John McCain

Mr. McCAIN

Mr. McCAIN. Mr. President, I ask unanimous consent that the amendment at the desk be agreed to, the bill, as amended, be read a third time and passed, the motions to reconsider be laid upon the table, and that any statements relating to the bill be printed in the Record.

Mr. McCAIN

Mr. McCAIN. Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of H.R. 4302, which is at the desk.

Mr. McCAIN. Mr. President, I ask unanimous consent that the bill be read a third time and passed, the motion to reconsider be laid upon the table, and that any statements relating to the bill be printed in the Record.

Mr. McCAIN. Mr. President, I suggest the absence of a quorum.

Mr. McCAIN

Mr. McCAIN. Will the Senator yield?

Mr. McCAIN. Madam President, my only question to the Senator is, is he really surprised that something egregious should be in this long package that none of us have seen or read until a few hours ago? Does it really surprise the Senator when we find it packed full of goodies for special interest and policy changes and all kinds of things that are passed into law that otherwise would not bear scrutiny? Is he really surprised that all of a sudden now we just pass some other barrier? Isn't it also the fact this is in a bill that none of us have seen or read? Should it surprise us that finally happened when we have a system that is broken? The system is broken. This is 9 of the 13 appropriations bills that have never seen a debate or discussion or amending. None, never. So now we find something that--thank God for somebody's staffer who found it buried on page--what did the Senator say, page 1,000-something?

Mr. McCAIN

Mr. McCAIN. Madam President, I intend to address the Senate for a period of time today. I believe I have as much as an hour under postcloture debate, but I will be discussing an issue I have been involved in for some 3 years now and have not reached a conclusion, although certainly enormous progress has been made in trying to address this issue. But during these 3 years since the appropriators slipped a $30 billion rider in the fiscal year 2002 Defense appropriations bill, a lot of strange and unusual things have happened, I am sad to say, that are a very damming commentary about the way the Pentagon in general and the Air Force in particular conducts its business. I am going to tell a story that has not, as I said, reached its end. But it has uncovered the very strong likelihood, because of the confession by Ms. Druyun in Federal court when she pled guilty, that there could be many billions of dollars of the taxpayers' money that were wasted, criminally treated, and misused because of the decisions made by Ms. Druyun. The question is, How could Ms. Druyun have done all this by herself? Did she have accomplices or was the system in the Pentagon so broken that one individual could make contracting decisions which entailed tens of billions of dollars, and in this case may have cost the taxpayers of America millions and even billions of dollars as well? Nearly 3 years ago, behind closed doors, the Appropriations Committee slipped a $30 billion rider in the fiscal year 2002 Defense appropriations bill. This rider authorized the Air Force to lease from Boeing up to 100 767s for use as aerial refueling tankers. Before the rider appeared in the bill, Air Force leadership never came to the authorizing committees about this issue. In fact, tankers have never come up in either the President's budget or the Defense Department's unfunded priority list. The Air Force's tanker lease program was born of a virgin birth. The rider was, in fact, the result of an aggressive behind-the-scenes effort by the Boeing Corporation with considerable assistance from senior Air Force procurement official Darleen Druyun and others. After the President signed the bill into law, the Air Force embarked on negotiating with Boeing a lease that would have cost the taxpayers around $6 billion more than an outright purchase of these aircraft would have. Soon after Air Force Secretary Jim Roche submitted to the four Defense committees a report on plans to lease these tankers from Boeing, three out of the four authorizing committees summarily approved the lease without even looking at the contract. Two did so without even holding a single hearing. Much to his credit, Senate Armed Services Committee Chairman John Warner held the line and refused to authorize the proposal, as did the ranking member, Senator Carl Levin. Through the hearings and investigations that followed, we unearthed a crushing body of evidence on how much a folly the proposal actually was. Throughout 2002 and in the beginning of 2003, even agencies within the Defense Department and the Air Force, including Program, Analysis and Evaluation, the Office of Management and Budget, and even the Air Force's own General Counsel's Office raised salient concerns about aspects of the proposal. These concerns, however, would not get in the way of Air Force leadership. Rather than resolve these concerns, Air Force proponents continued to aggressively push the deal in the press. A Wall Street Journal editorial entitled ``John McCain's Flying Circus,'' published on the very same day as the tanker hearing we had in the Commerce Committee, is particularly notable. It was obviously drafted with considerable help from the Office of the Air Force Secretary. In it, tanker proponents accused me of ``trying to prevent approval by running up my own Jolly Roger'' and brazenly exaggerated the Air Force's need for tankers by describing how, during Secretary Roche's visit to Tinker Air Force Base, he ``peeled back the skin of a tanker being refurbished and found the metal underneath disintegrating before his very eyes.'' By this time, Air Force leadership's aggressive press campaign was well underway. On April 25, 2002, Secretary Roche's special assistant, William Bodie, told Secretary Roche that he: saw Rudy deLeon [who heads Boeing's Washington office]-- And, by the way, he has rotated back and forth between the Congress and defense corporations and the Defense Department--he: saw Rudy deLeon at the Kennedy Center and politely asked the Great White Arab Tribe of the North [which is what these folks called Boeing] to unleash their falcons on our behalf for once. I talked to [defense analyst] Loren [Thompson], who is standing by to comment to this reporter about the national security imperatives of tanker modernization. [Editor of Defense News and Air Force Times] Vago [Murandian] is also standing by. I will get with [Assistant Air Force Secretary for Acquisitions Marvin] Sambur first thing to rehearse talking points. Get that, ``to rehearse talking points'' with the editor of Defense News and Air Force Times and defense analyst Loren Thompson: We will get with you before we talk to the reporter. Among the falcons that Boeing ``unleashed'' was an op-ed that subsequently appeared in Vago Muradian's Defense News. This piece, which strongly endorsed Boeing's tanker lease, was supposedly written by former Commander-in-Chief for U.S. Pacific Fleet Admiral Archie Clemins. However, Admiral Clemins has admitted, and Boeing's e-mails reflect, that it was in fact ghost-written and placed by Boeing. As this indicates, rather than address salient concerns regarding the tanker deal raised by their own staff, Air Force leadership focused on using the press, which Mr. Bodie described as ``3rd Party support at its best'' to perpetuate the fiction that ``the lease was the exact opposite of a Boeing `bailout.' '' Among the spin that lease advocates fed the press, were statements like, ``[I] will not succeed in blocking a 767 lease because tanker replacement is critical and [I] have offered no alternatives to leasing.'' While Air Force leadership was focused on pushing the deal in the press, analyses from several independent bodies, including the Defense Department's Office of the Inspector General, the Government Accountability Office, the Congressional Budget Office, the Congressional Research Service, the National Defense University, the Center for Naval Analysis, the Institute for Defense Analyses, and others criticized almost every aspect of the program. Perhaps most notably, a Defense Science Board Task Force, vetted for conflicts with industry only after my insistence, concluded that the need to replace the current tanker fleet was not urgent. The Task Force's finding debunked the numerous representations Air Force leadership made to the contrary. Indeed, the Defense Science Board suggested that the Air Force's case on corrosion was virtually cut from whole cloth. Air Force leadership repeatedly cited this case as the biggest reason for having taxpayers pay Boeing billions more than necessary. About 2 months ago, Ms. Druyun was sentenced to 9 months in prison on public corruption charges. Her crime: negotiating the $30 billion deal with Boeing while negotiating with Boeing for a job. Ms. Druyun's sentencing occurred months after Boeing's board of directors fired her and former Chief Financial Officer Michael Sears for misconduct arising from the tanker negotiations. Boeing's Chief Executive Officer Phil Condit soon left the company under a cloud of suspicion. In court papers accompanying her sentencing, Ms. Druyun admitted to overpricing Boeing's 767s as a ``parting gift'' to Boeing. She admitted that she did this to ``ingratiate herself'' with her future employer and help secure employment for her daughter and future son-in-law at the company. Astonishingly, Ms. Druyun also admitted that she similarly harmed the United States on behalf of Boeing on several other major defense programs, including the NATO AWACS, C-130 AMP, and the C-17 programs. How much taxpayers were fleeced remains unclear. These contracts were in the billions. But this matter remains under investigation by the Justice Department and other authorities. The scope of these investigations seems to widen almost weekly. Ultimately, it is likely that Ms. Druyun's misconduct cost taxpayers an astronomical sum. In yesterday's paper, Lockheed is bringing suit against Boeing for allegedly having involvement with bid rigging on other contracts as well. Over the past few weeks, Air Force leadership has tried to delude the American people into believing that all of this happened because of one person, and that because no one else has been hired for her position, the problem has been solved. I don't buy it. I simply cannot believe that one person, acting alone, can rip off taxpayers out of possibly billions of dollars. This appears to be a case of either a systemic failure in procurement oversight, willful blindness, or rank corruption. Either way, full accountability among Air Force leadership is in order. Just this week, Secretary Roche and Ms. Druyun's old boss, Assistant Secretary of the Air Force for Acquisitions Marvin Sambur, announced their resignations. But, among Air Force leadership, nor one has assumed responsibility for this debacle. Ms. Druyun is, perhaps grudgingly, accepting responsibility for her role. To some extent, Boeing has accepted responsibility for its. The Justice Department and others are continuing to ferret out others who may be responsible. However, accountability among Air Force leadership has been almost nonexistent. It seems that it is business as usual. Air Force leadership remains content laying all the blame at the feet of a single individual, Darleen Druyun. I'm not buying it. Just on the Tanker Lease Proposal, the conduct of Air Force leadership has been unacceptable. First, Air Force leadership was never interested in doing a formal ``analysis of alternatives'' for the multibillion dollar tanker program. Such AOAs are typically always done for major defense programs. Second, Air Force leadership misrepresented to Congress how bad corrosion afflicted the current tanker fleet. They did this to devise a reason why taxpayers needed to lease new tankers from Boeing, rather than simply buy them at a much lower cost. Third, according to independent analyses, Air Force leadership overstated ``operation and supply'' cost-growth estimates for the current tanker fleet. This too was done to artificially bolster the case that the current fleet needed to be replaced immediately, at a dramatically higher cost. Fourth, Air Force leadership repeatedly misrepresented that its proposal was merely an ``operating lease.'' Their plan was to slip the program in the budget at a relatively modest initial cost, only to have actual costs balloon in the intervening years. We now know that this was done to conceal the Tanker Lease Proposal's real budgetary impact. By the way, they also had plans that the money to fund in the later years, known as outyears in Pentagonese, that would be taken from the other services' budget. Fifth, according to the Defense Department's Inspector General, the commercial procurement strategy that Air Force leadership used in the tanker proposal (and, incidentally, the C-130J program) placed the Department at ``high risk for paying excessive prices,'' and precluded ``good fiduciary responsibility for DoD funds.'' Sixth, the Inspector General found that, when the specifications for the tanker were being developed, Air Force leadership let Boeing tailor those specifications to Boeing's proposed tanker. They were not tailored to the operational requirements of the warfighter. They should have been. Yet, Air Force leadership allowed an Air Force briefer to tell the Joint Staff that the tanker ``operational requirements document'' was not tailored to Boeing's aircraft. The Defense Department Inspector General, however, found that it was. I could go on, but I'll stop here for now. As I've gone into many of these points in excruciating detail in my letter to Secretary Rumsfeld on July 28, 2004, I'll simply ask for unanimous consent to have my letter printed into the Record.

