Jack Reed

Mr. REED

Mr. REED. I ask unanimous consent that we now proceed to a period of morning business with Senators allowed to speak for not to exceed 5 minutes each.

Mr. REED

Mr. REED. Mr. President, I would like to take a few minutes before we vote later today on the Graham amendment and the Grassley amendment to describe some of the grave concerns I have with the tripartisan amendment sponsored by Senators Grassley, Jeffords and Breaux. The tripartisan Senate bill offers the following ``benefits'' to seniors: an expected monthly premium of $24; a beneficiary must cover the first $250 in drug costs; then half of his or her drug costs are covered between $251 and $3,450; at that point the beneficiary is then responsible for all drug expenses between $3,451-$5,300; Moreover, the plan claims to offer assistance for low-income beneficiaries. What is not mentioned is that a strict asset test would prevent 40 percent of low-income seniors from even qualifying for this subsidy. A car, a wedding ring, or a burial plot over a certain value would render a beneficiary completely ineligible. The purpose of insurance is to provide protection against certain costs. The kind of insurance some of my colleagues in the Senate have proposed would leave those seniors and persons with disabilities holding the bag when their drug expenditures are highest. Under the tripartisan plan, beneficiaries could still be required to pay thousands of dollars in drug expenditures. This proposal would create a serious lapse in what is supposed to be a safety net for our most vulnerable citizens, only paying a quarter of an average Rhode Islander's prescription drug costs. When a person breaks an arm, Medicare pays for the whole cast, not half. A prescription drug benefit should pay for all of your benefits. There are other nonprescription-drug-related provisions contained in the tripartisan bill that are also of great concern, particularly Title II, the ``Option for Enhanced Medicare Benefits'' section. To me, the provisions outlined in this section of the bill are a direct affront on the Medicare Program as we know it. It seeks to create a new Medicare option that combines both Part A and Part B with a combined premium. Under this option, a beneficiary would pay more upfront, out-of- pocket costs, such as a $10 co-payment for the first five home health visits and $60 per day for the first 100 days in a skilled nursing facility. In return, the beneficiary would pay nothing for preventive health services such as mammography and cancer screening and would receive protection against catastrophic health care costs. This new Medicare benefit option would reverse the universal nature of our current program by creating a new line of services for those who can pay more. During the Balanced Budget Act debate of 1997, I fought against the addition of copayments for home health and other essential services because they threaten the access of low-income beneficiaries to those services. This new enhanced benefit option would create a two-tiered system of the haves and the have-nots. Since there is no premium assistance for low-income beneficiaries who may wish to enroll in the enhanced benefit option, only more wealthy beneficiaries would be able to afford it. And since it requires beneficiaries to pay a greater share of their upfront costs, it would divert healthier, younger beneficiaries from the traditional program. This adverse selection would ultimately result in higher costs for those who remain in the traditional Part A and Part B program. The sponsors and supporters of the tripartisan Senate bill have argued that even though our Nation's most vulnerable citizens deserve a Medicare prescription drug benefit they can depend on, the proposal offered by Senators Graham, Miller, and Kennedy is simply too expensive. I would like to take a moment to highlight for my colleagues a recent report by the Center on Budget and Policy Priorities that I believe adds an important perspective to that point of debate. The report compared the cost of last year's tax cuts with the costs of two prescription drug proposals for the Medicare population. The estimated 10-year cost of the first plan being roughly $350 billion and the second $700 billion for the same period. The report found that when the tax cut is fully in effect, the cost of the tax cut for just the top 1 percent of the population would exceed the entire difference in cost between the two prescription drug proposals. I voted against the President's tax cut because I felt that it failed to leave room for critical immediate needs such as a prescription drug benefit, nor did it allow us to adequately address the long-term solvency of Social Security and Medicare. Once Congress enacts a Medicare prescription benefit, it will be difficult to modify or significantly alter it. If we are going to enact a benefit, we must pass a solid, reliable benefit that will continue to meet the needs of Medicare beneficiaries in years to come. And if resources are the issue, many Members have already stated clearly that there is a way to address that issue, either through the reserve fund set aside in last year's budget or by other means.

Mr. REED

Mr. REED. Mr. President, I rise this afternoon to join my colleagues and the growing chorus requesting that the Senate move expeditiously to pass a universal, voluntary, and affordable prescription benefit plan under Medicare. I am a proud cosponsor of the Graham-Miller-Kennedy proposal, which I think is the right approach to provide a voluntary, universal, and affordable prescription drug benefit for our seniors. In 1964, Congress took the bold step to enact a health insurance program that guaranteed coverage for all seniors and disabled persons in the country. That boldness has been justified over the last decade because it has improved materially the health of seniors, and, indeed, this development has improved their economic standing as well. But it is time for their Congress to bring that Medicare Program into the 21st century. Back in 1964, the key elements of health care for seniors and for all Americans was access to hospitals and access to doctors. Medicare provided for both. Today, there is a third critical element. That element is pharmaceutical benefits. Thus, we must bring the Medicare Program that has served us so well over these last several decades into this new century by providing a prescription drug benefit for our seniors. Today, Medicare beneficiaries account for 14 percent of the population, but they account for 43 percent of the Nation's spending on prescription drugs. You can see that the population most affected by the use of pharmaceuticals and the rising costs of pharmaceuticals is seniors. Another reason why we have to move quickly and expeditiously to provide assistance under the Medicare Program. Today, the Medicare Program covers approximately 39 million Americans, about 170,000 of my fellow Rhode Islanders. It is a program that is integral to the health and economic security of our seniors and to all of our families. For this system to go forward, it has to be strengthened by pharmaceutical benefits. I would like to talk briefly about some of the trends we have seen with respect to prescription drug benefits, to highlight the strengths of the Graham-Miller-Kennedy proposal, and to contrast this proposal with competing proposals: the House version and the tripartite package that is before us in the Senate. Before I do that, I want to commend majority leader Daschle for bringing this matter to the floor. This is an issue which every senior and every family in this country is acutely aware of and who have called for our attention to it for many, many years. This is not something new. There was at least rhetorical consensus in the last election when both sides claimed they were for the inclusion of a prescription drug benefit under Medicare. We have reached the point where words have led to action on this floor. I thank the majority leader for forging that action as we debate this issue today. I think it is also appropriate that this legislation has been brought together with another bill, the Schumer-McCain legislation that was modified in the HELP Committee by Senators Collins and Edwards, which provides benefits, we hope, to the entire population of this country when they purchase pharmaceuticals, because it will hasten the introduction of generic drugs into the marketplace while preserving the integrity of our intellectual property system. These two bills together--a prescription drug benefit for seniors from the Medicare system, and strengthening and speeding access to generic drugs in the country--I think are appropriate responses to the legitimate, persistent, and long-standing demands of the American public. Last year--if we look at the spending on pharmaceuticals--out-of- pocket spending on prescription drugs was estimated to be $848 a year among Medicare beneficiaries. Nine percent of them, however, spent more than $2,500 a year. This is an extraordinary amount of money for people who are living on fixed incomes. You do not have to talk to too many seniors before you hear their legitimate complaints, that they often have to choose between buying their prescriptions or paying their rent. Today, we had an event in Providence, RI, where we had seniors and physicians talk about that issue. A physician who joined us was very eloquent on this subject, pointing out that often his patients will tell him the choice they face is either filling their prescriptions or paying the telephone bill that month. That is a choice many seniors have to make. Frankly, many of them will choose to have the telephone-- for an emergency, for a lifeline, for communication with their families--and they will forgo the prescriptions. The doctor spoke of one case--one among many--where he was treating an elderly person, a woman, for high blood pressure, and she could not afford the full range of drugs he prescribed. So he tried to make do with whatever was in his supply cabinet: the samples he got from pharmaceutical companies. This caused, of course, a situation where they were frequently changing prescriptions; and even then she could not fill all the prescriptions because of her economic circumstances. The high blood pressure was treated on an ad hoc basis. Sometimes she could take her medicine because she could afford it; sometimes she could not. And what happened? The lady suffered a devastating stroke. Ironically, today that doctor can prescribe and ensure she gets the full complement of pharmaceuticals because she is disabled and her health care is paid for through the Medicaid Program as a disabled citizen. That is not right, and it does not make any sense. If that woman had been covered by the provisions of the Graham-Miller-Kennedy bill, she could have purchased those medicines that would have, hopefully, prevented her stroke. That is just one example, but we see it time and time again. Seniors are under tremendous financial and economic strain, as prescription drug costs go up and up and up. I spoke to another senior this morning: 70 years old, still working, and working primarily to pay for her prescriptions. She said she went back to a druggist the other day and was told her drug cost over $100. She cannot afford it. These are the realities that seniors face throughout the country. The bill Senators Graham, Miller and their colleagues have proposed--and one I proudly support--will address those concerns. They will provide a prescription drug benefit that is voluntary, a benefit that will require a $25 monthly premium, and no deductible. It will require the senior to pay $10 for generic prescriptions, $40 for a preferred brand name prescription, and $60 for a nonpreferred brand name prescription-- simple, direct, well defined, the essence of what I believe we should do to help seniors. The bill sets forth a clearly defined framework for what a Medicare recipient would expect to receive in benefits. The assistance is there from the very first prescription. There is no deductible. There are no gaps or limits in coverage. There is a catastrophic cap on out-of- pocket expenditures above $4,000. And there are additional subsidies for individuals with incomes below 150 percent of poverty--simple, direct, well defined, the essence of what we should do. It is a program that will not be administered at the discretion of private health insurance. It will be a Medicare program, available to every American, no matter where they live, something I think should be inherent in any drug proposal we make here on the floor of the Senate. In contrast, the House bill and other Senate proposals do not provide reliable drug coverage as part of Medicare's defined benefit package. These alternative bills have no defined benefit, no guaranteed premiums, no standard copayments or cost-sharing. And because the plans rely on private insurance companies and HMOs, the actual benefit a person receives could vary, depending on where that person lives. As we have experienced with the Medigap and the Medicare HMO market, private insurers are not capable, often, of providing stable, predictable coverage that older Americans and the disabled need and deserve. I hear regularly from constituents who are confused and upset by the constant changes in premiums, copayments, and benefits under these plans. And I suspect the same confusion will result if these pharmaceutical plans are administered exclusively by private insurers. So I believe we should move forward, very deliberately and very quickly, to adopt the version proposed by my colleague from Florida, Senator Graham. Again, in contrast to the Graham bill, the House-passed bill would require a monthly premium of $34, but the first $250 in drug costs must be assumed entirely by the beneficiary. You would be paying a premium, and yet you would be getting nothing for the first $250 in costs. For the next level, from $251 to $1,000, you would only pay 20 percent. But then, if you went over $1,000, you, the beneficiary, would have to pay 50 percent of the cost. And what, to me, is the most astounding aspect of this House proposal is, once a patient spends up above $2,000, they would have to pay the entire cost of their prescriptions until $4,800. Just at the point where these pharmaceutical costs were accumulating, a beneficiary would have to pay all of the costs and still the premium. This bill and its counterpart, the tripartisan bill in the Senate, I think, are not sufficient to meet the task before us. I urge my colleagues--all of my colleagues--to support strenuously the Graham- Miller-Kennedy bill and provide seniors and the disabled with a real pharmaceutical benefit. I yield the floor.

