend the alternative minimum tax, to do these things without raising taxes either on the same taxpayers or on other taxpayers. We could provide tax relief for members of the military and veterans, incentives for charitable giving, a deduction for higher education expenditures and teacher classroom expenses, do the subpart F active financing and look-through exceptions. These are provisions that are very important for American businesses to be competitive. All these things are in the Republican alternative. I believe that because they represent good tax policy, they would be agreed to on a bipartisan basis. Certainly, the chairman of the Finance Committee has been supportive of, I think, all of these provisions as well. It would also extend and improve the expiring energy tax incentives for alternative energy production and solar power that Senators Cantwell and Ensign added to the housing bill. It would do all of these things without raising taxes. These are provisions that I suggest we could negotiate as soon as cloture is rejected on this bill. Let me conclude by making the point that delaying further is costly to taxpayers. Enacting the bill solely last year prevented more than 13 million taxpayers from being able to file their returns and delayed their refunds for several weeks into the filing session. We need to get on with this. We need to get to the bipartisan discussions. We can negotiate a bill, and we can get it passed in a matter of days if we do that. Businesses need to be able to tell those with whom they do business, their stockholders and the people they get money from, whether they can take advantage of these important tax benefits such as the R&D tax credit. The fact that this tax credit has already expired should be enough to convince us that we need to do this as soon as possible. This helps keep American businesses competitive. It is one of the key things we can do. For example, France has a 50-percent R&D tax credit, and China offers a 150-percent deduction for R&D expenditures. Clearly, the United States needs to get back in this game. As I said before, we need to provide the AMT relief. The bickering between the two Houses on this is doing nothing but hurting American taxpayers. I think we should recognize right now it is not going to be subjected to pay-go. There are not going to be new taxes raised in order to provide relief from the AMT. I think everybody knows that. We might as well get to the job of negotiating a bill and getting it done. We have already voted three times in support of this policy, once at the end of last year--that vote was 88 to 5. Last month, we extended the energy tax extenders, 88 to 8. And last week in the cloture vote that I indicated, that failed 50 to 46. I think it is clear we can get to the end of this. Everybody agrees we need to do so. It is just a question of how and a question of time. We can do it the easy way. We can do it the hard way. We can either get it done now or we can take a lot of time. I think most of us and most of our taxpaying constituents agree it would be better if we can get it done now, if we can do it the easy way, and they can begin planning for their futures. I urge all our colleagues at our 5:30 vote to vote no again. We took this vote before. The vote should not be any different. Once that is done, we can get down to the bipartisan negotiations that will actually result in legislation that we can pass and the President can sign and that will be to the advantage of American taxpayers. Mr. President, I suggest the absence a quorum.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Arizona (Mr. McCain) and the Senator from New Hampshire (Mr. Sununu).