Mr. McCAIN. What I would like to do now is discuss documents, belatedly produced by the Defense Department, that underscore the need for accountability among Air Force leadership regarding the tanker lease proposal. While the total number of documents that the Defense Department has produced remains unsatisfactory, the few that have been produced are compelling. On February 5, 2002, Air Force Secretary Roche personally assured me, in testimony before the Senate Armed Services Committee on the tanker program, that he ``believed in competition,'' and ``would come back to Congress'' if another competitive proposal was particularly good. Secretary Roche's e-mails, however, suggests that he is indeed a man who allows his personal animus to stifle competition. For example, on September 5, 2002, Darleen Druyun wrote to Secretary Roche, ``I read with disgust the article on Airbus tankers from the new EADS CEO of North America. What BS . . . should not have been surprised at the slime . . . his day of reckoning will come hopefully.'' Secretary Roche answered, ``Oy. I agree. I had hoped you would have stayed and tortured him slowly over the next few years until EADS got rid of him!'' This is from the guy who says he believes in competition. His personal contempt for one defense contractor, and particularly its CEO, is clearly reflected in his other e-mails. For example, on August 7, 2002, when Secretary Roche learned that Ralph Crosby, with whom Secretary Roche once worked at Northrop Grumman, was appointed to the head EADS' North American operations, Secretary Roche wrote to his special assistant, William Bodie: Well, well, we'll have fun with Airbus. The day after, William Swanson at Raytheon asked Secretary Roche: Did you see the notice on Ralph in EADS? Secretary Roche responded: Right. Privately between us: Go Boeing! The fools in Paris and Berlin never did their homework. And, Ralphie is the CEO and chairman of a marketing firm, for that's all there is to EADS, North America. The [Air Force] has problems with EADS on a number of levels. The widespread feelings about Crosby and the Air Staff, Jumper especially, will only make their life more difficult. Smiles. On September 4, 2002, Mr. Bodie wrote Secretary Roche complaining about statements EADS issued about its tanker proposal: We don't have to turn the other cheek, you know. I'm ready to tell the truth about Airbus' boom, footprint, and financial shortcomings. But maybe we should sleep on it. In response, Secretary Roche wrote: No, sir, save it and blow him away. He admits they were not technically qualified! And, we keep their record of bribes as our trump card! This is the Secretary of the Air Force communicating with an assistant of his saying ``we keep their record of bribes as our trump card.'' Remarkable. Taken together, these documents inject serious doubt into Secretary Roche's commitment to competition in contracting, about which he assured me in congressional testimony. During hearings on the controversy in the Senate Commerce Committee and the Senate Armed Services Committee, I expressed concern about Secretary Roche asking Boeing to pressure dissenting elements within the Office of the Secretary of Defense into playing ball on tankers. However, in congressional testimony, Secretary Roche categorically denied this. For example, at a September 3, 2003, Commerce Committee hearing, I asked Secretary Roche about a Boeing e-mail dated 23 June 2003, ``Subject: Roche Meeting 23 June 2003.'' In particular, I asked Secretary Roche: Do you have any recollection whatsoever of telling . . . anyone . . . from Boeing to put pressure on [Acting Assistant Secretary for Acquisitions] Mike Wynne to convince [Program Analysis, and Evaluation] to write a new letter essentially undoing the first letter [which criticized the proposal]? After significant waffling, Secretary Roche responded: No, sir. I talked to [PA&E Director] Ken Krieg, and in fact, I told him, ``Don't bother writing another letter.'' We understood these were his arguments. Again, on September 4, 2003, at a hearing before the Senate Armed Services Committee, I asked the same question to Secretary Roche: Do you have any recollection whatsoever of telling . . . anyone . . . from Boeing to put pressure on Mike Wynne to convince PA&E to write a new letter essentially undoing the first letter? I might say that the first letter from this part of the Pentagon was very critical of the tanker lease deal. This time Secretary Roche testified: I did not ask them to put pressure [on Wynne]. Finally, in testimony before the Senate Armed Services Committee on March 2, 2004, Secretary Roche adamantly denied asking the Boeing company to put pressure on Mike Wynne. Secretary Roche said: I've told you there was no pressure. . . .[I] certainly did not tell them to pressure anybody. Secretary Roche's e-mails, however, paint a very different picture. From Boeing's e-mails, here is what we know. In a June 23, 2003, e- mail to Jim Albaugh, who is head of Boeing's defense subsidiary, Boeing executive Thomas Owens described a meeting during which Secretary Roche expressed serious concerns about this letter from Mr. Ken Krieg. Mr. Krieg is the Director of Program Analysis, and Evaluation at the Office of the Secretary of Defense. His letter was key. In that letter, Director Krieg concluded that the original Boeing proposal failed two key Government accounting rules and, therefore, violated the authorizing legislation. According to Mr. Owens's e-mail, Secretary Roche ``ask[ed] [Boeing] to put pressure on [Acting Assistant Secretary of Defense for Acquisitions] Mike Wynne to convince PA&E to write a new letter essentially undoing the first letter.'' Soon after, Dr. Sambur wrote Secretary Roche regarding the PA&E letter saying: Boss, this is getting ridiculous. Secretary Roche wrote to Acting Assistant Secretary Wynne as follows: Ever since Pete-- They are talking about former Assistant Secretary Aldridge-- left, the bureaucrats who opposed the 767 lease have come out of the woodwork to try to kill it--yet, once again, Mike, I won't sign a letter that makes the case that we shouldn't lease the planes. Ken Krieg's memo attached is a cheap shot, and I'm sure has already been delivered to the enemies of the lease on the Hill. It is a process foul. And Ken needs to be made aware of that by you! I can't control the corporate staff on acquisition issues. Mike, this is their way of asserting dominance over you. I know this sounds wild, but animals are animals. Pete had beaten them down. Now, they're taking you on. I'm sorry. Expecting professional behavior from them is something I gave up on a while back. Among other things, they are about to embarrass SecDef-- That is Secretary of Defense-- who having approved the lease, will now have to explain why his staff is destroying the case for it. I'll do whatever I can to help you, Mike, but [it's] your job to get the corporate staff under control. If not now, then they will overrun you whenever you ``don't behave'' according to their desires. This is a game they played for years. [They] and OMB are trying to set the Air Force up to be destroyed by Sen McCain with OSD-- Office of Secretary of Defense-- and OMB-- Office of Management and Budget-- arguments. As you might imagine, I won't give them the chance, but I will make it clear who is responsible to Don [Rumsfeld]. I refuse to wear my flack jacket backwards! This is after testifying before the Senate Armed Services Committee that Secretary Roche never put any pressure on anybody. This is remarkable. Subsequently, Assistant Secretary Wynne reprimanded Director Krieg. In response to an e-mail from Director Krieg that attempted to clear the air, Secretary Roche rather disingenuously answered: Kenny, I love you, and you know that. I think you have been had by some members of the famous PA&E staff. You never should have put what you put in writing. It will now be used against me and Don Rumsfeld. Other e-mails corroborate that Secretary Roche suggested to Boeing that it lobby the Office of the Secretary of Defense to undercut Program Analysis and Evaluation. For example, a December 17, 2002, e- mail from Boeing's top lobbyist Andy Ellis to Rudy deLeon, who heads Boeing's Washington office and served as a Deputy Defense Secretary in 2000 and 2001 described ``some quick notes from Jim [Albaugh]'s meeting today. It instructed, ``Please do not re-distribute this e-mail.'' The e-mail memorialized what was said during ``[a] meeting with Sec. Roche'' as follows: PA&E now a problem on tankers--arguments include price, 767 footprint and prospects for ``used 767s.'' Boeing needs to do more on behalf of tankers in the Office of Secretary of Defense. PA&E working to convince Aldridge to delay--reengine while doing an analysis of alternatives. We should vector hill support for tankers at Aldridge. . . . said he is very comfortable with the price air force has on tanker, and very comfortable with overall deal. It is the right time to do this deal. He is waiting until early January to push on the Office of Management and Budget--wants to deal with the next congress, not the current. . . . Boeing needed to work White House and especially Office of Secretary of Defense. That is from the Secretary of the Air Force. Other e-mails recently produced by the Department of Defense corroborate the shocking dynamic whereby Secretary Roche apparently orchestrated efforts against tanker lease critics within the Office of the Secretary of Defense. For example, in a May 7, 2003, e-mail, Paul Weaver, a Boeing lobbyist and former Director of the Air National Guard, wrote Secretary Roche as follows: Rudy [DeLeon] called me and said that Marv Sambur was getting beat up by Mike Wynne again concerning the $125 million number per aircraft. Rudy would like to know if he needs to do anything like calling in the big guns to help out. I told him I would query you to get your advice. In response, Secretary Roche wrote: It's time for the big guns to quash Wynne! Boeing won't accept such a dumb contract form and price, and Wynne needs to ``pay'' the appropriate price! Now, that is the Secretary of the Air Force talking about another member of the Pentagon in the Office of the Secretary of Defense, Program Analysis and Evaluation: Wynne needs to ``pay'' the appropriate price. I wonder what he was talking about. These e-mails call into serious question whether Secretary Roche was truthful in testifying that he had not directed Boeing to pressure tanker lease critics within the Office of the Secretary of Defense to play ball. During last year's hearings, we released e-mails indicating that Secretary Rumsfeld's policy analysts may have been improperly lobbying the Office of the Secretary of Defense in support of the tanker lease proposal. Another set of e-mails, only recently produced, give a fuller picture of this issue. For example, in an October 9, 2002, e-mail, Darleen Druyun wrote Secretary Roche and Dr. Sambur saying: I would like to informally brief [Defense Science Board Chairman] Bill Schneider on tanker leasing when he gets back from Germany. I had briefed him during the transition about the idea of leasing as a viable acquisition alternative. He has apparently had a positive conversation with Wolfowitz on leasing and is interested in quietly helping us. This is the head of the Defense Science Board, who is supposed to be making decisions about weapons systems and other acquisitions, and he is ``interested in quietly helping us.'' If you give the nod we will use the same charts we used to brief Gingrich which was very positively received by him. Secretary Roche responded: Please do. Thanks much. This e-mail, and others I have released, raise serious questions about the undue influence that industry exerts on procurement decisions in the Pentagon. What is striking here is that in this case, Air