Mr. REED

Mr. REED. Mr. President, I rise to call attention to the 28th anniversary of the Turkish invasion and occupation in the Republic of Cyprus. In 1974, the Turkish Government sent 35,000 Turkish troops in two separate actions into Cyprus, obstensibly to put down a coup attempt against Cyprus President Makarios and to protect Turkish Cypriots. However, after taking over 36 percent of the northern part of the island, Turkish troops remained. This led to the Turkish Cypriots declaring their own government, the Turkish Republic of Northern Cyprus; a government only Turkey recognizes. Since then, the United Nations has maintained a buffer zone between the two land areas. The U.N. Secretary General has called Cyprus ``one of the most militarized regions of the world.'' Despite the U.N.'s presence and numerous attempts at settlement, there have been many tragic results of the Turkish intervention: nearly 200,000 Greek Cypriots have been displaced, over 1,000 Greek Cypriots and 4 Americans remain unaccounted for, over 400 Greek Cypriots remain enclaved in the occupied area, and the Turkish troop presence continues. For this and other reasons, I was proud to cosponsor S.C.R. 28, calling for a U.S. effort to end restrictions on the freedoms and human rights of the enclaved people in the occupied area of Cyprus. We should be heartened that it appears that the settlement process may be making some progress. Talks between Cyprus President Clerides and Turkish Cypriot Leader Denktash began in January of 2002 under the auspices of the U.N., and although they missed the June deadline for settlement, they have continued their dialog. The U.S. must remain committed to the settlement process. A durable, comprehensive settlement that addresses the legitimate concerns of both sides and promotes regional stability would benefit Cypress, the region, and U.S. interests. Cypress is an important partner and friend of the U.S. Most recently Cypress has cooperated in the fight against terrorism since September 11 and was of enormous help when it agreed to allow the 13 Palestians in Bethlehem to stopover temporarily on their final destination in the EU. On the anniversary of the day Cyprus was divided we must renew our efforts to promote measures aimed at reunification and designed to reduce tensions and promote peace between the two communities.

Mr. REED

Mr. REED. Mr. President, I rise in strong support of the Sarbanes legislation. We have been buffeted over the last several months on a daily basis with news of companies with accounting practices that have led them to bankruptcy, have left them without the means to carry on their business, have left their workers without jobs, and have devastated their pension funds. Day after day after day, a litany of accounting irregularities surface on the front pages of America. It has translated into a growing lack of confidence in our markets. We are here today with the critical role of reassuring the American public that we will pass legislation quickly that will restore their confidence in our financial system. This crisis is deepening with each day. Therefore, we must move forward deliberately, carefully but very quickly, to ensure that we can communicate with the American people and let them know we are aware of these problems and we are correcting them. I just came from a press conference to which we invited representatives who manage public pension funds. It is a staggering sense that we are seeing out there, not just problems on Wall Street but problems on Main Street. Essentially what has happened is that the American public has become invested heavily in our capital markets, in our equities, not just individually but particularly through pension funds. Sixty percent of the assets of defined contribution plans are invested in equities or mutual funds. About 70 percent of all of these funds together is creating a situation in which, when Wall Street has a problem, it translates to every corner of the country. We have to step forward. We are stepping forward. The Sarbanes bill is a strong bill. It has been made even stronger with the adoption yesterday, in a bipartisan vote, of the Leahy amendment. We are going to create an oversight board for accountants that will truly be independent and will have the force and the teeth to get the job done. The Sarbanes bill also proposes the serious separation of the auditing function and other consulting functions that accountants can perform. If you are going to be an auditor, you have to be an auditor, not an auditor and consultant. This is an important step forward. Also importantly, the Sarbanes bill will require that the SEC receive the necessary resources to get the job done. There have been for decades extensive security laws on our books. Unless these laws are enforced, they are not effective. Frankly, some of what we are discovering is a lack of enforcement. You have the SEC that is overwhelmed with filings and not capable of reviewing all those filings, not capable of taking the kind of proactive action which is necessary to avert the crisis we have seen. We are indeed at a critical moment in our history. We have seen the market over the last few days take huge losses. That suggests that not just the American public but the world is growing more and more concerned with our accounting practices, our transparency, whether or not a financial statement by an American publicly traded company can be relied upon. One of the ironies of this is a year or 2 ago, 3 or 4 years ago certainly, we were out offering our market to an emerging economy in Russia as the model; in a way, sort of looking at them, saying: Boy, if only they would adopt our accounting practices, the kind of tough rules we have, it would be a huge step forward in their development as a market economy. Well, ironically, today we have discovered that what we thought was a very thorough, comprehensive system is not as thorough and comprehensive as we thought and did not have the kind of integrity we need to ensure investors that when they read a report from an American company, that report is accurate. That used to be the standard. I mentioned previously that I had the occasion to attend a press conference with representatives of public pension funds. One of the individuals was the first comptroller of New York City. Let me give you an idea of the dimension of a problem we are talking about. On an annual basis, the city of New York has been contributing about $600 million a year to their pension funds in order to make sure those pension funds are actuarially sound, that they can pay the benefits for all of their retirees. They still can do that today, but the pricetag has gone up to over $1 billion in a year. They estimate, if the market continues, that they will be paying on the order of $3 billion in a few years. That money comes from taxes paid by the people of New York, and it comes from cutting other programs. It is a huge problem. At the core of the problem is this lack of confidence, the daily spate of news reports saying essentially that the accounting practices of major publicly held companies are absolutely erroneous. We have to reverse that tidal wave, and we have to do it quickly. We can begin to do that by strong support of the Sarbanes bill. Many people have called this an investors' bill of rights. I think they are correct. I commend and compliment the chairman of the Banking Committee, Senator Sarbanes. This is an example of how legislation should be done. This is an example of a careful, thoughtful process through the committee. I know the Presiding Officer, as a member of that committee, contributed substantially to that process. It was a delight and pleasure to work with Senator Sarbanes on the Banking Committee, to see that careful, thoughtful approach--with 10 hearings, witnesses from every sector of our economy, including perspectives from those who manage pensions, those who are security experts, and those who are business leaders. All of those perspectives were brought together in this legislation, which is thorough, comprehensive, and, in my view, outstanding. Then, also, to be able to fashion a bipartisan group of support was critical here and throughout our country. This is a textbook example by a master of how to move legislation through this body, but, more importantly, how to respond to the compelling needs of the American public. I commend and thank Senator Sarbanes and his staff for their great effort. We are at a point we can begin to see--if we move forward in the next few days--a new regime of securities laws that will feature an independent, full-time professional oversight board to monitor the behavior of accountants. We will also see guidelines on which nonaudit services are prohibited, so there will be a separation between the audit and nonaudit services. That should prevail. This is very important. I was an attorney in private practice and did corporate work. Frankly, I assumed that what I saw in that report, signed by a distinguished auditing firm, was gospel and not to be contradicted; that it was the final judge about disputes on costs and facts about what the company was doing and what they were disclosing and what they didn't have to disclose. I always assumed that it was the accountants who were answering those tough questions. They were literally the bad guys. There were a lot of creative CEOs, CFOs, and lawyers. In fact, they were often satirized, and the most uncreative part of the management was that auditor who was telling you, no, you cannot do this. That, obviously, over the last few years, has eroded tremendously. With the Sarbanes bill, we will clearly delineate those activities that can and should be performed by an auditor. It will also shore up tremendously corporate responsibility and require CEOs and CFOs to certify the accuracy of the company's financial statements. It will also increase the amount of the financial disclosure that a company must conduct in the course of their business. Many of the exotic arrangements that brought down Enron were never disclosed to shareholders and the investing public. As a result, those entities, when discovered--such as CHEWCO--were the instruments of the demise of that company. Those kinds of off-balance-sheet transactions will have to be disclosed if the bill passes, and I think it is necessary to do that. We are also dealing with the very real need for increasing funding for the SEC. That is a critical component of the legislation. The President was in New York City making a speech, calling for $100 million--or probably closer to $300 million, or more--that we need to ensure that the SEC has to conduct their activities. So we are moving forward and ensuring that, I hope, we do this. Our record over the last several years has not been as aggressive as I would have liked it to be. I supported a measure a few years ago--in fact, I think last year--in which we passed legislation that lowered various fees that are involved in securities transactions, with the idea that we would, at the same time, increase the pay within the SEC to attract better workers and more sophisticated individuals there, to complement what is going on in the private market where legal salaries are very high. The transaction reduction fee went down, but the pay parity never went into effect. So I think we have to follow through not only with this authorization but also with appropriations to make sure that can occur. So we have a situation where we are moving forward and in which the Sarbanes legislation, I hope, will be complemented by legislation proposed by Senator Kennedy to directly affect pension operations in the United States. These two pieces of legislation--hopefully brought together quickly, passed through this body and by the other body, and signed by the President--will send a signal to the American public, the investing public in the U.S. and around the world that our markets are the best in the world, that they can rely upon every word in a financial report, and to have fully disclosed the financial conditions of publicly held companies in the United States. If we do that, it will be a huge benefit not just to Wall Street but to Main Street. I suggest the absence of a quorum.

Mr. REED

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

Mr. REED. I ask unanimous consent the time be equally charged to both sides during the course of the quorum calls.

Mr. REED

Mr. REED. I thank the Senator from Virginia for his help on this amendment. I think this is an opportune time to call for passage of the amendment prior to any other discussion at this time. I urge passage of the amendment.

