Don Nickles

Mr. NICKLES

Mr. NICKLES. If my colleague would yield, I would be happy to work with the Senator. Some legislation has been considered by the Governmental Affairs Committee on that issue, and maybe we should review that to achieve more fair consideration. I spoke earlier tonight about judicial nominations. We did confirm, I believe, seven or eight judges today. That is good. But on circuit court nominees, we have confirmed 13 out of 32; that is 40 percent, 8 of which have been languishing for over a year, 445 days, I think, since May of last year. Several of those eight are outstanding nominees. One of them, John Roberts, has argued 37 cases before the Supreme Court. Miguel Estrada has argued 15 cases before the Supreme Court and has yet to have a hearing. Another nominee argued 10 cases before the Supreme Court. Other nominees served on district court levels for years, and were rated very high by the ABA. For fairness, we need to treat these individuals with respect and give them a hearing before the committee. Mr. President, 40 percent on the circuit court level is not satisfactory. I just mention that; I am not trying to pick a fight. I would just like to see that we let circuit court nominees have consideration. They should not have to languish for over a year after the nomination to have a hearing. I might mention, two of the eight have had hearings. Six of the eight have not even had a hearing scheduled, and they have waited over a year. So I mention that. I appreciate my colleague's consideration. Mr. Reid. I think, generally speaking, we have to do better. It is too bad that someone has had to wait a year. But during the time when we were trying to get some judges approved and we were in the minority, we had judges who waited 4 years. I hope that record is not beaten. I would say we have held more hearings on district and circuit court nominees, 78, than in the past 22 years. I have all the statistics here. We need not go through them. We need to try to have a better system. I am happy to work on that, and I will be happy to work with my esteemed friend, the senior Senator from Oklahoma, to do whatever we can to work out some of these bumps in the road that exist.

Mr. NICKLES

Mr. NICKLES. Mr. President, I haven't seen a list. I am trying to figure out what companies would be impacted by that. Do you have a copy that maybe you might share with other Senators?

Mr. NICKLES. Whoa, whoa.

Mr. NICKLES. Correct me if I am wrong, but don't they pay U.S. income taxes on every penny of the contract they have with the Department of Defense?

Mr. NICKLES. They do. So if they incorporate in Bermuda, or Barbados, or someplace else, they might try to not pay U.S. taxes on foreign income, but they are already required, under present law, to pay U.S. taxes on U.S. income; isn't that correct?

Mr. NICKLES. Will my colleague and friend yield for a question?

Mr. NICKLES. If the Senator will yield, I am asking for a list of companies--not countries--that have done this egregious deed of reincorporating in some other country.

Mr. NICKLES. Let me get that in question----

Mr. NICKLES. Accenture reincorporated in July of 2001. Your deadline is January 1, so it would not apply.

Mr. NICKLES. I found one. PricewaterhouseCoopers evidently reincorporated in Bermuda on March 27, 2002; is that correct, according to your sheet?

Mr. NICKLES. They do defense contracts of $220 million and total Federal contracts in defense and homeland security-related, $129 million; is that correct?

Mr. NICKLES. I got this from you.

Mr. NICKLES. I am trying to figure out who we are trying to punish here.

Mr. NICKLES. If the Senator will yield further, I found a guilty party--PricewaterhouseCoopers. I will say I had no idea--I have read in the paper, and I heard about Stanley and Ingersoll-Rand. I didn't find somebody--

Mr. NICKLES.--guilty as under your provision. PricewaterhouseCoopers is a $220 million contractor. That is pretty significant. Let me ask you a question. PricewaterhouseCoopers does a lot of business, evidently, with the Department of Defense, homeland security, and other Federal contractors. They would be banned from all Federal contracts--or only Federal contracts dealing with Department of Defense?

Mr. NICKLES. So now we are down to $129 million worth of contracts. If they do those contracts with U.S. employees, do they pay taxes on their U.S. contracts if they make income--I mean, if they make income, don't they pay corporate income tax on the contracts they have in the United States?

Mr. NICKLES. So they do pay income tax?

Mr. NICKLES. Let me make sure I understand. So this company, which does a lot of work--they do software, management, and a lot of different things--is doing $129 million worth of defense-related contracts, they would be banned from any of those contracts; is that correct?

Mr. NICKLES. Under the Senator's amendment.