Force leadership seems to have been deep in the middle of it. To what I have described already, add the doctoring of documents produced to Congress. After SASC, Senate Armed Services Committee, staff returned from their visit from Tinker Air Force Base in October 2003, they asked for some placards that reflected unusually low failure rates associated with component parts of the KC-135s maintained there. That is the present Air Force fleet of tankers. Shockingly, what the Senate Armed Services Committee staff received were altered versions of what they asked for. I conveyed my concerns about these doctored documents directly to Secretary Roche. In Secretary Roche's February 27, 2004, response to me, he conceded that the information that the Senate Armed Services Committee requested was intentionally deleted. In particular, he explained: As those placards featured ``Tinker-only'' information, and because our installations and logistics professionals strive to present a complete and timely picture of our fleet, they amended the placard file by omitting the ``Tinker-only'' occurrence factors. To add insult to injury, the explanation that the Air Force leadership provided to the press about what happened was different entirely. Furthermore, we have yet to learn who in Secretary Roche's office directed that the information that Congress asked for be doctored before it was delivered. It seems that whatever documents Air Force leadership did not doctor, they improperly withheld. For example, on Friday, September 10, 2004, the White House Counsel's Office and the Office of Management and Budget brought to my staff's attention a very troubling e-mail stream between Secretary Roche and senior OMB official, Robin Cleveland. After Darleen Druyun went to work for Boeing, Ms. Cleveland, the Associate Director for National Security Programs, represented the Government in negotiating with Boeing on the tanker lease proposal. In this e-mail stream beginning on May 9, 2003, Ms. Cleveland asked Secretary Roche to help her brother get a job at Northrop Grumman. The e-mail said: Jim, this is my brother's [Peter Cleveland's] stuff. I would appreciate anything you can do to help with NG-- that means Northrop Grumman-- He is an incredibly hard working, disciplined guy--worked full-time, with two little kids, putting himself through law school at night. I would be grateful. Thanks very much. Robin About half an hour later, Secretary Roche gave Mr. Cleveland's resume and cover letter, and, under color of his office and title, vouched for him to Steve Dyslas, a Northrop Grumman executive: I know this guy. He is good. His sister (Robin) is in charge of defense and intel at OMB. We used to work together in senior staff. If Peter Cleveland looks good to you, pls [sic] add my endorsement. A few minutes later, Secretary Roche wrote Ms. Cleveland in an e- mail: Be well. Smile. Give me tankers now. (Oops. Did I say that? My new deal is terrific.) Now, the person who is responsible for overseeing the national security programs at the Office of Management and Budget, the watchdog of all the budgetary issues in America, that one specifically charged with overseeing tankers, asked the Secretary of the Air Force to get her brother a job. He, under his title and name, contacts the defense corporation that does business with the U.S. Air Force and asks them to give Ms. Cleveland's brother a job, and then after sending it, sends an e-mail back to Ms. Cleveland: Be well. Smile. Give me tankers now. (Oops. Did I say that? My new deal is terrific.) On May 15, 2003, Ms. Cleveland responded to her brother in an e-mail entitled: ``Interview at NG,'' saying, ``Great. Hope it works before the tanker leasing issue gets fouled up.'' Until these e-mails were brought to our attention by the White House, we never even knew about them. In a meeting with me on September 13, 2004, White House Counsel Judge Alberto Gonzales told me that someone in Secretary Roche's office concluded that these e-mails were a joke and therefore they did not need to be produced. That has to be taken in the context that they told me that they would give me these e-mails as part of our oversight responsibility. The Secretary of the Air Force decided the e-mails that I just cited were not relevant to the tanker deal. So if there is some level of mistrust that exists between me and my office and the Secretary, maybe that clears up that degree of mistrust a little bit. Given all the scandal and controversy surrounding the tanker lease proposal, and especially given the keen interest that Chairman Warner and I have expressed regarding potential Air Force misconduct, the unilateral decision made by Air Force leadership to withhold this document is profoundly disturbing. Keeping a defense contractor's ``record of bribes'' as a ``trump card''; ``torturing'' a defense contractor ``slowly''; pressuring dissenting elements within the Office of the Secretary of Defense whose job it was, particularly in the absence of a Defense Acquisition Board--in other words a formal analysis--to vet this procurement program; signing off on a plan to get the chairman of the Defense Science Board to ``quietly help'' on the tanker lease inside the OSD; doctoring and improperly withholding documents requested by Congress: this is the picture that we are getting on what happened with the tanker proposal, and we have received only a few documents from 6 out of 30 people we have asked for. This is the picture we are getting, but no one among Air Force leadership stands up to assume responsibility. Instead, what we get from Air Force leadership is deeply troubling statements in the press about how rosy things are. For example, in a recent op-ed appearing in Defense News, Dr. Sambur describes the current acquisition process as ``healthy'' and ``on track.'' Hoping that Air Force leadership will ``get it'' now may perhaps be too much, when they didn't ``get it'' then. In that context, I find particularly troubling an e-mail from Air Force Under Secretary Teets to Secretary Roche sent just 3 days after Boeing announced the firing of CFO Michael Sears and Vice President Darlene Druyun. In it, Under Secretary Teets writes: Jim, I think it is important for you to know all I know about the situation surrounding the tankers . . . Late Tuesday afternoon I talked to Marv Sambur and got his assurance that a thorough review of the Darlene situation had been completed and there was no way Darlene had any influence on our plan for tankers. Furthermore, Marv said that a letter had been prepared for the DepSecDef to send over to the SASC indicating same, and notifying them of our intent to proceed. So two people are fired by Boeing because of information that has come to light about improper behavior and later the individual pleads guilty in court--in fact, both of them have now pled guilty in court. Ms. Druyun has confessed that she rigged the contracts as a ``parting gift to Boeing'' in behalf of her daughter and son-in-law's employment. Meanwhile, the Under Secretary of the Air Force writes to the Secretary of the Air Force that he talked to Marv Sambur, the Assistant Secretary of the Air Force for Acquisition, and got his assurance that ``a thorough review of the Darlene situation had been completed and there was no way Darlene had any influence on our plan for the tankers.'' I am amazed. I am amazed. One thing is for sure: the final chapter on the tanker lease proposal cannot be closed until all the stewards of taxpayers funds who committed wrongdoing, are held accountable. In order to get a full accounting of what happened on the tanker lease proposal, I will continue to insist that all the documents that the Senate Armed Services Committee has asked for, be produced--no matter how long it takes In closing, Air Force Doctrine Document 1-1 on Leadership and Force Development contains a section setting forth the Air Force's core values. There are three: integrity, service before self, and excellence in all they do. The first, integrity, includes the indispensable characteristics of accountability, responsibility, honesty, and honor. When it comes to Air Force leadership's conduct regarding the tanker lease proposal and related congressional probes, I must however ask: where is the accountability and the responsibility; where is the honesty and the honor; where have these core values been over the past 3 years, and where are they now? To eschew accountability here is to do a profound disservice to the good men and women who wear the uniform of the United States Air Force honorably, capably, and proudly. For those in the public interested in what I have discussed today, I will be posting all of these documents on my website, www.mccain.senate.gov. In closing, the scandal continues to widen. Yesterday one of the competitors of Boeing alleged that information was leaked by Ms. Druyun, and the CEO of Boeing. I don't know if it is true. I doubt if it is true. I have no way of knowing. But the scandal continues to unfold. As I said, we have only received a small percentage of the documents and e-mails that we have asked for. This is a very sad chapter. I was asked last week by a reporter for the Air Force Times if this was personal with me, this issue I have discussed on the Senate floor for the past half hour or so. It is personal in this respect. It is personal that I had the privilege of serving in the U.S. military and wearing the uniform. I believe we always expect not only the same standard but a higher standard of conduct of the men and women who wear the uniform, and the vast majority, 99 and 44/100 percent of the men and women who wear the uniform conduct themselves with the highest degree of honor, courage, and integrity. But here we have individuals who have, obviously, behaved in a less than honorable fashion. That is why it is necessary we get to the bottom of this. Next year, beginning January, we are going to have to look at the whole procurement process as it works today in the Department of Defense, because we have just found out that Ms. Druyun, in her guilty plea, said she was involved in rewarding Boeing on several other contracts, not just the Boeing tanker lease. We have no idea how much money that is. But it brings a profound question here: How could one person do this? How could one person alone in the whole Pentagon--I have forgotten how many thousands of people work there--have done this and they not know about it? If they didn't know about it, what kind of a system is it that allows such a thing to take place, over a period of years? I deeply regret having been involved in this. But I also remind my colleagues that the way this thing started was the insertion in an appropriations bill that was one line that no member of the Senate Armed Services Committee had any knowledge of nor did the Senate Armed Services Committee have a single hearing on before this appeared as a line item in an appropriations bill. That is not the way to do business. I would allege to you right now, if it had gone through the normal authorization process perhaps this whole scandal wouldn't have unfolded the way it did because we would have had a hearing. We would have scrutinized the proposal. We would have gone through the normal process. Instead, we spent 3 years fighting a rearguard action and through the sheerest kind of luck, in many respects, we are able to identify this wrongdoing. I hope we can get to the bottom of this as quickly as possible and find lessons learned, find out how much money we can reclaim, if necessary, on behalf of the taxpayers, so that if, indeed, Ms. Druyun's statement is true--and I have no reason not to believe what she confessed to, that she issued a number of contracts that were detrimental to the cause of the American taxpayer--we can reform the system so this kind of thing can never happen again. I yield the floor.