Mr. REED. Madam President, I thank the Senator from Virginia for his help and cooperation, and the Senator from Michigan for his accommodation. This is an amendment that responds to an announcement made by the Missile Defense Agency shortly after the conclusion of our committee deliberations. The announcement was that they would classify the details of all future flight tests of the national missile defense system--now called the land-based midcourse system. I believe Congress needs information of that kind. I also believe those unclassified portions of the tests should be available to a broader community, particularly the scientific community. The amendment that has been agreed to and included in this bill would require the Missile Defense Agency to provide to the Congress within 120 days a thorough report of the details of the tests. And it would include both an unclassified format and a classified format so that those items the Defense Department and the Missile Defense Agency believes should be secret will be kept secret, and it will be reported to us in a classified form. Let me say that one of the persistent criticisms of the first test of the missile defense system--the land-based midcourse system--was the fact that the tests were unrealistic. In fact, this criticism-- particularly by the scientific community--led the Missile Defense Agency to adopt a much more realistic, thorough, and exhaustive test process for our missile defense system. That criticism, in effect, has been very helpful to the development of the national missile defense. I think it is something that should be encouraged--certainly not discouraged. This view is also shared widely in many other places. Yesterday USA Today had an editorial which said ``The Pentagon policy wrongly shields missile defense data.'' They went on to point out that past scientific commentary about the performance of weapons systems has been very valuable in terms of improving those systems. They point specifically to the Patriot system. Initially, the Defense Department claimed that the Patriot was wildly successful in the gulf war. It turned out that a scientist at MIT was able to look at some of the news video. He observed, based on his scientific training, that these claims were dubious. In fact, he proved to be correct. Once the Pentagon publicly acknowledged that the effectiveness of the Patriot was not as they had originally claimed, it was the beginning of serious work to accelerate the development of additional improvements. That improvement is now the PAC-3 system, a much more capable system. I believe honestly that the Defense Department would have tried to move to a better version of Patriot anyway, but certainly the public scrutiny of this type of information helped that process move forward much more expeditiously. As USA Today points out, we could spend up to $100 billion under the administration's missile defense plan. As they say: Taxpayers deserve assurances beyond the Pentagon's word that the system works. This is particularly important when, at the same time the Missile Defense Agency is talking about putting a much broader cloak of secrecy around what they do, they are also saying they want to have a contingent deployment of missile systems as early as 2004. Again, some of these tests are not even scheduled to take place until after that date. Yet they are talking about a system in which they want to have something ready by 2004. I fear that the pressure to put something in the field by 2004 will overcome the willingness to be as clear and transparent as you want them to be about these tests. I hope this amendment will reinforce the Defense Department's view that these details are useful for the Congress and, in unclassified form, useful for the scientific community. As a former director of operational testing, Phil Coyle, stated in a Washington Post article, on June 11, the new classification policy that is being proposed by the Missile Defense Agency is, in his words, ``not justified by either the progress and tests so far or by the realisms of the test.'' We are still at a very rudimentary stage, a stage in which details of the test will help inform the Congress, will help inform scientific observers, and, I hope, will help us keep this system on track and keep the system, in effect, honest, so that if people are looking closely, all the t's will be crossed and all the i's dotted. I must also say, at this point, too, that General Kadish, particularly, has committed himself and budget dollars to ensure that a much more realistic and much more rigorous form of testing is employed. That is commendable and, indeed, is supported in the underlying legislation by our authorization. Testing and reporting of results is very important because, as I mentioned many times, the comments of outside authorities, scientists, are very useful. The Union of Concerned Scientists, for example, prepared a report about the first several tests of the ground-based midcourse system. They made several valuable suggestions. First, they suggested that you make the end game more realistic. By that, they meant we make the engagement with the kill vehicle and the enemy warhead much more realistic than the tests were at that stage. That is being done, not solely because of the UCS recommendation, but certainly it helped move along, I think, the concentration on more realism. They also talked about more realistic test conditions. Some of these things do not strike me, at this juncture, as particularly sensitive information. They talked about the geometry of the interception, whether it is the same flight track for the enemy warhead as well as for the interception vehicle, the kill vehicle. The time of day: If we are only testing at the same time of day, when atmospheric conditions and sunlight or starlight are most opportune to discriminate a warhead from decoys, that is not a realistic test. The weather conditions: Are we testing in foul weather as well as fair weather? The flyout range, the altitude of the intercept--there are many things that are very important. And we should have an idea, on an unclassified and classified basis, of these parameters. And the scientific community should at least have an indication, on an unclassified basis, of what is taking place. I believe the amendment is important. It is useful. I am extraordinarily pleased that the ranking member, the Senator from Virginia, was helpful in getting this done so expeditiously. One final point, we are simply codifying what I believe and what I know to be the intent of the Department of Defense. In that same USA Today article previously mentioned, Secretary Aldridge wrote: There is not now, and can never be, any component of this missile defense program classified beyond the reach of the security clearances of its congressional overseers. Congress' constitutionally mandated oversight will always be respected. That constitutionally mandated oversight has been codified in this amendment. I yield the floor.

Mr. REED. Madam President, I also at this time seek unanimous consent to send a modification of the amendment to the desk and have it reported.

Mr. REED. If the Senator will yield, you are absolutely correct. What I would suggest is, because of the highly technical nature of the whole program, often we do not know what questions to ask at times. As a result, with this reporting requirement, I think we will fulfill our constitutional obligation. I guess I would respond, finally, by saying there is a saying from a famous poet from New England, Robert Frost: ``Good fences make good neighbors.'' Perhaps if we look at this as a good fence, we will be better neighbors with our friends in MDA.

Mr. REED. Madam President, I call up amendment No. 4029.

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

Mr. REED

Mr. REED. Thank you, Mr. President. I rise to respond to some of the arguments made today. First, my colleague, the Senator from Alabama, at least suggested the Levin amendment somehow would curtail additional spending on future combat systems, on R&D, and on technology. Frankly, if there is any curtailment, as has been suggested, it is the underlying amendment by Senator Warner. It is very clear. He said, if we have additional savings from inflation adjustments, they will go to two categories of spending: Missile defense, or counterterrorism. The Levin amendment simply says: Listen, we want to prioritize those expenditures. The President has the right to decide, but it should be the law and the view of Congress--that the most pressing and urgent need of those two is counterterrorism. That is the essence of the Levin amendment. There is also a suggestion made that somehow this underlying legislation is oblivious to the missile threats we face. That is not at all correct. Let me go back to the intelligence estimates. I suggested--and, in fact, I read--that U.S. territories are more likely to be attacked using materials from nonmissile delivery means--most likely from terrorists--than by missiles, primarily because nonmissile delivery means are less costly, easier to acquire, more reliable, and accurate. I suggest if the national intelligence is already telling us the most immediate and the most dire threat we face is a terrorist attack using unconventional munitions, that goes a long way in suggesting the priorities we should adopt in spending the money. Let me quote further. They also can be used without attribution. Nevertheless, the missile threat will continue to grow in part because missiles have become important regional weapons. Here we are talking about regional missiles, which were referred to in the old parlance as theatre missiles or medium-ranged missiles. We are funding and supporting robustly the development of a missile defense for the United States. The PAC-3 system--our most advanced development--is fully funded in this proposal, both R&D and procurement. We propose in fiscal year 2003 to buy 72 of these missiles. The first set of operational tests is scheduled for this year. They will complete the first set of operational tests. Soldiers are already operating these systems. And it is capable of prompt deployment to protect U.S. troops from the types of regional missile threats that have been identified by national intelligence assessments. These regional missile threats are different from the long-range, intercontinental ballistic missiles that are the sum and substance of the rationale for a national missile defense. So we are fully cognizant of the missile threat we face, and we are robustly funding missile defense systems. Let me also suggest with respect to THAAD--that is another theater missile defense we are developing--that this legislation fully funds the testing and development program. First flight tests are scheduled for fiscal year 2005. That is fully funded at $985 million--almost $1 billion. What we don't support in the proposal by the administration that they want to buy 10 extra missiles before the first missile is flight- tested. That is not the way you effectively develop a system that will protect the people of the United States. It makes some sense, I think, to at least have the first test flight before you acquire the additional missile. We have increased the resources available for the sea-based, midcourse--formerly, Navy theatre-wide. We have added $40 million for the shipboard radar system, which we believe is important if this is ever to work properly. We increased the administration's request for the Arrow missile, precisely the type of system that will counter a threat from Iran and from Iraq, because long before those missiles could effectively reach the United States, they would likely be targeted on Israel. The Arrow missile system is an Israeli-United States partnership designed to counter some of those threats. We added $40 million. No one would suggest--at least I won't suggest--that the administration was oblivious to the real needs of defense in that region of the world when they requested $66 million. But I would suggest that we were more sensitive, in a way, to the regional missile threat. So we added $40 million to that. This legislation fully supports and is consistent with the threat. One of other things I think we have to understand--again, it goes to the point of why we should, if we have to prioritize, be more sensitive in this year and the next fiscal year to terrorism--is that, frankly, our opponents, much to our dismay, are clever, cunning, calculating, ruthless people. They know where our strengths are. They do not attack us on our strength. They find our weaknesses and our vulnerabilities. They will look for these vulnerabilities. As a result, they will conduct, I think, unconventional means of attack. They will challenge us in a host of different ways. What we are simply saying is, if there are additional resources, and if the choice, as suggested by the amendment from the Senator from Virginia is between missile defense and counterterrorism, the obvious answer, I believe, is counterterrorism. That is what the Levin amendment does. That is what the American people, I believe, will demand. I think it is also illustrative that the military professionals, the uniformed officers, the men and women who have sworn their lives to protect this country, have a long list of unfunded needs just to protect the security of DOD installations and to respond to incidents of mass destruction caused by some type of weapon. You could fund those needs upwards of $1 billion with the extra moneys available. So, again, I rise not only to respond, but to place in perspective the point that before we adopt this Levin amendment as a second-degree amendment we must look very closely at what the Senator from Virginia is proposing. Simply, he is saying if we have extra money through savings, through inflation adjustments, then they will apply to two categories--missile defense or counter-terrorism. Of course, our highest priority is everything the Department of Defense has requested in the President's budget. I think we have to make it clear our highest priority today and for fiscal year 2003 is countering the obvious, immediate, dramatic threat of terrorism here at home and abroad in the context, of course, of robust and full funding for national missile defense, and in particular theater missile defense, that precisely responds to the issues raised by the Intelligence Estimate of the growing regional threat from missiles. I yield the floor.