Mr. KYL

Mr. KYL. Mr. President, today I am pleased to introduce the White Mountain Apache Tribe Rural Water System Loan Authorization Act. This legislation would authorize a Federal loan to the White Mountain Apache Tribe for the planning, engineering, and design of a dam and reservoir, which will be used to provide drinking water to the tribe. The White Mountain Apache Tribe, which is located on the Fort Apache Indian Reservation in eastern Arizona, has approximately 15,000 members. The majority of the reservation's residents are currently served by a relative small well field. According to the tribe, well production has significantly decreased over the last few years, leading to summer drinking water shortages. A small rural development funded diversion project on the North Fork of the White River on the tribe's reservation is planned for construction this year. The tribe indicates that when the project is completed it will replace most of the lost production from the existing well field, but will not produce enough water to meet the demand of the tribe's growing population. Consequently, in order to meet the basic drinking water needs of the tribe, a longer-term solution is needed. The most likely and best solution is a relatively small dam and reservoir located on the tribe's reservation--the Miner Flat Dam. The legislation I am introducing today would authorize the Secretary of the Interior to provide a Federal loan to the tribe for the planning, engineering, and design of the Miner Flat Dam. A portion of the funds set aside in the Arizona Water Settlements Act for future Arizona Indian water settlements would be used to repay the loan. Although Congress specifically set aside money in the Arizona Water Settlements Act for this purpose, the money will not be available until 2013. If the tribe were to wait until then to access these funds, the cost of Miner Flat Dam would increase $5 million to $7 million a year. Therefore, providing a loan to the tribe to expedite the planning of the dam would ultimately decrease the project's costs. Any Federal funding for the actual construction of the project would be conditioned on the settlement of the tribe's water rights claims, which would have to be confirmed by Congress. The tribe is in the process of settling its water claims in the State of Arizona, and it is my understanding that the parties involved in negotiating the tribe's water claims will likely reach a settlement with the tribe this summer. Once the parties reach an agreement, I intend to introduce legislation confirming their settlement. The legislation I am introducing today would bring the tribe one step closer to having a reliable source of drinking water. Consequently, I urge my colleagues to support this legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, today I am pleased to introduce the White Mountain Apache Tribe Rural Water System Loan Authorization Act. This legislation would authorize a Federal loan to the White Mountain Apache Tribe for the planning, engineering, and design of a dam and reservoir, which will be used to provide drinking water to the tribe. The White Mountain Apache Tribe, which is located on the Fort Apache Indian Reservation in eastern Arizona, has approximately 15,000 members. The majority of the reservation's residents are currently served by a relative small well field. According to the tribe, well production has significantly decreased over the last few years, leading to summer drinking water shortages. A small rural development funded diversion project on the North Fork of the White River on the tribe's reservation is planned for construction this year. The tribe indicates that when the project is completed it will replace most of the lost production from the existing well field, but will not produce enough water to meet the demand of the tribe's growing population. Consequently, in order to meet the basic drinking water needs of the tribe, a longer-term solution is needed. The most likely and best solution is a relatively small dam and reservoir located on the tribe's reservation--the Miner Flat Dam. The legislation I am introducing today would authorize the Secretary of the Interior to provide a Federal loan to the tribe for the planning, engineering, and design of the Miner Flat Dam. A portion of the funds set aside in the Arizona Water Settlements Act for future Arizona Indian water settlements would be used to repay the loan. Although Congress specifically set aside money in the Arizona Water Settlements Act for this purpose, the money will not be available until 2013. If the tribe were to wait until then to access these funds, the cost of Miner Flat Dam would increase $5 million to $7 million a year. Therefore, providing a loan to the tribe to expedite the planning of the dam would ultimately decrease the project's costs. Any Federal funding for the actual construction of the project would be conditioned on the settlement of the tribe's water rights claims, which would have to be confirmed by Congress. The tribe is in the process of settling its water claims in the State of Arizona, and it is my understanding that the parties involved in negotiating the tribe's water claims will likely reach a settlement with the tribe this summer. Once the parties reach an agreement, I intend to introduce legislation confirming their settlement. The legislation I am introducing today would bring the tribe one step closer to having a reliable source of drinking water. Consequently, I urge my colleagues to support this legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from South Carolina (Mr. Graham) and the Senator from Arizona (Mr. McCain).

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from South Carolina (Mr. Graham) and the Senator from Arizona (Mr. McCain).

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from South Carolina (Mr. Graham) and the Senator from Arizona (Mr. McCain).

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from Minnesota (Mr. Coleman), the Senator from Texas (Mr. Cornyn), the Senator from Idaho (Mr. Craig), the Senator from South Carolina (Mr. DeMint), the Senator from South Carolina (Mr. Graham), the Senator from New Hampshire (Mr. Gregg), the Senator from Arizona (Mr. McCain), the Senator from Alaska (Ms. Murkowski), the Senator from Pennsylvania (Mr. Specter), and the Senator from Alaska (Mr. Stevens). Further, if present and voting the Senator from South Carolina (Mr. DeMint) and the Senator from Texas (Mr. Cornyn) would have voted ``nay.'' The Senator from Minnesota (Mr. Coleman) would have voted ``yea.''