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

Mr. McCAIN

Mr. McCAIN. Mr. President, today I honor a true leader and exceptional American. After a long and distinguished career of service to our Nation, COL Frank Rohrbough is retiring from his position as Deputy Director for Government Relations of the Military Officers Association of America, MOAA. On this occasion, it is fitting to recognize his 30 years of commissioned service as an Air Force officer and 13 years as one of the foremost health benefit advocates for the uniformed services community. Colonel Rohrbough's career illustrates a lifelong commitment of service to the nation and to preserving the welfare of uniformed members and their families. In 1961, Frank Rohrbough graduated from the Reserve Officer Training Corps at Texas A&M University, earning his commission as a second lieutenant in the U.S. Air Force. Appointed to the Medical Service Corps, he served with distinction at all levels in the Air Force, from small community military medical treatment facilities to large regional hospitals. His distinguished career culminated with his appointment to the Air Force's top Medical Service Corps position--Chief of the Air Force Medical Service Corps and Assistant Surgeon General for Healthcare Support. After retiring from the Air Force in 1991, Colonel Rohrbough joined the MOAA staff and served as principal advisor on health issues. In this position, he worked with the Armed Services Committees of both the House and the Senate, the Department of Defense, and numerous organizations and agencies to protect health care benefits for uniformed services beneficiaries. His personal efforts contributed significantly towards important legislation including lifetime health care and pharmacy coverage for Medicare-eligible beneficiaries and extending eligibility for the Federal Long Term Care Insurance Program to the entire military community. Our Nation is grateful to Colonel Rohrbough for supporting members of the Armed Forces and their families, the Military Coalition, and all veterans, while serving in uniform and in private life. We offer him a sharp salute and wish him continued success and happiness in retirement.

Mr. McCAIN

Mr. McCAIN. Mr. President, I wish to briefly remark on H.R. 2391 and H.R. 4077, a package of bills referred to as the Intellectual Property Protection Act of 2004. I have objected to the further consideration or passage of these bills by unanimous consent. From the text of the bills that have been available to date for Senators to review, I believe that one part of this broad legislation, the Family Movie Act, may actually harm consumers while appearing to help them. To be clear, I support the stated goal of the act's authors: immunizing from legal challenges a technology that enables parents to skip offensive material from prerecorded copies of films and television. While I applaud the merits of their stated intent, I fear that the very exemption designed to achieve this laudable goal simultaneously creates an implication that certain basic practices that consumers have enjoyed for years--like fast-forwarding through advertisements--would constitute criminal copyright infringement. I note that Consumers Union and Public Knowledge, as well as a host of others parties interested in protecting consumers, share my concerns. Americans have been recording TV shows and fast-forwarding through commercials for more than 30 years. Do we really expect to throw people in jail in 2004 for behavior they've been engaged in for more than a quarter century? I look forward to working with my colleagues in this Chamber to address not only these concerns, but also the uncertain liability created for manufacturers that bring other innovative and pro-family products to market in the face of continual threats of extinction from powerful interests who seek to thwart their entry. For these reasons, I do not intend to remove my hold on these bills until I am satisfied that consumer interests have been protected in this legislation.