Mr. REED. Madam President, I rise to speak about the amendment proposed by the Senator from Virginia and the second-degree amendment proposed by the Senator from Michigan. As I understand the amendment of the Senator from Virginia, it does several things. First, it assumes there will be approximately $814 million in savings because of the inflation figures. Then it sets up two categories of funding that this extra money, if found, is to be used for: missile defense or counterterrorism activities. But then at the end of the amendment, it proposes to set the priorities for allocating these scarce resources. As I read the priority, it is everything that the Department of Defense does, because the priority would be activities for combating terrorism and protecting the American people at home and abroad. I suggest--and I doubt anyone would argue--that the crew of an American nuclear submarine patrolling the depths of the Atlantic or the Pacific are protecting Americans at home and abroad. I argue that Marine guards in embassies throughout the world are protecting Americans. I argue that troops that are training for possible deployments overseas are protecting Americans at home and abroad. The fact is that this priority is no priority at all. The fact is, this debate is a debate about whether we will use extra resources to fight terrorism or for a national missile defense shield. If you ask any American, their answer would be obvious and automatic: Protect us from terrorism. Why? I don't know if they have read the national intelligence estimate of December 2001. It says: In fact, U.S. territory is more likely to be attacked with [weapons of mass destruction] from non-missile delivery means--most likely from terrorists--than by missiles, primarily because non-missile delivery means are less costly, easier to acquire, more reliable and accurate. They can also be used without attribution. They might not have read in detail the national intelligence estimate, but that is what our intelligence officials are telling us: The most likely and immediate threat is terrorists attacking us, and perhaps with weapons of mass destruction, but not an intercontinental ballistic missile attack on the United States. On September 23, 2001, a few days after September 11, the Federal Aviation Administration grounded crop duster aircraft nationwide because of concerns that they might be used in chemical or biological terrorist attacks. This marks the third time since the September 11 terrorist attacks that crop duster aircraft have been grounded. The other two groundings were from September 11 through September 14, and from September 16 through September 17. Again, ask yourself, is that a threat that national missile defense can prepare for? I should add that, as the Senator from Virginia said, we are concerned about the future; but this authorization is for next year. This issue is what funds will be spent next year--the extra funds that will be available. This year and next year, the American people will say unhesitatingly: Protect us from terrorism. That was September 23, 2001. October 11, 2001: The Federal Bureau of Investigation issues a warning that there may be additional terrorist attacks in the United States and against U.S. interests overseas in the next several days. I do not suspect that any of those warnings were tied into the use of an intercontinental ballistic missile to attack. October 29: The Federal Bureau of Investigation issues a warning that there may be additional terrorist attacks in the United States and against U.S. interests overseas in the next several days and that Americans and police should be on the highest alert. Again, that is not coupled with any specific indication that an intercontinental ballistic missile would be involved. December 3, 2001: Director of the Office of Homeland Security Tom Ridge at a White House press briefing said: `` . . . the quantity and level of threats are above the norm and have reached a threshold where we should once again place the public on general alert, just as we have done on two previous occasions since September 11th.'' December 22: Flight attendants and passenger subdue a man reportedly trying to set his shoes on fire on American Airlines Flight 63 from Paris to Miami carrying 185 passengers and 12 crew members. The plane is diverted to Boston's Logan International Airport, escorted by two U.S. Air Force F-15 fighter jets. Boston Airport authorities say the man appears to have been carrying C-4, a powerful plastic explosive, in his shoes. The suspect is identified as Richard C. Reid on his British passport. Once again, ask yourself, if you are allocating money, do you allocate it to screening passengers better, or to x-ray baggage better, or to doing things for a national missile defense? January 29, 2001: In his State of the Union Address before Congress, President George W. Bush says U.S. forces in Afghanistan `` . . . have found diagrams of American nuclear power plants and public water facilities, detailed instructions for making chemical weapons, surveillance maps of American cities, and thorough descriptions of landmarks in America and throughout the world.'' Warning that ``thousands of dangerous killers . . . often supported by outlaw regimes, are now spread throughout the world . . . '' The President promises to continue the war on terrorism at home and abroad. Were those plans and diagrams used to target an ICBM, or were they used to infiltrate terrorists into the U.S. to attack those facilities? January 31, 2002: An internal alert warning that Islamic terrorists are planning a major attack against American targets appears in a classified document issued by U.S. intelligence agencies. The alert reportedly specifies several potential methods of attack and targets: a nuclear powerplant or nuclear facility bombing, bombing a U.S. warship in Bahrain, a suicide airliner attack on a building, and bombing a vehicle in Yemen. Again, none of those threats raise an ICBM attack, or even a theater missile attack on the United States. February 11: Federal Bureau of Investigation issues a warning that more terrorist attacks may take place within the United States and against U.S. interests in the country of Yemen on or around February 12, 2000. In its warning, the FBI specifically identifies Yemeni national Fawaz Yahya al-Rabeei and several of his associates as suspects, and Yemen as their possible target based on information gathered an detainee interrogations at Camp X-Ray on the U.S. Navy base at Guantanamo Bay, Cuba, and in Afghanistan. The warning advises Americans and law enforcement agencies to be on the highest alert and requests help in identifying these suspected terrorists. April 19: Federal Bureau of Investigation issues a terrorist threat alert identifying U.S. financial institutions in the Northeast as possible targets. April 24: The FBI issues a terrorist threat alert identifying shopping malls and other public places as possible targets, according to news sources. May 13: U.S. authorities have received reports from different intelligence sources of a threatened July 4, 2002, attack against an undetermined U.S. nuclear powerplant in the Northeast by al-Qaida terrorists. May 20: FBI Director Robert Mueller tells a gathering of the National District Attorneys Association that walk-in suicide bombings, such as those that have taken place in Israel, are likely to occur in the U.S. The Director says, ``We see that in the future. I think it is inevitable.'' News sources report that the FBI has issued informal warnings that terrorists might rent apartments at large apartment complexes, pack the apartments with explosives, and detonate them. Ask yourself: How much will a missile defense system protect us against a suicide bomber walking into a mall or walking in and exploding an apartment building? May 21: The FBI issues a terrorist threat warning to New York law enforcement agencies that it has received ``unsubstantiated and uncorroborated information that terrorists are considering attacks against landmarks in New York City.'' May 28: Hans Beth, director of the antiterrorism and organized crime division at Germany's BND foreign intelligence service, says at a conference in Bonn, Germany, that the al-Qaida terrorist network is active, regrouping, and recruiting new members, according to the Associated Press. The director says: We believe that bin Laden himself and several of his confidants are still around to give the impulses for attacks. May 29: Customs Commissioner Robert Bonner, in an Associated Press interview, says that every Customs inspector will be equipped by January 2003 with a pocketsize radiation detector, and that Customs is working with other countries to screen cargo containers before they are shipped to the United States. The Commissioner cautions, however, that ``there are no guarantees'' that improved border security will prevent a terrorist from smuggling a nuclear weapon into the United States. Again, this is not something with which a national missile defense system could cope and for which it is not even designed. May 30: New sources report that the Federal Bureau of Investigation issued an alert on May 22, 2002, to Federal, State, and local law enforcement agencies warning that al-Qaida terrorists may be trying to target commercial aircraft by using shoulder-fired antiaircraft missiles. Reportedly, the warning was issued after U.S. military personnel found a spent portable missile tube outside the Prince Sultan Air Base in Saudi Arabia earlier in May 2002. May 31: The Washington Times reports that classified U.S. Government intelligence reports indicate that Islamic terrorists may have smuggled portable shoulder-fired Russian SA-7 surface-to-air missiles or U.S. Stinger antiaircraft missiles into the United States. Again, ask yourself how we should be allocating extra funds to protect the people of the United States if those funds become available. June 7: Reuters News Service reports that CDR Jim McPherson, a U.S. Coast Guard spokesman, says the Coast Guard issued a warning to all of its units to be on alert during the June 7 through 9 weekend for ``possible acts of terrorism targeting the Nation's ports, bays, rivers, and shores.'' June 10: Attorney General John Ashcroft announces the disruption of ``an unfolding terrorist plot to attack the United States by exploding a radioactive `dirty bomb.' '' June 12: CBS News reports the Immigration and Naturalization Service issued a June 6, 2002, security alert instructing INS agents at U.S. airports, borders, and ports to do ``[a] complete and thorough search of all baggage'' carried by Yemeni travelers, except those carrying diplomatic passports, and make ``an inventory of all effects.'' The order was reportedly prompted by the discovery of several thermos bottles--some rigged with batteries and wire--during a raid in the northeastern United States of an apartment that housed several Yemeni nationals. The alert instructed agents to look for ``large sums of currency, night vision goggles, or devices.'' It also warned against agents opening any thermos bottles. June 14: A suicide bomber drives a car filled with explosives into a guard post outside the U.S. Consulate in Karachi, Pakistan, killing 11 Pakistanis and injuring at least 45 people, including one U.S. marine who was slightly wounded by flying debris. June 16: The Washington Post reports that three Saudis seized in Morocco told interrogators that they fled Afghanistan and came to Morocco on a mission to use bomb-laden speedboats for suicide attacks on U.S. and British warships in the Strait of Gibraltar. The three Saudi men were captured in May 2002 in a joint Moroccan-Central Intelligence Agency operation. June 21: The Federal Bureau of Investigation issues a terrorist threat alert warning that terrorists might be plotting to use fuel tankers to attack undetermined Jewish neighborhoods and synagogues, according to the Associated Press. June 25: The New York Times reports that, according to congressional officials, Capitol Police in Washington, DC, are stockpiling up to 25,000 gas masks to protect tourists, lawmakers, and their staffs in case of a terrorist attack. If you ask the American people how this money should be prioritized, the answer is clear, overwhelming, and irrefutable. The highest priority should be the war against terrorism, certainly at this moment and certainly in this next fiscal year. As a result, I believe Senator Levin's amendment is not only crucial but essential so that the direction, at least the sense of this Congress, is clear. I hope we will support this second degree amendment. In addition, I should point out again that we are robustly funding missile defense activities. We have done that. Our proposal is $6.8 billion for fiscal year 2003. We expect an additional $4 billion to be available since it was not spent last year. This gives us in the next fiscal year over $10 billion to use on national missile defense-- theater missile programs, national missile programs, boost phase, midcourse phase, terminal phase, the latest system which this administration is pursuing. That is adequate and sufficient in our view, but in addition, as Senator Levin pointed out, recognizing the top priority of terrorism, the language still would allow, even as amended, some resources to be devoted to additional national missile defense activity, if the President determines that. Having listened to this litany of warning emanating from the administration itself, it is hard to think that there is a higher priority at this moment and next year than counterterrorism. We have supported robust activities to test and deploy missile defense systems. There is full support for the Alaskan system. There is full support for research, experimentation, and testing. In fact, we have added money to these categories. We have added money for the Arrow missile, an important theater missile system we are developing jointly with the Israelis. We have added money for radars for Navy sea-based systems. What we have cut are those ill-defined, duplicative programs that are not going to advance, we feel, the development of this missile system, and we are looking to the future. A $10 billion investment next year, a combination of our authorization and residual funds, is an important downpayment, a substantial, robust downpayment on a future system that will counter future threats. What we are suggesting in this bill is that when you look closely at the suggestions and recommendations of the Department of Defense with respect to terrorism operations and contingencies, there is a long list of items not funded. Senator Levin's priority and my priority would be to fund these counterterrorism activities. There is, for example, $871 million for improved security on the list of unfunded priorities by the services. The Special Operations Command found an additional shortfall of $42 million in items that they could not provide to protect units fully, from their perspective, against terrorism on their installations. The second item, for example, on the Air Force list of unfunded items is $149 million for improved physical security at its bases. The Navy's list included an additional $263 million for improvements to Navy installations. The Army identified $110 million of unfunded force protection needs. These funds will be used to protect military installations, naval stations, shipyards, fencing off installations, airfields, and keeping intruders away. All of them are very necessary. But because we were making difficult judgments about priorities--and that is what our job is--we could not fund these compelling needs. I suggest if there are inflation savings, that is where they should go, and that is what the Levin amendment will direct, suggest, at least make as the policy of this Congress: That our highest priority is counterterrorism. In addition to this $914 million of unfunded force protection requirements, the services and Special Operations Command identified $184 million in unfunded priorities for defending against and managing the consequences of attacks using weapons of mass destruction. As a national intelligence estimate suggests, if such an attack takes place within the foreseeable future, it will not be as a result of a missile strike, but terrorists detonating some type of weapon of mass destruction in the United States. Our services are asking us for $184 million to respond, to defend against, and manage the consequences of such an attack. The Marine Corps, for example, identified over $27 million in shortfalls for their chemical and biological incident response force. The Air Force had an unfunded priority of $92 million for equipping installation first responders to manage WMD attacks. The Navy had a $20 million unfunded priority of this same line, the first responders within the services to respond to a weapons of mass destruction attack. The Air Force also had a $33 million unfunded requirement for bolstering the defenses of their personnel against weapons of mass destruction attack, and Special Operations Command had a $12 million shortfall for counterterrorism activities. If we add the $914 million of unfunded priorities related to protecting the Armed Forces by attack from terrorists to the $184 million of unfunded priorities related to defeating and managing WMD attacks, we reach a total of over $1 billion. So it is clear that the Special Operations Command have urgent, indeed critical, need to combat terrorism. So when we pass legislation that says there are two categories of spending for additional resources made available through inflation savings, one is missile defense, and one is combating terrorism, I think we need the Levin amendment to say our highest priority is combating terrorism, equipping our military forces to protect themselves and to protect us, at a minimum. But we also understand, even if we are able to provide these resources to our Department of Defense, where are the additional resources for the Department of Commerce to make sure that all of their activities complement and supplement the activities of the Department of Defense? What about the Coast Guard? Do they have enough resources to protect all of our ports? What about the FAA installing additional security measures in airports? All of these priorities are immediate, extraordinarily important, and have to be addressed. We have the opportunity today to make it clear that if these resources are available, they will be going to the most immediate, the most dire, threat we face, based upon our intelligence estimates, based upon the numerous statements by the administration, and we should do that confident we are providing a robust funding source for national missile defense development in every phase of their multilayered operation. I hope my colleagues will support enthusiastically the Levin amendment. I yield the floor.