Mr. NICKLES. There are 200-some-odd-million-dollars' worth of contracts. There is no prohibition right now that I know of that would keep a foreign company from doing the same work that PricewaterhouseCoopers is doing, or some other company, so a French company or a German company could pick up this contract that we are going to foreclose from PricewaterhouseCoopers, or somebody else and, correct me if I am wrong, under the Senator's amendment a German company could do it, and 100 percent of those employees could be in Germany and do 100 percent of this work and there would be no U.S. income tax--I take that back. I will rephrase this. This is a $129 million PricewaterhouseCoopers contract and they would be barred, so now those contracts would be open. There is nothing to prohibit a Swiss company, a German company, a French company, Israeli company, or any other company worldwide from doing that work, and those jobs might be domiciled someplace else in the U.S.; isn't that correct?

Mr. NICKLES. Mr. President, I want to make a couple of comments on the legislation. My colleague mentioned that he is not on the Finance Committee. This is an item that has jurisdiction in the Finance Committee. Of late, I think maybe we don't use the committees anymore. I am kind of shocked that the chairman and ranking member of the Finance Committee are not here saying, wait a minute, we are dealing with this issue. Actually, I believe an amendment has been reported out on this issue, but it is a different amendment. We are dealing with taxation issues. My colleague from Minnesota already admitted--and it happens to be factual--if you do business in the United States and you are a U.S. company, at 100 percent you pay taxes on that contract, period. And if you are domiciled in Bermuda and you do a U.S. contract, you pay 100-percent corporate taxes. What we are talking about is a differential of taxes of international taxation of foreign source income, not U.S. contracts. We are using U.S. contracts and threatening thousands of U.S. jobs that, if this amendment is adopted--and I hope it is not--these jobs may be done elsewhere because there is nothing in this amendment that says other companies in other countries need not apply. They are not going to be prohibited. We may well have a situation, as absurd as it sounds, of: Oh, we are sorry, you do not pay enough in foreign taxes on foreign source income; therefore, we are going to deny you U.S. contracts. And now we are going to export U.S. jobs. I am not sure that makes sense. Let me be very clear. My colleague from Minnesota agreed with me, U.S. companies, whether domiciled in Bermuda or not, if they do U.S. contracts with the Department of Defense or any U.S. contracts, they pay U.S. corporate income taxes, period. They pay U.S. taxes, period. There would be U.S. taxes paid on every dime of this contract. We are really dealing with foreign international taxes, a very complicated issue, one that should be dealt with appropriately in the taxation committee, not on the Department of Defense appropriations bill, not where people do not know what we are talking about when we talk about foreign source income. On occasion, this Senate should rise and say this is not the way to legislate. I understand the beautiful demagoguery that somebody is able to say--and I have read in the papers--look at those companies, they are leaving the country, turning their backs. I do not know I agree with that statement. I will give an example. I do not know that much about Stanley. It is a Connecticut-based toolmaker. They took a lot of flack. Stanley decided they got enough pressure, and they rescinded their corporate move, or they were contemplating going to Bermuda, and they rescinded it. PR-wise, this is bad news if a company tries to reincorporate in Bermuda or anyplace else--I do not know why my colleague included Cyprus. I never considered Cyprus a tax haven. Stanley decided not to reincorporate in Bermuda. I do know that if they did incorporate in Bermuda, for every contract they had with the Department of Defense, they would pay 100 percent U.S. corporate income taxes--100 percent. They would pay as much as Nickles Machine Corporation would. This is an easy issue to demagog, but it is a complicated issue in tax policy. The Finance Committee, of which I happen to be a member, and Senator Grassley and Senator Baucus have worked on a bill. It is not perfect, but it is a much better approach than what we have before the Senate today. To say you cannot get the jobs--I do not know, I am sure PricewaterhouseCoopers has thousands of employees. I am sure they have some employees my State. I am not sure they have employees in every State, but they have a lot of employees, and those are employees in the United States. They pay U.S. taxes. Should we say they should be denied any Federal contract or any Department of Defense contract? I am not ready to say that. They may well be providing goods and services--$129 million to DOD or $220 million--that are very much needed. As a matter of fact, they are probably doing jobs that Arthur Andersen used to do. So we need more accounting consulting companies. Should they be totally debarred? That is a pretty serious penalty. Debarment is usually a penalty for pretty egregious conduct such as fraud or criminal liability, not necessarily moving a headquarters. I know a lot of companies incorporate in the State of Delaware. All across the country companies incorporate in the State of Delaware. There must be some advantage in incorporating in the State of Delaware. I am amazed at the number of corporate headquarters in Delaware. Is that for income tax evasion? I do not know. I do not think so. But should we deny them contracts? I am not sure. I darn sure question the wisdom of saying all Government contracts will be banned. Maybe there should be a penalty if people reincorporate in Bermuda to avoid foreign taxes. Should that penalty be taxation? Right now this penalty is total debarment from Federal contracts. I question that penalty. I am not sure that is the right penalty. Maybe there should be a better way. Maybe we should reconsider foreign taxation and make sure we are competitive. I know in some countries they are growing, and growing dramatically because their international taxation picture is much better than ours. Take, for example, Ireland. They have reduced their international taxation, and they happen to be growing. There are other countries that have done quite well because they have a low tax structure. God bless them. I am proud of them. Should we say that anybody who happens to have a headquarters in those facilities, but also has a branch in the United States, should be denied any business in the United States and automatically export those jobs to other countries? I do not think so. I just question the wisdom of the amendment. I know the amendment is well intended. I know it is populist. I know it is very comfortable to beat these companies up, and maybe some rightfully so. But I am not sure that total debarment from any Federal contract of those employees who work for those companies and are going to find themselves unemployed because we just said they cannot do Government work, when they pay taxes on that Government work, I am not so sure that is the right penalty. I have serious reservations about my colleague's amendment. I am not so sure that we should adopt it. I am sure it does not belong on this bill. If we are going to deal with taxation issues, I think it should come out of the Finance Committee and be dealt with on a tax bill, not on a Federal procurement bill. The amendment reaches pretty far. I hope people will start taking a look at it. I am trying to see who is covered by this. Let me find another company. I do not want to mention just one company. Ingersoll-Rand, I noticed, incorporated in Bermuda on December 31. That happens to fall on the Senator's date. I read his language.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from North Carolina (Mr. Helms) is necessarily absent. I further announce that if present and voting the Senator from North Carolina (Mr. Helms) would vote ``no.''