Mr. McCAIN

Mr. McCAIN. Mr. President, I voted against cloture on this measure yesterday because it is loaded with corporate pork and special interest tax provisions. This conference report, at 633 pages and $148 billion, serves as a sad example of the way business is done around here. The special interests continue to rule at the expense of the hardworking American taxpayer. The original intent of this legislation was laudable. Earlier this year, we missed a golden opportunity to pass a good, clean bill that would have brought us back into compliance with World Trade Organization, WTO, agreements and stop the burdensome tariffs now imposed on our manufacturers. Simply repealing the extraterritorial income, ETI, exemption tax benefit for exports would have saved $50 billion. Instead, because this was known to be a ``must pass'' piece of legislation, it was loaded up with billions and billions of dollars in tax breaks for big corporations and special interests of all types. I recognize the need to pass legislation to bring the United States back into compliance with the WTO, and I am more than willing to support a bill that accomplishes that goal. Unfortunately this legislation's worthy purpose has taken a back seat to a host of special interest tax provision add-ons and a big buyout for tobacco farmers. In an editorial on the issue, The Washington Times, noted that ``the ideal solution would have been a quick, simple repeal of FSC-ETI, which is bad economic policy in any case. The $50 billion in savings could then have been used to streamline and simplify the corporate tax code.'' I couldn't agree more. The Tax Code is far too complex and is in dire need of reform. While campaigning in recent months, the President has stated, with tremendous approval from every audience, that reforming and simplifying the Tax Code would be one of the main objectives of his second term. I will support him in that effort, and I encourage him to take the first step in that reform by vetoing this bill. We have a deficit that is quickly approaching $500 billion--that is half of a trillion dollars. The proponents of this bill say that it's ``revenue neutral.'' Well, I doubt that, and I am not alone in my skepticism. The Center for Budget and Policy Priorities has figured that the bill would actually cost $80 billion if the temporary tax cuts are extended for the full 10 years. Sadly, I have no doubt that those extensions will happen--because we simply don't say no to anyone anymore. We are told that this bill is offset by closing tax loopholes, and I will be the first person to say that I support closing those loopholes, but can anyone explain to me the rationale behind closing loopholes in order to raise revenues to open more loopholes? It is remarkable. It makes no sense. As I have said many times in the past, we need to start making some very tough decisions around here about our fiscal future. We need to be thinking about the future of America and the future generations who are going to be paying the tab for our continued spending. It is simply not fiscally responsible for us to continue to load up bills with good deals for special interests and their lobbyists. We have had ample opportunities to tighten our belts in this town in recent years, and we have taken a pass each and every time. We can't put off the inevitable any longer. Here is the stark reality of our fiscal situation. According to the General Accounting Office, the unfunded Federal financial burden, such as public debt, future Social Security, Medicare, and Medicaid payments, totals more than $40 trillion or $140,000 per man, woman and child. To put this in perspective, the average mortgage, which is often a family's largest liability, is only $124,000--and that is often borne by the family breadwinners, not the children too. Instead of fixing the problem, and fixing it will not be easy, we only succeeded in making it bigger, more unstable, more complicated, and much, much more expensive. The Committee for Economic Development, the Concord Coalition, and the Center on Budget and Policy Priorities jointly stated that, ``without a change in current (fiscal) policies, the federal government can expect to run a cumulative deficit of $5 trillion over the next 10 years.'' They also stated that, ``after the baby boom generation starts to retire in 2008, the combination of demographic pressures and rising health care costs will result in the costs of Medicare, Medicaid and Social Security growing faster than the economy. We project that by the time today's newborns reach 40 years of age, the cost of these three programs as a percentage of the economy will more than double--from 8.5 percent of the GDP to over 17 percent.'' Additionally, the Congressional Budget Office has issued warnings about the dangers that lie ahead if we continue to spend in this manner. In a report issued at the beginning of the year, CBO stated that, because of rising health care costs and an aging population, ``spending on entitlement programs--especially Medicare, Medicaid and Social Security--will claim a sharply increasing share of the nation's economic output over the coming decades.'' The report went on to say that, ``unless taxation reaches levels that are unprecedented in the United States, current spending policies will probably be financially unsustainable over the next 50 years. An ever-growing burden of federal debt held by the public would have a corrosive . . . effect on the economy.'' So what do we do when we are faced with these problems? We pass a tax bill that is loaded with corporate pork. This conference report is called the JOBS Act, but I think we should call it what it truly is: ``the corporate tax haven act.'' I doubt it will create any new jobs but it will certainly allow a few lucky folks, who have extremely well paying jobs, to make even more at the expense of the taxpayers. I'm sure the energy corporations are pleased that they won't have to wait for the energy bill to add to their over- flowing coffers. Yesterday we passed a bill to address the issue of FDA regulation of tobacco products. Essentially, the consideration of a free standing bill to address this issue at this stage means nothing. We're supposed to be appreciative that the FDA bill was taken up and passed quickly-- we all know that passing a controversial Senate bill on a Sunday at the end of the session is meaningless. The House will not move the bill, and, even if by some miracle they did, there certainly would be no conference held. This is a sham--plain and simple. The Senate had already addressed the issue of FDA regulation of tobacco. Sadly, the conferees on the FSC/ETI bill stripped that provision from this conference report. What the conferees did was unconscionable. They turned their backs on the health of our nation's youth and opted to strike the DeWine-Kennedy amendment that would have granted authority to the Food and Drug Administration, FDA, to regulate tobacco products. It is a very sad day for public health. They have used the FDA tobacco authority language as a linchpin to effectuate the passage of the underlying tax bill. It was nothing more than a sweetener to them and now that it is no longer of use, the conferees have discarded the language, and with it, who knows how many lives. In striking this historically important provision, the conferees ignored the public and medical health community, child health advocates, and registered voters who in a recent poll overwhelmingly, 69 percent favor FDA authority over tobacco. Even in the six leading tobacco growing states, support for FDA authority is above 65 percent. Without FDA authority over tobacco, there will be no regulation of tobacco marketing, no information disclosure such as nicotine and carcinogenic content, no requirement that can force the tobacco industry to remove harmful components from their products, and no pre- market approval of ``new products'' marketed as ``safer cigarettes.'' Tobacco-related illnesses and deaths in this country have reached epidemic proportions, but according to the Surgeon General, tobacco use is ``the single most preventable cause of death and disease in our society.'' The Surgeon General estimated 400,000 U.S. citizens lose their lives each year as a result of a smoking-related illness. This figure translates into approximately 1,200 smoking-related deaths per day. This loss of life has a significant economic impact accounting for an estimated $75 billion per year in health care expenses. Most tragically, however, the Surgeon General estimates that approximately 2,000 kids start smoking every single day, and that one third of them will die from a smoking-related illness. I thank Senators DeWine and Kennedy for their commitment to our Nation's youth, and I am certain that they will continue to fight for FDA authority over tobacco because it is simply too important not to continue to fight. We must protect the public health and hold the tobacco industry accountable for the production and marketing of its products, particularly as their business practices affect children, but I fear we have lost yet another opportunity. Not only have the conferees jeopardized the health of our Nation's youth by striking the FDA authority provisions of this bill, they left provisions that would eliminate the quota system and channel $10 billion--into the pockets of tobacco farmers--many of whom no longer even farm tobacco--and disguised the money as a buyout to encourage such ``farmers'' to shift their crops to something other than tobacco. According to the Wall Street Journal, among these ``tobacco farmers'' who would benefit from a tobacco buyout are Larry Flynt and his brother, who admittedly abandoned the ``blood, sweat, and tears'' of the tobacco business to pursue pornography. I fear that the conferees have failed to realize that, by not setting domestic production restrictions, and not restricting new market entrants from farming tobacco, they may be creating new opportunities for more tobacco farming. In doing so, they create the possibility that a greater supply of tobacco will result in reduced prices thereby making tobacco products more accessible to kids. Studies have shown that increases in the cost of cigarettes directly correlate to reduced youth smoking rates. Greater youth accessibility to tobacco products coupled with a lack of FDA authority over the marketing and information disclosure of these cheaper products is the most invidious combination possible. By turning their backs on FDA tobacco authority while simultaneously making it easier to grow and sell tobacco, the conferees may be exposing kids--not to mention adults--to an even greater health risk than they are today. As if the lack of FDA language wasn't bad enough, let me go through some of the other ridiculous items contained in this conference report. Many provisions in this bill remind me of the golden oldies we saw in the energy bill. One of the more generous tax breaks in this bill is a creative provision that allows energy companies to reclassify energy production as a manufactured good in order to qualify for potentially tens of billions of dollars in new tax deductions. The manufacturing tax deduction is currently available only to traditional manufacturing industries as an incentive for job creation. While this change in the tax code may not create manufacturing jobs, it does create a tax balloon, which