Mr. REED

Mr. REED. Madam President, I rise to reiterate my support for Senator Levin's second-degree amendment. Senator Warner's amendment directs that any savings from inflation should be used in one of two ways: for the research and development of missile defense or for combating terrorism. However, Senator Warner's amendment does not choose which area is more worthy of attention, and therefore it risks compromising both. Our job in deciding the budget is about making hard choices. Senator Levin's amendment simply sets priorities and it states that combating terrorism should be this administration's top priority. I do not think this is a difficult decision. We must remember that this amendment only authorizes funding for fiscal year 2003. And in the next 18 months, the citizens of the United States are going to be anxious, and even afraid, of a car bomb, an explosion in a harbor, an explosion in a mall, a dirty bomb, a biological attack. I think the way to protect Americans is clear: put resources into counterterrorism. The senior Senator from Virginia has been assured by the Office of Management and Budget that there will be over $800 million in inflation savings at the midsession review. At that time, the President will have a choice. He can invest $800 million more into a missile defense program that has already been robustly funded at $6.8 billion or the President can invest the funds in the $1 billion of counterterrorism requirements that the military has asked for and not received. The Levin amendment expresses the views of Congress, and I believe the views of the American people, that resources directed toward the most immediate need, the most immediate threat, fighting terrorism, will best protect the United States and its citizens.

Mr. REED

Mr. REED. Madam President, as the chairman of the Subcommittee on Strategic Systems, I have had the opportunity, over the course of many hearings and many briefings, to look closely at our missile defense program, and also to recommend to the committee that we make these reductions. All of these recommendations were based upon careful scrutiny of the programs. They were based upon an evaluation of the effectiveness of the programs going forward, and, in addition, a sense of trying to avoid duplicative costs, ill-defined programs, those areas in which money might be spent but there is no clear indication of the product that was going to be purchased. In fact, some purchases seem to be premature because the testing of the products had not been accomplished. So this process has been a long one, and it has resulted in specific recommendations that today we are considering on the floor of the Senate. I will make some general points about what is in this bill because it represents a significant commitment to missile defense, both theater missile defense and national missile defense, which now have been amalgamated in the administration's approach which they describe as a layered defense: the boost phase, midcourse phase, and terminal phase. We have made a significant commitment of dollars in this bill to missile defense, and those points should be made. First, the Department of Defense estimates that in this year they will spend about $4.2 billion. They expect to spend that for missile defense, leaving $4 billion of funds to be carried over to the next fiscal year, 2003. We recommend, in this bill before us today, $6.8 billion of new funding for fiscal year 2003, giving the Department of Defense more than $10 billion available for spending next year on missile defense. That is a significant commitment to missile defense, and one that is supported by this Senator and, I am sure, by others. It is probably twice what will be spent this year. To characterize $10 billion of available resources for missile defense next year as deep and damaging cuts to missile defense is somewhat inaccurate. I should say at this juncture, the proposed amendment by my colleague from Virginia suggests that we add about $800 million and give the President the option of spending it on missile defense or antiterrorism activities. But it seems clear to me this debate is about missile defense and not about terrorism. Terrorism is something we are concerned about, but I think the impetus for this amendment is the overarching concern of the administration for missile defense. So I think, first, we have, in fact, included within this bill before us robust funding for missile defense. We also have to respond to the reality that today we are engaged in a war on terror. In fact, the National Intelligence Estimate for December 2001 stated: U.S. territory is more likely to be attacked with [weapons of mass destruction] . . . from nonmissile delivery means-- most likely from terrorists--than by missiles, primarily because nonmissile delivery means are less costly, easier to acquire, and more reliable and accurate. They can also be used without attribution. That is the National Intelligence Estimate for December 2001. So we do recognize there are threats to us from weapons of mass destruction, but we have to put it in context that the most immediate threats are either short-term theater missile threats by nation states or clandestine operations of terrorists entering the United States. So with that recognition, I think this proposal we bring to the floor makes a great deal of sense. We have looked hard at individual programs. We are cognizant of the threats, particularly the theater missile threats. And we are also trying to do what we can to ensure that we protect this country from terrorist threats. So we have deliberated carefully and thoroughly on all of these issues. Let me talk for a moment about the threats because they should be often mentioned because our strategy has to respond to these threats. First, I think we should point out how we are going forward with the PAC-3 system which is a theater missile defense system. It is in operational testing. It is strongly supported in this bill. It counters those threats that are often mentioned here on the floor. I know colleagues have talked about the potential access to short- range missiles by terrorist groups in the Middle East. I think they have also talked about the developments which are ongoing in countries such as Iran and Iraq and North Korea for missile systems, short-range tactical systems. We have a system that is in operational testing, the PAC-3 system that counters those threats. We support that system. It is supported in this budget. We hope it is fielded at the first possible moment, deployed with troops in the field. There are other systems, too, that we support. We continue to develop the THAAD system, which is another theater missile system. That is supported in this budget. We are supporting the Navy theater-wide system. We are considering, and very carefully supporting, a whole range of missile systems that are important to our defense. So to suggest that this legislation is not supportive of missile defense is to miss the details of the legislation. We are also looking very carefully, as I mentioned, at specific adjustments to the systems that are being considered today. That is our role, our responsibility. We are not here simply to say whatever the Defense Department sends over is something we will support without any question or scrutiny. Our job is to look carefully at systems and to make critical decisions about scarce resources, and we have done that. Let me suggest some of the recommendations we have made in the context of the missile systems I mentioned. First, the sea-based midcourse, which was formerly Navy theater-wide. We fully fund the development and test program, $374 million. In fact, we add $40 million for new shipboard radar for robust theater missile defense. We are adding money to these programs because we believe it is important, and we believe this type of additional expenditure should be included within the budget. We do, however, look at the program carefully, and we have made the recommendation that $52 million should be reduced because it is for a very vaguely defined concept development study. We believe that study is unjustified, undefined, but we are supporting vigorously the Navy midcourse program, sea-based midcourse, as we should. From what I have seen of the Navy theater-wide system, the sea-based midcourse, the Missile Defense Agency is engaged in something which might be described as an ad hoc approach. Let me suggest why. In our authorization bill last year, we asked the Secretary of Defense to submit a report to the congressional defense committees no later than April 30, 2002, on the Department's ultimate plans for the Navy theater-wide system. That was last year's language. We asked them: Give us your plan. We received a letter back from General Kadish which essentially said: Here is some information, but we can't give you any of the definitive information, particularly the life cycle costs of the system. What he said was, basically, while the questions posed in this request are relevant, a response will not be available until the SMD element of the BMDS is defined, and he suggested that the SMD definition will be completed by December 2003. That is interesting. Then just a few weeks ago--approximately 10 days ago--I read in the Wall Street Journal where General Kadish was saying there will likely be a contingent deployment of this system in the year 2004. So the program will be defined by December 2003, and then we will have contingency deployment in 2004. That suggests to me a lack of a clear-cut plan, a lack of meaningful communication to this committee and to this Senate. That shaped a lot of our deliberations in the sense of these ill- defined programs and the significant requests for money. One area which is most relevant in this regard is the request for systems engineering money. Systems engineering money is generally the hiring of engineers, contractors, and software engineers to talk about designing and integrating systems. It is a very important part of the development of any system, particularly one as complicated and technologically challenging as national missile defense. We had included within this budget $500 million in systems engineering and other Government support and operations funding in individual missile program accounts: More than $170 million in systems engineering for the midcourse program element: the sea-based and the ground-based, the Navy system and the system in Alaska; more than $100 million for program management operations funding in individual program lines in the midcourse element; more than $70 million of Government support in the boost program element; more than $20 million in the sensor program element; and more than $80 million in the THAAD program element. These are all systems engineering or program management costs. It adds up to a half a billion dollars. There is another category of systems engineering which has been developed in the last 2 years called the BMD system, the system of systems. First, let me suggest that there are some practical time problems in spending all this money. The presumption for BMD systems engineering is that you are going to integrate all these systems that are being deployed. The reality is, it is very unclear at this juncture what systems will be deployed, what radars will be used, what types of sensors, what combinations of missiles and sensors. It is very unclear. But still the request was for a significant amount of money for systems engineering for the entire BMD system. We looked carefully at this. We concluded that $736 million for this category was more than sufficient, together with the $500 million that is already embedded in each of the program elements of the existing BMD program. As a result, we were able to reduce this request for BMD system money by $330 million. But let me also point out that as of this juncture, it appears that BMD will only spend $400 million of last year's money, and this will leave about $400 million for the next fiscal year. Together with the $736 million and the $400 million carryover, BMD systems engineering has over $1 billion, hardly a draconian, drastic cut in their ability to continue to do these programs of integration and systems engineering. Again, we looked carefully. We determined what they were doing. We determined that they would have more than enough resources to continue their efforts into the next fiscal year, and we were able to move some of this money into the shipbuilding accounts which everyone in this Chamber, I would say without hesitation, will support enthusiastically, an immediate need for our Navy for additional ships. In addition, we were able to move some of this money into programs for the protection of Department of Energy nuclear facilities. We did that in response to published reports, which we have all seen, that the Office of Management and Budget turned down the Department of Energy for a significant increase in security funds at a time when the threat--at least if you believe the last few weeks from the media--is not the long-range missile, the threat is the terrorists coming in here on an airplane, landing in Chicago with a plan or at least an idea to seize radiological material someplace in the United States, construct a ``dirty'' bomb here, and detonate it. Yet the administration said: No, DOE, you don't need this extra money to secure the nuclear facilities. We think DOE needs this money, and it is a higher priority than excessive systems engineering money for the ballistic missile defense program. So as we have looked at all of these programs, we have tried to take a very careful, considerate look, tried to make tough decisions, and they are tough decisions because we don't have unlimited, infinite resources. As the Senator from Michigan said, I question sincerely the availability next year of the inflation savings assumed in the proposed Warner amendment. This seems to be one of those fudge factors that is put in, an estimate. You might realize it, you might not realize it. I await, as the Senator from Michigan does, eagerly, Senator Warner's response from the Secretary of Defense with respect to these questions. The reality is that these resources may not be realized through inflation savings. If we authorize the spending, which, for political reasons, the administration seems to be absolutely committed to, we may end up using operational maintenance money to fund missile defense, to fund these ill-defined areas of systems engineering and other programs. We will find ourselves, in that case, coming back here and wondering why our flying hours are down for the Air Force and Navy pilots, why we can't provide the sort of resources we need for ongoing operations maintenance at a time when we have forces in the field engaged today, trying to destroy these terror networks, and succeeding in many cases because of their skill and courage and the support they are receiving. We have brought to the floor a bill that robustly supports missile defense but asks very tough questions about specific programs that are not adequately justified or are redundant. Let me give an example of that. The THAAD missile system is well on the way toward the engineering phase to get to a point where it can be part of our theater missile defense system in the next several years, we hope. They are asking for $40 million to purchase 10 unproven missiles. Our concept is fairly straightforward and simple. We provide that $895 million for the test development and for the first flight test of the missile in this budget. A simple proposition: Let's fly one of these missiles first before we buy 10 missiles. Maybe we can save resources. The THAAD Missile Program is a good example of a program that was once forced to accelerate beyond its technical means. It was, as General Welch described it, rushing to failure, and it failed-- program course out of sight, product not adequate, not meeting the requirement set out for the system. It was a program in such distress that it was virtually on the chopping block. General Welch's report said: Listen, you have to go back to a careful, deliberate, thorough development process. The program is back on track. And now our sense is they are trying to get off track again--let's just buy these 10 extra missiles today. That is an example, I believe, of the robust support--$895 million. But the very careful and appropriate question is: Why do you need to buy 10 missiles today when your first flight test is going to be in fiscal year 2005? Due to time constraints, I must yield the floor but will take time later to continue this discussion. Amendment No. 3918