Mr. KYL

Mr. KYL. Madam President, first of all, I note this legislation has nothing to do with ending our dependance on foreign oil. It does have something to do with ending our dependence on oil. In fact, what this legislation would do is make it much more difficult for Americans to enjoy the standard of living we do by making it much more costly to indulge in any consumption of energy in any form, including driving vehicles, including turning on the lights or the air-conditioning in a building. All of these things are deliberately made much more expensive in this legislation--deliberately because the point of it is to make energy consumption so expensive that we will not consume as much of it. That way the Earth will somehow not be warmed as much because we will not be consuming as much energy. That is the whole point here. It is not about ending our dependence on foreign oil. This legislation has nothing to do with that at all. People might ask, What is cap and trade? Why are we talking about cap-and-trade legislation? The cap and trade contemplated in this bill has the Federal Government creating something of value--carbon emission allowances--and they are equal to the cap on emissions set by the Federal Government each year. The Federal Government says: Americans, you can only drive so much or you can only consume so much electricity and the people who produce that product are going to have to pay for the right to produce the energy that you are consuming. Then, of course, they are going to pass that cost on to you. Some of these allocations are to favored groups. Others are auctioned off. But the cost of the allowances is passed on to the consumers, as I said. And these outstanding allowances can be traded. That is why it is called cap and trade. So you have a group of speculators, then, who are able to buy some of the allowances and sell them at a profit, even though they produce nothing of value in the meantime. While it is referred to as cap and trade, we should appreciate the fact that in reality it is very clearly nothing more than another tax on American consumers. A very good article in the Washington Post by Robert Samuelson points this out. He says: The chief political virtue of cap-and-trade . . . is its complexity. This allows its environmental supporters to shape public perceptions in essentially deceptive ways. Cap-and- trade would act as a tax, but it is not described as a tax. It would regulate economic activity, but it is promoted as a ``free market'' mechanism. Finally, it would trigger a tidal wave of influence-peddling, as lobbyists scramble to exploit the system for different industries and localities. The Congressional Budget Office itself, the nonpartisan group representing the Congress, acknowledges that businesses would pass on most of the costs imposed by a cap-and-trade system to American consumers. This would amount to a regressive stealth tax that would hit low- and middle-income families the hardest. What does the proposal cost? According to the Congressional Budget Office, the Boxer substitute amendment before us would take out of the private sector $902 billion between 2009 and 2019. Of that amount, the Boxer substitute manages to spend all but $66 billion--$836 billion of allowances are distributed not only to favored technologies and utilities but also to buy off interests that would use funds in ways that do not decrease carbon, such as for farming practices, endangered species, Indian tribes, State governments, and to other countries for their forests. The Congressional Budget Office considers the distribution of these free allowances the same as distributing cash, and indeed that is exactly what it is. Over the longer term, the Environmental Protection Agency projects the amendment would redistribute $6.2 trillion from the private sector to the Federal Government by the year 2050, through these allowance auctions that energy producers and manufacturers would be required to purchase in order to be able to continue their operations--meaning continue to provide energy for us. Another $3.2 trillion would be auctioned off by States and others. According to the administration, the nearly $10 trillion cost would make this bill the single most expensive regulation in the history of the United States of America. If a cap-and-trade system like the one in the Boxer substitute is implemented, a number of economists believe it would add significant costs to the production side of the economy and would likely have a severe negative impact on long-term U.S. economic growth, despite having a very modest impact on worldwide carbon levels. The cap-and-trade system is intended by design to raise the cost of gas and electricity, as I said in the very beginning. Raising the cost of gas and electricity will change people's behavior. They will use less energy and, as a result, theoretically emit less carbon. The cap-and- trade program cannot achieve its goals unless it increases the cost of energy, and the proponents do not deny this. So when you are thinking about the high cost of gasoline today, think about the additional cost that is going to be imposed by this legislation. The proponents say it is going up anyway. You do not have to make it go up more than it would otherwise, and that is what this legislation would do. The American Council for Capital Formation projects that under this cap-and-trade system, gasoline prices would rise from about $4 a gallon today to $5.33 a gallon by 2014 and $9.01 by the year 2030. As I noted, businesses would have to pass on most of the costs imposed by a cap-and-trade system to their consumers. One must recognize that the demand for energy is relatively inelastic. In other words, even as prices rise, individuals find it difficult to switch to alternatives. It is very hard to engage in any activity that does not use energy. As a result, individuals would be forced to bear the cost increases imposed by the system. They might use less energy, drive less, live in colder homes during the winter, or turn off air conditioners in the summer. Those are the choices. When individuals use less energy, they buy less, travel less, and in effect curtail overall economic activity. The gross domestic product of this country would be roughly 1 percent lower at the end of 2014 and 2.6 percent lower by 2030 under this legislation. That is a huge reduction in the economy of the United States and therefore the well- being of the American people. As economic activity slows, employers are not going to hire as many workers. In fact, employers would create 850,000 fewer jobs by 2014, and 3 million fewer jobs by 2030. My home State of Arizona would lose 63,500 jobs by 2023, roughly speaking. Ironically, this bill would become an economic stimulus for China and India, as they would meet the manufacturing demands that we could no longer produce competitively. Perhaps more striking is the cost on American household incomes. Cap-and-trade legislation would, on average, reduce income adjusted for inflation by $1,000 in 2014 and by $4,000 by 2030. My home State residents in Arizona would see their income fall by $3,400 by 2030. However, not everyone will bear the same burden. Cap and trade is incredibly regressive in its impact, since low-income households spend a higher fraction of their income on energy. According to the Congressional Budget Office, just a 15-percent cut in carbon emissions would cost low-income households almost twice as much as high-income households. Cap and trade reduces the after-tax income of those in the bottom fifth of the income distribution by 3.3 percent. The top 20 percent of the income distribution would see their disposable income fall by 1.7 percent. It is important to note that the amendment of Senator Boxer claims that it would reduce carbon emissions by 66 percent by 2050 or more than four times the amount CBO estimated. Of course, we obviously believe that CBO is far more correct in its assessment. But assuming the Senator were correct, then one might expect the amendment to reduce individuals' incomes four times as much as CBO estimated as well. Think about that--$12,000 to $15,000 reductions in income. I mentioned before that this creates winners and losers. Part of this is based on the whims of Congress. We would have the authority to make the distinctions that would enable some people to be better off than others. The amendment before us would redistribute $836 billion of allowances over the 2009-to-2018 period to various special interest groups. Just imagine that, Congress being in charge of redistributing $836 billion. And we are going to do that without any influence of special interests? I think not. Robert Samuelson noted in the article I quoted from earlier: Beneficiaries of the free allowances would include farmers, Indian tribes, new technology companies, utilities and States. Call this environmental pork, and that would be just a start. The program's potential to confer subsidies and preferential treatment would stimulate a lobbying frenzy. Think of today's farm programs and multiple by ten. The tax-and-spend system, in other words, would create arbitrary winners and losers. Over the life of the bill, it would give away allowances valued at approximately $3.2 trillion for auction by States and other entities. Let me conclude with this point. While having all of this dramatic negative impact, the benefits are questionable at best. They do not meet any rational cost-benefit analysis. A recent editorial in the Wall Street Journal aptly summed up cap and trade as follows: Trillions in assets and millions of jobs would be at the mercy of Congress and the bureaucracy, all for greenhouse gas reductions that would have a meaningless impact on global carbon emissions if China and India don't participate. And only somewhat less meaningless if they do. So it is doubtful that a cap-and-trade system would actually accomplish the goal of reducing emissions and decreasing global temperatures. A report released by the EPA indicates that even with a cap-and-trade system in place in the United States, there would still be a net increase in carbon emissions over the next several decades. Indeed, other cap-and-trade efforts have been unsuccessful. For example, the Kyoto Protocol, an international cap-and-trade system aimed at controlling and reducing greenhouse gases, has largely been considered a failure. The European trading system has not only failed to reduce emissions as contemplated, it has constrained growth in developed countries and has enhanced unrestricted development in countries such as China and India. So before we sacrifice the U.S. economy and American jobs, we need to quantify the benefits of having a relatively slight reduction in greenhouse gases, and compare it to the huge costs imposed on the U.S. economy and American families. In sum, the amendment before us would increase energy prices, harm American families, and likely have a negative impact on long-term U.S. growth. Moreover, it is questionable whether the legislation would even make a perceptible dent in carbon emissions and decreasing global temperatures.