increases to a maximum of 9 percent of a company's production income after 2009. The total estimated cost of this golden parachute is $76.5 billion. Other industries that will now be considered to be ``manufacturers'' are movie studios, real estate development, and construction companies. But the greatest share of this tax break will go to the oil and gas industry and electric utility companies. Fear not, not all of the largess goes to oil and gas companies. There are equal opportunities for other corporate and special interests to make profits at the expense of the taxpayers. An article in the Wall Street Journal on October 6, refers to the legislation as ``a trove of obscure breaks and perks'' and identifies four companies in Houston that were singled out for special treatment. These companies recently changed their addresses to the Cayman Islands and Bermuda when the Senate proposed a retroactive crackdown on businesses that incorporate offshore to shave their U.S. tax bills. Fortunately for them, the provision in this bill is no longer retroactive. Not only does the bill allow these companies to slip comfortably away, but others contemplating such actions will be heartened by the fact that the bill doesn't include a provision that would have supported Federal judges and the IRS in bringing companies that indulge in these improper tax shelters to justice. This bill also contains a tax credit totaling more than $2 billion over 9 years for industries generating electricity from alternative fuel sources. Let me be clear that I support clean renewable energy technologies as a means to reduce greenhouse gas emissions and increase energy independence, but most of these subsidized technologies aren't clean. No matter how you look at it, chicken droppings simply are not a clean alternative fuel. Just how, exactly, does the public benefit from the subsidies provided for the burning of municipal trash and poultry waste, both which create significant air pollution? The most outrageous provision in this section could be easily missed. It defines ``refined'' coal as a qualifying renewable resource. According to the Tax Code, refined coal is just another name for synthetic fuel. I would be greatly relieved if my colleagues could document that this is not the case, but it appears to me that the synthetic fuel credit has been snuck in here along with so-called renewable sources of electricity. I have spoken before about the synthetic fuel tax credit scam that was revealed by Time reporters in October 2003. It is shameful for Congress to perpetuate this expensive hoax, which has cost taxpayers $4 billion since 1999. The IRS followed up the Time report with a November 2003 bulletin stating, ``The Service believes that the processes approved under its long standing ruling (that a synthetic fuel must differ significantly in chemical composition from the substance used to produce it) do not produce the level of chemical change required.'' Incredibly, it goes on to say, ``Nevertheless, the Service continues to recognize that many taxpayers and their investors have relied on its long-standing ruling to make investments.'' So, basically, we should just ignore the fact that chemical change isn't occurring. They should have just said that if Congress wants to continue this shameful scam, then the IRS will let it pass. The original intent of the synthetic fuels tax credit was not sheer folly. It is just that, for a variety of reasons, a synthetic fuel industry never materialized in the United States. Canada invested heavily in synthetic fuel production over the past decades and sells millions of barrels of synthetic crude oil to the United States annually. The only evidence of a U.S. synthetic fuel industry is this gigantic tax shelter. One doesn't need to be in the oil or gas business to strike it rich with synthetic fuels either--one of the greatest beneficiaries of this tax shelter--and that is all that it is--a tax shelter, is a very profitable hotel chain, Marriott. This is an equal opportunity bill for wealthy corporate interests. Wait, we can't forget ethanol! $77 million from this bill will go to ethanol manufacturers. No tax break bill would be complete without subsidies for this synthetic fuel, ethanol gasohol, created and perpetuated by Congress. And it all starts with corn. Ten percent of the corn grown in this country is used to produce ethanol. Of course, corn producers, like producers of other major crops, receive farm income and price supports. In the 107th Congress, this body passed the Farm bill which appropriated more than $26 billion in direct assistance to corn-growers over 6 years. That is an average of $4.3 billion in direct subsidies each year just to corn-growers! In addition to the subsidies going primarily to agribusiness corporations, the public pays for ethanol in other ways as well. More energy is used in the production of ethanol than it provides to consumers, it increases the per gallon cost of gasoline, and it results in environmental degradation. Finally, to add to all these insults, ethanol subsidies increase the public's grocery costs. Subsidized corn results in higher prices for meat, milk, and eggs. This happens because about 70 percent of corn grain is fed to livestock and poultry in the U.S. Increasing ethanol production further inflates corn prices and subsequently food prices. So the American public provides billions to create this artificial market for ethanol, and then pays more for their groceries and what do they get in return? I will tell you what they get in return--absolutely nothing. No reduction in petroleum fuel use. No reduction in air pollution. There is one reduction, however, consumers are rewarded with--reduced fuel economy. More gasohol must be used to go the same distance as conventional fuel. So no one can honestly claim that subsidizing ethanol is in the public interest or an element of sound national energy policy. Another objectionable provision is the ``green'' bond program. The original form of this provision prompted the ``hooters'' part of my ``hooters and polluters'' reference to the energy bill. Well, the hooters is gone, but this program is still top-heavy with tax breaks-- $231 million for the real estate corporations that are going to develop these projects. With or without a hooters, I don't see how it's in the public's interest to pay for enormous commercial facilities in three or four States. These projects all sound like enterprises that can stand or fall on their own--they don't need the taxpayers throughout the country giving them a big boost. Let me give you a sense of the ``public works'' that benefit from this provision: Destiny USA in Syracuse, NY is an entertainment and retail development touted as an economic stimulus for upstate New York. The primary developer has committed to 3.2 million square feet of space with a price of close to $700 per square foot. They estimated these green bonds would save them close to $100 million. Belmar in Lakewood, CO is a $500 million redevelopment of a mall, which will include many restaurants, clothing stores, shops, and office space. Atlantic Station in Atlanta GA is a 138-acre redevelopment of a former steel mill which will include 12 million square feet of retail, office, hotel space, and parks. Riverwalk Development in Shreveport, LA, minus the Hooters, this $150 million project will feature stores, restaurants, movie theaters, hotels, and entertainment spots. These all sound like grand, money-making ventures to me--they don't need taxpayer support. Pork called ``green bonds'' is still pork. Some of the other notable giveaways in this grab bag of corporate tax delights are: The ``hummer in every home'' provision is still intact. It is just not quite as expensive as it has been the past. This provision extends the existing $100,000 tax deduction for the purchase of vehicles weighing over 6,000 pounds. The original intent of this deduction was to benefit farmers and other business owners in need of heavy-duty vehicles. Unfortunately, some individuals unscrupulously seized on this loophole in order to purchase Hummers, Escalades and other expensive, gas guzzling SUVs. Thankfully, due to the insistence of Senator Nickles, those purchasing luxury sport utility vehicles can no longer take advantage of the $100,000 deduction. However, they can still take a deduction of up to $25,000. This could cost our Treasury $350 million for every 100,000 taxpayers who take advantage of this loophole. Again, it is not as bad as it used to be, but it is still too expensive and should be eliminated. The cost of foreign oil is about $53 a barrel. Shouldn't we, as a practical matter, be encouraging the use of smaller, more fuel efficient vehicles? There is a tax break for ``small refiners'' of oil to improve clean air standards. Unfortunately, ``small'' is defined as those with refining capacity below 205,000 barrels per day, so some of the large oil companies can get in on this one too. Three of the world's richest energy companies--BP, Exxon Mobil, and Conoco Phillips--stand to be the primary recipients of two tax breaks, totaling $445 million, for building an Alaskan natural gas pipeline and for processing natural gas for the project. Considering that these three companies have enjoyed after-tax profits of $95 billion since 2001, the wealthy shareholders of these companies--not taxpayers--should foot this bill. In addition, these three companies are allowed to depreciate their natural gas pipeline over seven years, costing taxpayers another $150 million. There is $27 million for dog and horse race tracks to help lure more foreigners to gamble at U.S. horse and dog racing facilities; $995 million for the treatment of aircraft leasing and shipping income. This provision would provide a tax exemption on income derived from an aircraft or vessel leasing business. There is $28 million for a cruise ship tax break. This provision would allow the cruise industry to delay paying taxes on airplane tickets, hotels, and other excursions it sells in the United States. The delay would save the Carnival Corp. $15 million, and Royal Carribean would save anywhere from $8 million to $10 million. There is $9 million for a tax break on archery products; $11 million for a provision that would reduce the excise tax on fishing tackle boxes; $44 million for the importers of Chinese ceiling fans; $4 million to repeal the excise tax on sonar devices that are used for finding fish; $247 million for a provision that is designed to help the producers of small jets and planes, 60% of which are built in Kansas. Lear Jet and Cessna benefit greatly from this provision; $27 million for providing tax-free treatment if farmers replace livestock because of weather related conditions; $101 million for NASCAR track owners; $57 million for a tax break for shipping companies; $501 million for a tax credit for the maintenance of railway tracks; $336 million for a tax break for Hollywood studios; $234 million for a tax break for the producers and marketers of alcoholic beverages; and $495 million for Naval shipbuilders. Where is it going to end? We have to face the facts, and one fact is that we can't continue to cater to wealthy corporate special interests any longer. The American people won't stand for it, and they shouldn't--they deserve better treatment from us. I strongly encourage my colleagues to vote against this conference report.