Mr. REED

Mr. REED. Mr. President, this morning I had the opportunity to address the issue of missile defense from my perspective as the chairman of the Strategic Subcommittee of the Armed Services Committee. In the course of our deliberations over many months, with many hearings, hours of testimony, and more hours of briefings and staff contacts, we looked very closely at the proposed budget for missile defense this year by the Department of Defense. We supported many of their initiatives. We are recommending $6.8 billion of new funding for fiscal year 2003. But let me put that in a larger context. For fiscal year 2002, the Department of Defense estimates they have only spent $4.2 billion of previously authorized money, leaving approximately $4 billion of carryover funds for fiscal year 2003. So our recommendation, together with carryover funds, will give the Department of Defense more than $10 billion of available funding for fiscal year 2003. That is a staggering amount of money. It is the largest 1-year funding source for missile defense I think we have ever had in our history. It is the combination of not only what we authorize this year for fiscal year 2003, but what has been authorized and not spent for fiscal year 2002.

Mr. REED. I am happy to yield.

Mr. REED. I thank the Senator, my colleague, the ranking member from Colorado, for that point. I do not disagree with that point, but I am making a different point, which I will make again; which is, regardless of what caused them not to spend the money last year, that money seems to be entirely available this year, together with our proposed funding level, and gives the Missile Defense Agency over $10 billion to spend on missile defense in fiscal year 2003. That is robust funding by any definition. The suggestion that we are cutting out the heart of funding for missile defense is, I think, erroneous. We are supporting very strongly a missile defense program, but we are not supporting it without looking carefully at its components and making tough choices about priorities of spending. That is why, as a result of our proposed reductions, we were able to move significant amounts of money into shipbuilding, which every Member of this body strongly recommends, commends, and supports. In addition, we were able to move some money into Department of Energy security for their nuclear facilities, which is very important. We also have, in fact, provided a bill that robustly supports missile defense. We did reduce the overall recommendation of the Department of Defense for missile defense, but we also added funds into specific missile defense programs which we believed were underfunded. For example, we added an additional $30 million for test and evaluation of missile defenses. One of the persistent criticisms of our missile development program is that they have not had realistic testing, that they have had tests but they didn't really represent in any meaningful way the type of actual environment in which the missiles must operate. We added additional resources. This is one of the recommendations of everyone who has looked at the Missile Defense Program. We have added $40 million for a new, powerful, sea-based radar for the Navy theater-wide system. Again, this is a system which General Kadish, director of the Missile Defense Agency, announced 10 days ago or so was a likely candidate for contingency deployment in the year 2004. That was not suggested or recommended by the administration, but we believed very strongly that an additional $40 million to develop this radar was key to developing the Navy theater-wide system which could be the major element of the sea-based system. We have also added $40 million for the Arrow missile defense system. That is a joint United States-Israeli program to develop and field--and it is far into the development phase--a theater missile system that will protect not only Israel but United States forces, too, because we hope we will emphasize interoperability as we go forward with the development of that system. Many colleagues have said the danger of terrorists obtaining missiles is acute in the Middle East, and we are putting more money into the system than was requested by the Department of Defense to ensure that our allies and our forces in that region have an effective missile screen. That is a plus--not a minus--that we added, that the administration did not request. We have also included $22 million for an airborne infrared system which could be used as a near-term, highly accurate detection and tracking system for national or theater missile defense. Again, this was not requested by the administration but supported and included by our deliberations at the committee level because we do in fact want to see an effective missile defense system fielded at an early time. Let me talk about some of the reductions we made. Before I get into details, we asked some basic questions: What are you going to spend the money for? What is the product? What do you want to buy? When do you plan on deploying such-and-such a system? Frankly, the answers we got were very vague, very ambiguous. The Missile Defense Agency seems to be in the process of redefining their role, which is incumbent upon this new agency. But in that phase of redefinition, they were not able to provide the kind of specific data we requested. In fact, in some cases they just plain refused to provide any really adequate information. One example is that in last year's authorization, we requested, required by law in the report language, that they report to us on the life-cycle costs of any system going into the engineering phase. THAAD was in that engineering phase, and THAAD is a theater ballistic missile being developed right now. Rather than reporting to us the life-cycle costs, they simply administratively took THAAD out of that engineering phase, which suggests to me that either they don't have these life-cycle costs or they were unwilling to share them with the Congress. We have to know these things. We have to make judgments about critical systems, not just missile systems, shipbuilding, the operational readiness of our land forces, our air forces. All of these are tough choices with scarce resources. At a minimum, we have to know how much these proposed systems will cost. In the case of missile defense, it is very difficult, if not sometimes impossible, to get that information. We looked at programs and expected they would be justified and detailed in concrete ways. Frankly, we found many programs that appeared to be duplicative, ill-defined, and conceptual in nature. And these programs were not inconsequential. We are not talking about a couple of million dollars to do a study, we are talking about hundreds of millions of dollars; in the case of the Navy theater-wide, $52 million to do a study of concepts for sea-based midcourse naval defense. So that was the approach we took: Look hard at all of these programs, with the purpose of trying to ensure that missile defense development goes forward but also to ensure we had resources for other critical needs of the Department of Defense. One of the areas that appeared to us to be the least well justified was the area of the BMD system cost--approximately $800 million--used, as they say, to integrate the multilayered BMD system. First, there are a couple of timing issues. The various components of this BMD system have not yet been decided. As a result, they have an awesome challenge to integrate components that have not been decided upon. That is just an obvious starting point. Again, there was not the clear-cut definition of what they were doing, and $800 million is a great deal of money to spend on simply contracting for consultants, engineers, and systems reviews, particularly when the architecture of the components is not yet established. We also found out, as we looked back at last year's authorization, which included a significant amount of money for this BMD system, that the Department of Defense, as of midway through the year, had only spent about $50 million. We were informed that throughout the course of the year they are expected to spend about $400 million, leaving about $400 million of resources in this one particular element, BMD systems, that is available for fiscal year 2003 spending. So even with our reduction in BMD systems, they will still have a significant amount of money, upwards of $1 billion, for fiscal year 2003, in this one category of BMD systems. Again, if you ask them what are they doing: We are integrating systems. We are planning, and we are thinking. All of that is very fair, but is that a sufficient justification for $1 billion when we have other pressing needs for national defense in this budget? As we go forward, we looked, again, very carefully, at all the different elements. We made adjustments that we thought were justified by the lack of clear program goals, by duplicative funding, poorly justified funding, and then we looked at other issues. For example, the THAAD Program. THAAD is a theater missile defense program that has been under development for several years. It had its problems years ago. It was, frankly, off course. One of the conclusions of the Welch panel that looked at the THAAD Program was that they were rushing to failure. They were trying to do too much too fast. They were abandoning the basic principles of developing a system, good requirements, moving forward deliberately, testing carefully. As a result, the program was in danger of being canceled. The program is back on track now, with better engineering, commitment by the contractors. They are moving forward. But what the administration would like to do now is to go ahead and purchase 10 extra missiles for the THAAD Program. The problem is that the first flight test for the THAAD is in fiscal year 2005. We fully fund this flight test, $895 million for the THAAD for developing the missile, for flight testing in 2005. But ask yourself, why would we buy 10 unproven missiles several years before the first flight test? The administration talks about a contingency deployment. That is nice, but the first real flight test is several years from now. And in a scarce, tough budgeting climate, why are you buying 10 extra missiles that appear to be unnecessary before they follow through with the first test flight. So we made a reduction of approximately $40 million for those extra missiles. Now, we also looked at some of the funding for what they described as boost phase experiments--$85 million. We found these very ill defined and conceptual. That is a lot of money for ``experiments,'' without other explanation. Then we looked at the proposal to buy a second airborne laser aircraft, $135 million. The airborne laser is an interesting system, designed to mount a laser in a 747 and use that to knock down a missile as it leaves the launch phase in its boost phase. It is very complicated technology, challenging just in the simple physics, let alone the hardware that you have to construct. I am told that the prototype laser is twice the size of a system that can fit on a 747. I am also told that the 747 that they are outfitting has yet to have been flown operationally in this capacity in a test. So you asks yourself, when you have not developed a laser, when you have not used it on the aircraft to actually engage targets, when you are working on basic optics problems and physics problems, why do we have to buy a second airplane in this year? When, for example, you have people complaining that the real chokepoint in our airplane fleet are tanker aircraft to support our ongoing operations. This is an example of expenditure we thought was unjustified. As a result, we suggested and recommended that there be reductions in this program. Now, I wish to mention one other point in conjunction with the airborne laser because I think it is important. One of the things we discovered in our deliberation was that the Department of Defense has not only totally revamped the Missile Defense Agency, but it is trying to give it an autonomy that exists for few, if any, other defense programs. It has effectively eliminated review of its activities by the JROC, which is chaired by the Chairman of Joint Chiefs of Staff, the warfighters who eventually will use all this equipment. We believe, as with most other programs, that it is required for these people to have a say whether and how missile defense is being developed. We found out that the Joint Chiefs of Staff were not consulted about this budget that was submitted from the National Missile Agency for missile defense in general; that they did not have an opportunity to say you are spending too little or too much. They were frozen out. Those are the senior uniform leaders of our Armed Forces and they didn't get a say in determining what should be spent on missile defense. As we develop these systems, we have to think, even at this point, how are we going to use these systems? The airborne laser has real potential in a tactical situation where you are going against theater missiles. If it is going to be used in a national missile situation, where we are trying to back down an aggressor that threatens us with an intercontinental missile launch, a couple issues should be considered: first, this is a 747 doing circles close to the airspace of a hostile nation. If we believe they have the capacity and the will to shoot an intercontinental missile at us, we have to assume they have the capacity and the will to knock down a 747 as it circles in the air waiting for the blastoff. So our first reaction militarily, I think, would be that we would have to dominate the airspace, send our fighters in to preempt the attack so they won't have to send the 747. Why don't we preempt the launch by attacking? These are some of the operational issues that are being addressed. All we are speaking about here is technological possibilities, but until they are integrated in with the coherent advice of the Joint Chiefs of Staff and JROC, the weight of that advice and of these proposals, I think, has to be questioned. That is our job. Now, we spent a great deal of careful time reviewing all of these systems. As I said, we support robust deployment of systems. The PAC-3 system is a theater system that is well on the way to operational readiness. It is being tested right now. We have made some substantial and robust expenditures for the THAAD Program. Navy theater-wide is a program we are supporting in terms of its testing and evaluation. We support the ABL concept. We are funding it but the question before us is, Is it time to buy a second airplane now? I think the answer is no. The midcourse, the land-based national defense system in Alaska, has been robustly funded. A few days ago the administration announced that a test bed has been started in Alaska for five missiles. That is fully supported in this legislation that we bring to the floor--even though there are real questions about its utility for anything more than a test bed, or even for a test bed. A contingency deployment would be likely directed against those nations identified as the ``evil empire.'' It turns out that the radar that the system being used in Alaska, the COBRA DANE radar, does not face in the direction of Iraq and Iran. It would be impossible to track those missiles. It has partial coverage of North Korea, but it would be difficult to cover with that radar. The administration has rejected a proposal supported under the Clinton administration to build an X-band radar in conjunction with the Alaska test bed. One of the reasons that the X-band radar was so important was indicated by General Kadish and others in their testimony. One of the real challenges for a midcourse interception is to identify the warhead from all of the clutter, including decoys that would likely be launched. To do that, you have to have a finely discriminating radar. The X-band is much more finely discriminating than the L band, which is COBRA DANE. The administration says forget that, we are not doing that. Yet we have funded this proposal fully because we recognize that the X-band radar is an important aspect of defending the country. Yet we also recognize we don't have a blank check. We have to make tough judgments about what we spend. So the idea that we are sort of blithely cutting programs and eviscerating missile defense is, I think, wrong on its face. There is $6.8 billion in this year, coupled with almost $4 billion of funds, that can be used from this year, meaning the fiscal year 2003 budget, coupled with almost $4 billion still available from the fiscal year 2002 budget, is robust funding for missile defense. My last point is something that I think is important to emphasize in the context of not just this program, but the overall challenge we have. When Secretary Rumsfeld came up to the Appropriations Committee to argue for the cancellation of the Crusader system, he made the point--which I think in his mind was very clear--that we face a defense bow wave of epic proportions as we go forward. If we fund all the programs that we are proposing right now, we are going to have some very hard choices. One of the problems with Secretary Rumsfeld's evaluation is it doesn't go as far as I think it should because, as far as I know, he is not including the cost of the deployment or operation of any missile defense system in the bow wave. As we consider the long-term implications, we must consider that we cannot just add funds. We have to be careful about it, and we have to be very careful about what these funds will be used for. We have done a very thorough, detailed review of these programs. We have made suggestions based upon the review. There are other pressing needs. The most glaring to me is homeland defense and antiterrorism expenditures. There, the possibility for extra spending probably exists. Here I think we have made sound choices about priorities that will help enhance the defense of the country. I urge my colleagues to consider carefully the proposals that Senator Levin might make but ultimately to, I hope, agree that the bill we brought to the floor contains robust spending that will enhance our defense through wise expenditures with respect to missile defense. I yield the floor.