Mr. NICKLES. Mr. President, I urge my colleagues not to waive the Budget Act with respect to the point of order for a lot of different reasons. One, I wish we had a budget. Somebody said we could have passed a budget. Maybe the Budget Committee was going to pass a higher number. Unfortunately, this is the first time since 1974 that we have not had a budget pass the Senate. Maybe one of the most fiscally irresponsible things we have not done is not pass a budget. We are still under the constraints of last year's budget. Last year, we overwhelmingly passed a budget and set up $200 billion, $300 billion, and it was passed by the Finance Committee. Really what we should do is direct the Finance Committee to pass a bipartisan bill. I looked at the last 22 years, and the Finance Committee has dealt with major Medicare and Medicaid reforms, every one of which passed with bipartisan support except one. Only once did we bypass the committee. Unfortunately, the Democrat leadership said: We are not going to go through the Finance Committee because we think it will report out something we do not like. So they came up with a partisan bill, and we are playing ping-pong. I looked at the amendment we are considering right now. It is 102 pages. It was still warm off the press, and nobody on this side, with one exception maybe, had seen this amendment before it was offered yesterday. This is the most important expensive expansion of Medicare in its history, and we find out that most of the expansion is not in Medicare but Medicaid, and the cost to States is in the billions of unfunded mandates to the States because we did not just expand Medicare, we expanded Medicaid, and we are telling the States they are going to have to come up with matches to provide this brand new free benefit. Thirty- one States are going to have to pay for half of this new benefit. There is an increase in S-CHIP match, a 100-percent match for some, but 31 States have a 74-percent match. They have to go up to 120 percent. All of that is on the States, or at least their matching portion. The estimated cost of unfunded mandates is $70 billion. We have not had a hearing. We have not had a markup. This may be a classic example of the best way not to mark up legislation that is this important. Let us step back a little bit. Let us work with the Finance Committee. Let us work in a bipartisan way. We can certainly get that done. We have the month of August and part of September. We can report a positive bipartisan bill that can become law. What is before us, unfortunately, is well short of that goal.

Mr. NICKLES. I announce that the Senator from North Carolina (Mr. Helms) is necessarily absent. I further announce that if present and voting the Senator from North Carolina (Mr. Helms) would vote ``No.''

Mr. NICKLES. I announce that the Senator from North Carolina (Mr. Helms) is necessarily absent. I further announce that if present and voting the Senator from North Carolina (Mr. Helms) would vote ``no''.