Mr. McCAIN

Mr. McCAIN. Mr. President, with reservations I support passage of the conference report to the fiscal year 2005 Military Construction Appropriations Act. This bill provides $10 billion in funding for important military construction activities including base housing as well as the construction and maintenance of base infrastructure. When we passed the Senate version of this legislation, I declared that this appropriations bill was a good example of how the legislative process is expected to work, wherein the work of the authorizers is fully taken into account by the appropriators. The legislation was relatively free of earmarks and riders that were not related to Military Construction. However, during the conference, a legislative rider that has no business in an appropriations bill found its way into the conference report. I am referring to the section of the conference report that authorizes a $18 billion loan guarantee program for the construction of an Alaska natural gas pipeline. This authorizing provision is found in neither the House nor the Senate version of this legislation, yet with characteristically little attention, it has found its way into the conference report. Once again, it pays to have powerful members of the Appropriations Committee representing your State or district. Congress has a legislative process that has two separate tracks for authorization and appropriation. Merging these tracks and eliminating the essential discourse and deliberation necessary to establish sound public policy is not in the Federal taxpayers interest. Nevertheless, here we are again, faced with the necessity of approving appropriations for military construction with an enormous pork program attached at the last minute. All the more problematic is that this same piece of legislative text was included in the failed energy bill. The Senate rejected this provision then, but we are unable to do it again, as it was snuck into a conference report on a totally unrelated bill. It is a clear violation of the legislative process, specifically Rule 28, and it's simply wrong. My objections to the Alaska pipeline provision are not only procedural. Many of my colleagues may not be aware that what they are approving here is an economic cushion for three extremely wealthy corporations. Undoubtedly, these three corporations have the financial resources to proceed with this project without taxpayers' dollars, but once again, we will manage to provide generous financial incentives to corporate interests with public funds. These selective subsidies are clearly inequitable and contrary to the interests of the rest of American taxpayers. The sponsor of this provision may maintain that the American public will benefit from the natural gas supply that may flow through this pipeline years from now. Undoubtedly, if the supply is there, the consumers will be, too. And that is my point. This is an economic venture that will yield significant profits for those companies involved. It is my understanding that as a result of the financial promise of this venture that there are other companies that would very much like to be involved. What this provision does is to codify the terms set by these three corporations to provide an even sweeter opportunity with $18 billion in federally backed loan guarantees. These loan guarantees are the thick rich icing on the tax break cake included in the FSC-ETI conference report, which also passed today. Tax breaks totaling $445 million are provided for pipeline construction and gas processing, again directed to the same corporations, which together have shown after-tax profits of $95 billion since 2001. I am certain that American taxpayers do not appreciate paying twice for their expensive energy supplies. Once at the pump and for their home heating bills, and then again for tax subsidies to profitable energy subsidies. Also contained in this legislation is funding for drought assistance. I sympathize with the proponents of this agricultural disaster assistance and I do not question that drought and abrupt changes in climate are having a severe impact on the crops grown in the states covered in this conference report. While I do agree that prolonged drought and other natural disasters are having devastating effects on many Americans and sectors of our economy, crop assistance does not belong on Military Construction funding legislation. When the Senate considers legislation to address drought-induced and other climate damages, shouldn't all affected states receive assistance? How are we to say that one group of people or sector of our economy deserves financial assistance over another? According to the Congressional Research Service, Congress provided about $3 billion in assistance for crop and livestock losses in 2001 and 2002. Coupled with all the other billions in agricultural subsidies, American taxpayers could conclude that Congress has determined, without clear deliberation, that this is the priority need. There are many States, including Arizona, that are facing terrible drought-induced problems and do not receive assistance in this conference report. Destructive wildfires have spread through the Western United States because of the dry conditions there, causing billions of dollars in property and resource damage. Drought-induced insect infestations have increased wildfire risks to our communities and natural resources. Water levels in reservoirs in our parched states have dropped dramatically, reducing water supplies, causing millions of dollars in losses to the recreation and tourism industries and reducing hydropower generation. In some areas, the lack of precipitation and water supply recharge, has resulted in wells running dry. I can't think of a more disastrous situation than that. However, the people who fall into these categories are not covered by the drought assistance provisions. I have found this report contains 62 earmarks totaling $98.7 million. I am also troubled by a provision in the explanatory statement that accompanies this conference report. According to the explanatory statement, ``The language and allocations set forth in House Report 108-607 and Senate Report 108-309 should be complied with unless specifically addressed to the contrary in the conference report and statement of the managers.'' This has the composite effect of essentially doubling the number of earmarks in the Military Construction Appropriations Act. As legislators we are often forced to make difficult budgetary decisions. However, in the instance of this conference report, the most difficult decisions were avoided. With looming budget deficits, it is as important as ever to practice fiscal responsibility and avoid the practice of earmarks. The above statement ensures all $44.7 million in earmarks added by the Senate as well as the $38.5 million in earmarks contained in the House version of this legislation. As I stated when we considered that legislation, nearly all of these earmarks are funded under the minor construction account. Normally, this account is intended to be used for urgent and unforeseen requirements and therefore neither the President's budget nor the authorizing committees identify specific projects to be funded. Once the Services decide to spend the money, the authorizing and appropriations committees must approve or disapprove of the minor construction project to which the Services plan to fund. By earmarking the funds in the minor construction account, the appropriators have usurped the authority of the authorizing committee to approve or reject these projects. I can only hope that next year, when the appropriators stray from this practice. With the passage of the conference report to the fiscal year 2005 Defense Authorization Act, the legislative branch has once again affirmed its support for the important round of base closure and realignment that will occur next year. With this being an election year and Member's parochial concerns being as strong as ever, I am encouraged to see that my colleagues have resisted the temptation to add pork to bases in their states in what would be a misguided effort to save their bases from base closure. Such efforts would be a waste of taxpayer money, and would not prevent their base from being closed. I commend the chairman of the Military Construction Subcommittee, Senator Hutchison, and the ranking member, Senator Feinstein, for their hard work on this bill and their continued support for our military. Their attention and commitment to only supporting high priority projects for the Navy, Marine Corps, Army, and Air Force is once again exemplary and provide for a sound measure to fund military construction in the coming fiscal year. I only wish they were able to hold to the Senate version of this legislation and were able to keep extraneous non-military construction provisions out of this conference report.

Mr. McCAIN

Mr. McCAIN. Mr. President, I am pleased to support a Senate resolution to celebrate the 125th anniversary of the first International Polar Year, IPY, of 1882-1883, the 75th anniversary of the second IPY of 1932-1933, and the 50th anniversary of the International Geophysical Year, IGY, 1957-1958, in 2007-2008. The resolution would also support the continuation of such international science year traditions, particularly emphasizing activities dedicated to global environmental research, education, and protection. Mr. President, IPY and IGY have left a legacy of scientific advancements, new discoveries, and international goodwill that continue to benefit societies today. They have made significant contributions to enhancing our understanding of the processes of environmental change and variability. In order to accurately access and monitor changes in the Earth's climate, environments, and ecosystems, it is imperative that we give adequate attention and resources to understanding these processes. Examining environmental changes in the past will strengthen our abilities to make informed decisions for the future. IPY, first launched over 125 years ago, set precedents for internationally coordinated scientific campaigns. Accomplishments from past IPY activities include advancements in meterology, atmospheric sciences, geomagnetism, and technology. IPY also fueled the establishment of the first year-round research station inland from the Antarctic coast by the United States. Planning for an IPY in 2007-2008 is currently underway under the United States leadership of the National Academy of Science, in conjunction with the International Council for Science and the World Meterological Organization. Modeled after IPY, IGY was first launched in 1957-1958 and also has been a model for international science activities. Accomplishments from past IGY activities include the initiation of the global space age and exploration of the upper atmosphere through the launching of Sputnik and Vanguard, the world's first satellites. IGY led to the establishment of more research stations in the Antarctic, and to the ratification of the Antarctic Treaty in 1961, which promoted peaceful international collaboration and scientific exploration in the Antarctic. It is my hope that the same research activities will occur in the Arctic region. This resolution celebrating the anniversaries of IPY and IGY in 2007- 2008 would endorse the concept of a worldwide campaign for scientific activity and expand the scope of past international science activities to promote interdisciplinary research that incorporates the physical and social sciences to enrich the understanding of diversity in life and environmental patterns on Earth. The resolution also would require the President of the United States to submit to Congress a report on steps taken by the National Science Foundation and the National Aeronautics and Space Administration, in association with the National Academy of Sciences and other scientific organizations, to ensure a successful worldwide international science year in 2007-2008. I urge my colleagues to support this noncontroversial effort to promote continued international scientific collaboration.

Mr. McCAIN

Mr. McCAIN. The Chairman is correct. This means that, under Section 133, the Air Force may not acquire, either by lease or purchase, Boeing 767s without full and open competition. In other words, any program to acquire tankers must start from the beginning, as the Senator properly stated last year, on a traditional budget, procurement, and authorization track.

Mr. McCAIN. I thank the Chairman for clarifying the intent of the legislation with respect to the prohibition on leasing tanker aircraft. Now, let's turn to what authority Section 133 grants with respect to purchase of tanker aircraft.

Mr. McCAIN. Mr. President, I would like to review with my colleague Section 133 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005. Under the leadership of Senate Armed Services Committee Chairman Warner and Ranking Member Levin, Congress has agreed to amend Section 135 of the National Defense Authorization Act for fiscal year 2004 by expressly prohibiting the Air Force from using previously granted authority to acquire, through a lease or purchase, Boeing 767 aircraft for use as aerial refueling tankers. This provision succeeds in accomplishing Chairman Warner's primary objective, as he stated in this chamber on October 23, 2003, to put the tanker replacement program back into a traditional budget, procurement, and authorization track. In other words, the Air Force's program to modernize its tanker fleet must be subject to the aerial refueling analysis of alternatives, the aerial refueling portion of the Mobility Capabilities Study, a new aerial refueling validated capabilities document and operational requirements document in accordance with all applicable Chairman of the Joint Chiefs of Staff Instructions, and the express approval of a Defense Acquisition Board in full accordance with Department of Defense regulations.