Mr. REED

Mr. REED. The system that is most developed is one I mentioned previously, the PAC-3 system. It is a theater missile system. It is not designed to counter long-range threats. It has been tested rigorously. It is in operational testing now. Phil Coyle states that the administration is considering an advanced version of PAC-3 for a national missile defense. But if you were trying to use it in a terminal phase it would take many systems to defend a rather small area of the United States. We probably would never have the number of systems needed to adequately defend the United States. Another system we have been developing for years is the THAAD system. Phil Coyle states that the Administration is also considering use of THAAD along with PAC-3 for national missile defense. But in its current configuration THAAD is not ready for this role. In fact, it is far away from it--perhaps a decade before it could be reasonably used in that way. The other system being developed as we speak is a Navy theater-wide system. It is a midcourse system as it is currently designed. They are now talking about this system as a potential element of their midcourse national missile defense. Again, there are still significant issues with respect to the use of this system for national missile defense. As Mr. Coyle points out, if the system were to be used for a midcourse mission, or a boost phase mission, for national missile defense, it would require a new missile that is twice as fast as any existing version of the standard missile which the system now uses. He writes it would require: A new, more powerful Aegis radar system to track targets; a new launch structure to accommodate the new, larger missiles; and probably new ships. As a result, the Navy theater-wide program requires a great deal of new development. It is unlikely that Navy theater-wide will be ready for realistic operational testing until late in this decade, and it will not be ready for realistic operational demonstration in a layered national missile defense for several years after that. It is interesting to note that this system is being considered today by the Missile Defense Agency for possible deployment in 2004. It is also interesting, and a bit surprising, because in last year's authorization bill we asked the Missile Defense Agency to tell us what they propose to do with the Navy theater-wide system. We asked for a report on April 30. The response to our request was actually a letter that came to us on May 30, and repeated the questions we asked. It responded to some of the questions in a very cursory way. It didn't give any life cycle cost for us, so it is hard for us to estimate how much this new evolving system will cost. It simply said they redefined the system. That was May 30. Yet, about 2\1/2\ weeks later, they were telling the press that we are deploying this system in 2004. In fact, one of the points they made in the letter is: The details of the sea-based program block 2006 and out capability are being developed through work that is scheduled to be completed by December 2003. We will be able to provide specifics on the system definition, along with a preliminary assessment of force structure and life cycle cost at that time. So this work is going to be completed in planning by 2003. Yet this system is being talked about for deployment in 2004. It just does not seem to make much sense, and it illustrates, I think, the problem we have had in the subcommittee, first of getting reliable information, and second of getting a sense of the direction of all these programs. We are not trying to micromanage the Missile Defense Agency, but when we asked a year ago in our report for information specifically about a type of missile system, when we get a cursory response saying, we have renamed it and we will not be able to tell you anything until we conclude in December of 2003 our deliberations, and then 2 weeks later they are talking about the system being deployed in a theater role in 2004, it illustrates, I think, the problems and the issues we have confronted with simply getting the information we need to do our job, to inform our colleagues, to make decisions that are not only important to our national security, but extremely expensive decisions so that we can perform our mission, our role in the Senate. That is the Navy theater wide system. There are other systems we have developed, and I think it is appropriate to note that the next system is the airborne laser system. This is a program to develop a high-power chemical laser that will fit inside a Boeing 747 aircraft. This is a system that would be designed to shoot down short-range enemy missiles in the boost phase. It has some potential, but it is a major technological effort which is going forward, but not going forward with great speed at the moment. The final major component is the national missile defense midcourse, or the land-based system, in Alaska, and that system we have supported. We have supported it, but having supported it, we also have serious questions with it. The system was inaugurated, if you will; at least ground was broken last week for a test bed for missiles. There are concerns that the missiles cannot be effectively used in a flight test capacity because of safety concerns and other factors with respect to the local area in Alaska. That is one issue. The other issue, though, is for several years now in the development of this national missile defense midcourse land-based system in Alaska, the administration and the Missile Defense Agency have talked about using an x-band radar, claiming it as absolutely necessary because of its ability to discriminate the warhead. This is important because the major issue that faces the midcourse intercept is the possibility of countermeasures and decoys. So we need a very fine discriminating radar to determine what is the warhead and what are the decoys. However, That x-band radar has not been funded by the administration. They have declared instead they will use an existing radar, COBRA DANE. One of the problems with COBRA DANE is it faces the wrong way to provide any coverage of Iran or Iraq and provides only limited coverage of North Korea, if you are concerned with the ``evil empire.'' Despite that, and in an effort to support sincerely and consistently the mission of developing adequate national missile defense, we have provided robust funding for the Alaska test bed, and that is included in this bill. However, I do think it is important and appropriate to state our reservations now because they are points we should consider as we go forward. Let me continue to discuss some of the important issues, particularly some of the actions the committee has specifically taken. One thing we should point out is we have looked at the theater missile systems. We have particularly found that the Arrow Missile Defense Program is making great progress. We have increased funding for the Arrow missile system. That is a joint United States-Israeli effort for a theater missile system. We have also fully funded the PAC-3 system, which is the one closest to deployment. It is one that is, again, a theater missile system. In all of our deliberations, we have striven to ensure deployment of these systems in a timely way, but also ensure these systems are operationally tested and rigorously tested before they are put in the field. That is incumbent upon us. We also tried to ensure the independent oversight of the Defense Department's Director of Operational Tests and Evaluation is part of the process. One of the concerns I have, frankly, is that in an attempt by the administration for secrecy and flexibility, we will find a situation in which there is no outside objective voice within the Department of Defense. One that is looking at these programs, advising these programs, and making some judgments that are not influenced by the need for a successful program at any cost, or even a program-- forget successful--at any cost, but are motivated by the need to deploy effective systems that will defend this country. The other factor we considered, and consider constantly, is the discussion of contingency deployments, contingency capabilities. One of the reasons we pause slightly is these contingency capabilities and deployments often result in a rush to failure, often result in a situation where the system is pushed beyond its absolute capabilities. A few years ago, that is exactly what happened with the THAAD Program. It failed its first six intercept tests in a rush to deploy the system before it was ready. The THAAD Program was subsequently totally redone and revamped. It cost hundreds of millions of dollars that were unnecessary expenditures. It is on track now but, frankly, the situation is such that we do not want to repeat that experience in other missile defense programs. We do not want a situation where the pressure for contingency deployments undercuts the need for thorough, deliberate consideration of the operational characters of these systems and the ability of these systems to do the job they are designed to do. We have looked very closely at what we think are attempts to rush the systems. In one area, we have reduced funding of THAAD because they have requested what we consider a premature acquisition of missiles before they have actually had missile's first flight test. We have made that judgment. Let's turn to another aspect of missile defense, and that is the ICBM threat to the United States. It is not as immediate today as the theater missile threat, but it is still a threat. Fortunately, with our new relationship with Russia, the ICBM threat has decreased significantly. China has a small arsenal of ICBMs, but they typically do not have their missiles on ready status, fueled, and with a warhead on the missile. North Korea seems to be developing an ICBM capability of reaching the United States, although it has voluntarily suspended its long-range missile flight test program. There are other potential adversaries. This is an issue about which we are concerned, but one of the things we have to recognize with an ICBM is that its launch leaves an indelible signal of the point of departure and our deterrence doctrine is very clear. We have the capacity to strike back, and strike back with overwhelming force. That has been the hinge, really, of our deterrence policy for 50 or more years, and it remains an important part of our policy. As I have mentioned, the issue of intercontinental ballistic missiles has been with us for many years. We have relied upon deterrence as a mainstay of our defense posture. Today we are developing