Mr. KYL

Mr. KYL. The following Senators are necessarily absent: the Senator from New Hampshire (Mr. Gregg) and the Senator from Arizona (Mr. McCain).

Mr. KYL

Mr. KYL. Mr. President, today I am pleased to join with Senator McCain in support of this resolution to highlight the athletic achievements of a tremendous group of young women. On June 3, the Arizona State University women's softball team won the 2008 National Collegiate Athletic Association Division I Softball Championship by defeating Texas A&M University 5 to 0. This is the first softball championship title for ASU, and the second consecutive year that a university in Arizona has brought home the NCAA Softball Championship. The Sun Devils won the championship in an impressive fashion with considerable efforts by all. ASU beat its opponent by an 11 to 0 margin, the largest margin of victory in a championship game. Pitcher Katie Burkhart allowed only four hits during the game, struck out 13 batters and was recognized as the Most Valuable Player. Mindy Cowles and Kaitlin Cochran both hit homeruns for the Sun Devils. Jackie Vasquez, Jessica Mapes, Mandy Urfer, Rhiannon Baca, Krista Donnenwirth, Lesley Rogers, and Caylyn Carlson all contributed to the final score. Other Sun Devils making important contributions include Katie Crabb, Megan Elliott, Dani Rae Lougheed, Brittney Matta, Kristen Miller, Ashley Muenz, Amanda Nesbitt, Brooke Neuman, Michelle Nulliner, Sarah Rice, Colleen Robbins, Jessie Ware, and Renee Welty. Coach Clint Myers led the Sun Devils to a season record of 66 wins and 5 losses and a perfect 10 and 0 mark in the postseason. Coach Myers joined ASU three years ago and has turned the ASU women's softball program into a PAC-l0 Conference powerhouse. I salute the Sun Devils and congratulate them on a hard-earned national championship. All Arizonans, even die-hard UofA Wildcats like me, are proud of the team's outstanding achievement and wish the team success in the years to come.

Mr. KYL

Mr. KYL. The following Senator is necessarily absent: the Senator from Arizona (Mr. McCain).

Mr. KYL

Mr. KYL. Objection.