Mr. McCAIN. Mr. President, I strongly support passage of the conference report on HR 4200, the National Defense Authorization Act for Fiscal Year 2005. This legislation funds over $420 billion for defense programs, which is a 3.4 percent increase or $20.9 billion above the amount authorized by Congress last year. While I am pleased that we are able to act on this legislation prior to adjourning for the elections, I would be remiss if I did not mention that once again, the Defense Appropriations Act has been signed into law prior to final action on the Defense Authorization Act. The responsibilities of authorizors and appropriators are expected to be distinct. The Defense Authorization Act lays out the blueprint for the policies and funding levels for the Department of Defense and its programs. The role of the Appropriations Committee is to allocate funding based on policies provided by authorization bills. In reality however, the Appropriators' function, has expanded dramatically, and the Appropriations Committee now engages in significant policy decision making and micromanagement, largely usurping the role of the authorizing committees. I hope next year we will succeed in passing the authorization measure prior to the appropriations measure. The men and women of our Nation's Armed Forces put their lives on the line every day to protect the very freedoms we Americans hold dear. It is our obligation to provide key quality of life benefits to the members of our military. Great strides will be made by this bill towards accomplishing that goal. For example, this Conference Report authorizes a 3.5 percent across-the-board pay raise for all military personnel. It repeals the requirement for military members to pay subsistence charges while hospitalized, and adds $7.8 million for expanded care and services at the Walter Reed Amputee Patient Care Center. Also, included in the conference report is a permanent increase in the rate of family separation allowance from $100 per month to $250 per month as well as a permanent increase in the rate of special pay for duty subject to hostile fire or imminent danger from $150 per month to $225 per month. We continue to be increasingly reliant on the men and women of our Reserve forces and National Guard. In fact, around 40 percent of all the ground troops in Iraq and Afghanistan are composed of National Guard and Reserve forces as well as nearly all of the ground forces in Kosovo, Bosnia, and the Sinai. Many of these soldiers and sailors leave behind friends, families, and careers to defend our nation. Accordingly, it is the responsibility of policy makers to ensure we look after the needs of these patriots. Included in the conference report is the authorization for full medical and dental examinations and requisite inoculations when reservists mobilize and demobilize as well as a new requirement for pre-separation physical examinations for members of the reserve component. This provision is critical to maintain and, in some circumstances, increase the readiness of the total force. In the Senate version of this legislation, we passed an important amendment to authorize an increase in the size of our Army by 20,000 and size of our Marine Corps by 3,000. I am very pleased this provision was included in the conference report. This increase is absolutely vital in our Army's ability to carry out its mission in the global war on terror. There is no shortage of evidence supporting an increase in Army endstrength. Recently, the Army pulled 3,600 troops out of South Korea to fill critical needs in Iraq. The Department of Defense should be able to move troops around as needed to address critical needs. However, in this case, we are sacrificing our readiness on the Korean peninsula because we do not have enough solders serving in the Army. After returning home for a short period of time, soldiers and Marines are already making preparations for their second tour in Iraq or Afghanistan in as many years. This is not good for morale, this is not good for retention, this is not good for readiness, and this is not good for the soldier's families. Eventually, recruitment will be seriously affected by these trends. Additionally, the Army recently announced a new stop-loss policy. While, I certainly recognize the Army's authority and necessity to issue stop loss orders, their issuance in this instance is yet another reason why we need to increase the size of the Army. For all the benefits in group cohesion that results from extended tours, the Army will be facing a serious crisis when it comes time for these soldiers to reenlist on their own accord. I am concerned about the effect that these stop-loss orders will have on the morale of our Army. While I still do not believe that we need a draft, we do need to increase the size of the Army to carry out important defense missions. Once again, I am disappointed that the development of this legislation lent the opportunity for the annual buy America battle. In a similar fashion as last year, the Senate had to beat back a provision in the house version of the legislation that sought to protect parochial interests at the cost of our defense industry and American jobs. It seems as if every year, we fight the same fight in conference. I am pleased that once again, the Senate prevailed over the protectionist leanings in the House. As I have stated countless times before, we need to provide American servicemen and women with the best equipment at the best price for the American taxpayer. By following this simple philosophy, we will protect both the men and women in uniform, as well as our domestic defense industry. The international considerations of buy America provisions are immense. Isolationist, go-it-alone approaches have serious consequences on our relationship with our allies. Our country is threatened when we ignore our trade agreements. Currently, the U.S. enjoys a trade balance in defense exports of 6-to-1 in its favor with respect to Europe, and about 12-to-1 with respect to the rest of the world. We don't need protectionist measures to insulate our defense or aerospace industries. If we enact laws that isolate our domestic defense industry, our allies will retaliate and the ability to sell U.S. equipment as a means to greater interoperability with NATO and non-NATO allies would be seriously undercut. Critical international programs, such as the Joint Strike Fighter and missile defense, would likely be terminated as our allies reassess our defense cooperative trading relationship. The Senate also successfully defeated an amendment during Senate consideration and again in conference aimed at crippling the upcoming BRAC round. BRAC has taken on a new significance in the war against terror. There has not been a time in recent memory when it has been more important not to waste money on non-essential expenditures. To continue to sustain an infrastructure that exceeds our strategic and tactical needs will make less funding available to the forces that we are relying on to destroy the international network of terrorism. I am once again pleased that the Senate put the good of the Department of Defense over parochial interests and protected the upcoming BRAC round. The Department of Defense has come out with very fair and reasonable criteria used to select what bases are chosen for BRAC. I have every confidence the Secretary of Defense will carry out this round of BRAC in a just and consistent manner. Sooner or later surplus bases must be closed. Delaying or canceling BRAC would only make the process more difficult and painful than necessary. The sooner the issue is addressed, the greater will be the savings that will ultimately go toward defense modernization and better pay and benefits for our hard working service members. I understand that some of my colleagues are concerned about the potential negative effects a base closure may have on their local economy. But let me point out that previous base closure rounds have had many success stories. For example, after England Air Force Base closed in 1992, Alexandria, LA, benefitted from the creation of over 1,400 jobs--nearly double the number of jobs lost. Across the U.S., about 60,000 new jobs have been created at closing military bases. At bases closed more than 2 years, nearly 75 percent of the civilian jobs have been replaced. This is not to say that base closures are easy for any community, but it does suggest that communities can and will continue to thrive. Another issue of considerable diverse views during conference deliberations concerned the aerial refueling tanker lease program. I would be remiss if I did not take the opportunity to praise the leadership of Senate Armed Services Committee Chairman Warner and Ranking Member Levin for their steadfast vigilance during the three- year odyssey on the Air Force's failed Boeing 767 tanker program. I remind my colleagues, again, that three out of the four defense committees that were required to approve the original proposal to lease 100 tankers, did so without so much as reading the contract for the $30 billion procurement proposal. It was the Senate Armed Services Committee and the Commerce, Science, and Transportation Committee that put the brakes on that costly and misguided misadventure. And lest one thought otherwise, the Boeing 767 tanker investigations in the Department of Justice, Department of Defense, Office of Inspector General and the U.S. Senate are continuing and expanding. Under Section 133 of the National Defense Authorization Act for Fiscal Year 2005, the Air Force may not enter into a sole-source multiyear contract for the lease or purchase of Boeing 767s. Indeed, the Conference Report makes clear that, at the end of the day, the Air Force's plan to modernize or update its fleet must be subject to full and open competition and the traditional budget, procurement and authorization track. The conference report brings the Air Force's plan back to square one. The bottom line here is this. The aerial refueling tanker provision in the defense authorization bill does much to inject much needed sunlight in a program that has largely been insulated from public scrutiny. In so doing, this provision, that was adopted, directs the Air Force to begin--anew from the beginning--in its program to modernize its tanker fleet. The Air Force will have to now fully consider the Congress's direction, prohibiting the retirement of KC- 135E tanker aircraft, as a worthwhile alternative to updating tankers through KC-135E to R conversions. The tanker legislation in this bill ensures that any effort by the Air Force to modernize and replace its fleet of tankers is done responsibly. We should expect no less from the Air Force. That having been said, the final chapter on the failed tanker lease program cannot be closed until those among Air Force leadership who engaged in misconduct, are held accountable. I also would like to thank the chairman and ranking member, as well as Senators Dodd, DeWine, and Hollings for their assistance in reauthorizing the Assistance to Firefighters Grant Program through Fiscal Year 2009. This program uses a competitive, merit-based review process to give grants directly to local fire departments for equipment, training, and fire prevention programs. Our nation's firefighters must be prepared to respond to a myriad of threats, and this legislation will help ensure that they are adequately trained and equipped to meet them. Mr. President, Americans are blessed with nearly limitless freedoms and liberties. In exchange for all our country gives to us, it does not demand much in return. Yet throughout our history, millions of people have volunteered to give back to their nation through military service. The selfless acts of courage and sacrifice made by the men and women in our armed services have elevated our nation to the greatness we enjoy today. America is defined not by its power but by its ideals. One of the great strengths of the American public is the desire to serve a cause greater than our own self interest. All too often, our younger generations are accused of selfishness and an unwillingness to sacrifice. I disagree. I see generations of people yearning to serve and help their fellow citizens. Each year, thousands of our young Americans decide to dedicate a few years or even a full career to protecting the rights and liberties of others. They often do this with very real risks to their lives. They volunteer to do this not for profit, nor for self promotion, but out of a sense of duty, service, and patriotism. I urge my colleagues to support this important legislation.

Mr. McCAIN. I thank the Senator. I am grateful to the gentleman from Virginia for his leadership in this 3-year odyssey. I remind my colleagues that three out of the four defense committees that were required to approve the original proposal to lease 100 tankers, did so without so much as reading the contract for that $30 billion procurement proposal. It was the Senate Armed Services Committee that put the brakes on that costly and misguided misadventure. That having been said, the final chapter on the tanker lease program cannot be closed until those among Air Force leadership who engaged in misconduct are held accountable.

Mr. McCAIN. One last question. Have we obtained an opinion from the Congressional Budget Office as to how it would score the acquisition of tankers under Section 133?

Mr. McCAIN

Mr. McCAIN. Mr. President, I withdraw my objection.

Mr. McCAIN. I object.

Mr. McCAIN

Mr. McCAIN. I would be glad to yield for a question by the Senator from New Hampshire. I am learning.

Mr. McCAIN. I said I would be happy to propound a unanimous consent to yield to you without losing my right to the floor, if you would like to describe what you intend to do.

Mr. McCAIN. I ask unanimous consent to yield to the Senator from Iowa for 5 minutes and then regain my right to the floor.