one system in Alaska that is clearly designed to be a national missile defense system, and this authorization bill supports that effort in Alaska. As I mentioned, we have taken away resources from some programs that are unjustified or duplicative and simply not advancing what we believe is the common concern of developing adequate missile defense systems, both theater and national. We have taken away approximately $800 million and applied $690 million to shipbuilding. But in addition, we have applied resources for security at our nuclear facilities. One of the things I found startling in press reports was the fact that the Department of Energy asked for considerably more money to protect nuclear facilities, and they were turned down by OMB. This is a letter to Bruce M. Carnes, who is the Director of the Office of Management Budget and Evaluation, from the chief financial office of the Department of Energy: We are disconcerted that OMB refused our security supplemental request. I would have much preferred to have heard this from you personally, and been given an opportunity to discuss, not to mention, appeal your decision. We were told by Energy Branch staff that the Department's security supplemental proposals were not supported because the revised Design Basis Threat, the document that outlines the basis for physical security measures, has not been completed. This isn't a tenable position for you to take, in my view. We are not operating, and cannot operate, under the pre-September 11 Design Basis Threat. Until that is revised, we must operate under Interim Implementing Guidance, and you have not provided resources to enable us to do so. That is from the Department of Energy to the OMB. We would move resources into the Department of Energy to provide for security of DOE facilities. But I think this underscores something else, too. It illustrates what I would say are the misaligned priorities between missile defense and other pressing, immediate concerns. Yes, missile defense is important. Yes, we should develop it quickly, thoroughly, and deliberately, but certainly defending and protecting our facilities that have nuclear radiological material is of an immediate and significant concern. Last week, we were not threatened by an intercontinental missile. We were threatened by a terrorist, an American who became infatuated with the al-Qaida and their rhetoric and came here, if you believe the press reports, to obtain nuclear materials to construct a ``dirty'' bomb. That is the immediate real threat today. Yet when the question before the administration was, do we fund security at DOE facilities or do we continue to put resources into missile defense, they made their choice to put resources in missile defense, way above, I believe, the appropriate amount. As a result, we have made adjustments, and I think those adjustments are entirely appropriate. The other aspect of this, too, when it comes to the issue of resources, is, first, a point that all of these deliberations on the missile defense budget seems to be outside the purview of the Joint Chiefs of Staff. I thought it was shocking when the Chiefs came up and testified that they were not consulted during the preparation of the ballistic missile defense budget. These are the uniformed leaders of our military forces. These individuals are charged with and have taken an oath to the Constitution to protect the country, and yet they were not consulted at all about this budget. Another point that is critical, and let me quote from Secretary Rumsfeld's testimony before the Appropriations Committee on May 21. He said: In February of this year, we began developing the Defense Planning Guidance for fiscal year 2004. In the fiscal years 2004 to 2009 program, the senior civilian and military leadership had to focus on the looming problem of a sizeable procurement bow wave beyond fiscal year 2007. This is shorthand for describing the course of procurement of systems that will be ready for fielding later in this decade. If all were funded, they would crowd out all other areas of investment and thereby cause a repetition of the same heartaches and headaches that we still suffer from today as a result of the procurement holiday of the 1990s. This in the context of his plea to cut the Crusader system. But what is most alarming about this quote is that this bow wave does not include any deployment costs of missile defense at a time when the administration is developing multiple systems which they proposed to deploy at the end of this decade, costing hundreds of billions of dollars perhaps. As a result, we cannot simply ignore the cost implications of these systems. As I mentioned before, simply to obtain life cycle cost information on any of these systems has proven to be virtually impossible. We asked for that with respect to Navy theater wide and we got a letter back saying, we will not know until December of 2003 and then we will tell you. We cannot operate without an idea, understanding that it will be amended many times before the end of this decade, but an idea about the cost of all of these systems over several years, procurement and operational deployment. If this bow wave is a crisis today, it becomes a tidal wave when you include missile defense costs. As a result, we have asked again for more specific information about the projected costs associated with the missile defense program. One of the areas, and an area on which we have focused our reductions, has been systems engineering funding. The Department of Defense Missile Defense Agency has asked for significant amounts of money for systems engineering, BMD systems engineering, in addition to specific moneys they are asking in every one of these component parts, boost phase, midcourse, and terminal, where there is sufficient systems engineering money. So we have directed reductions in this BMD systems engineering. It seems to us, again, to be an ill-defined area. We have asked for what products they are buying. Mostly, I suspect it is engineering services, or consulting services. It is not hardware. We have asked for this and we have gotten very little in terms of a response. As a result, we have shifted these funds significantly into the aforementioned shipbuilding programs and further security for our Department of Energy laboratories. These efforts represent an attempt to provide good government, good management to a program. We hope it will accelerate the deployment of an effective missile system that has been operationally tested. I hasten to add that this does not represent a revisitation of the ABM Treaty debate. The President used his prerogative as President to withdraw. This is not about arms control as much as it is about maintaining good management, informing the Congress, so we can make difficult decisions, so that 5 years from now we are not surprised when that bow wave hits us and suddenly the bow wave becomes a tidal wave because of the inclusion of significant costs of missile defense and for theater missile defense. There is a consensus to support missile defense, clearly theater and, in fact, I think also at this juncture clearly national missile defense. I do not think we support that without asking tough questions and making tough choices about how we spend our money, particularly when it comes to the other uses that are so necessary today, the immediate protection of our homeland, the immediate protection of forces around the globe that are confronting our enemies today. So we have to make these judgments and we made these judgments. In addition to that, we have asked that a whole system of, we think, very sensible reports and information be given to us. I have a disconcerting feeling that there is a deliberate attempt to limit information that we get and it is justified under the guise that we need flexibility, that we have not thought through the problem yet. There may be something to that, but it is particularly distressing when the Director of Test and Evaluation does not have unfettered access to the program. It is particularly distressing when the Joint Requirements Oversight Council, the JROC, chaired by the Vice Chairman of the Joint Chiefs of Staff, does not have a role in these deliberations. It is particularly distressing when the Joint Chiefs of Staff are not consulted in the preparation of this significant budget. The American people, I think, assume that these officials of the Department of Defense are intimately involved in all of these details and have a seat at the table to make judgments and to give advice. Our legislation would do that. As we go forward, we will continue to ask the tough questions. The specifics of our requests with respect to these issues of oversight include a reiteration of some of the things that we incorporated in last year's request. Last year, the National Defense Authorization Act required the Agency to submit lifecycle cost estimates for all missile defense programs that it entered into the engineering and manufacturing and development, or EMD, phase. These are the same types of reports that every major weapons system provides to the Congress. The THAAD missile defense program, I have mentioned before, entered EMD phase 2 years ago. We fully expected those lifecycle costs would be reported to us in a routine way. However, instead of providing the required information for THAAD, the Department chose to reclassify THAAD as no longer being in EMD thereby avoiding, in their view, the congressional requirement to submit the cost estimate. It seems to be gamesmanship, to avoid responding to an obvious question, an obvious concern: Tell us how much this system will cost over its lifetime. That, again, is the type of nonresponsiveness, either inadvertent or deliberate, that we have encountered. Therefore, it reinforces the need for additional language in this legislation to require appropriate reports, the same types of reports that you get from mature systems in other areas of defense procurement. We are not asking for the speculative. We are looking at systems that have had many years of development, which are entering the phases of engineering work. So the issue is defined. We can't do that because it is not defined--sometimes we hear that--that is not at the heart of our request. We have applied the request to major missile defense systems such as the ground and sea-based midcourse program, Airborne laser, and the THAAD program. It is particularly important to get information because, on the one hand, the administration says these are all speculative, ill-defined, and they are thinking about it. And then they say: We will deploy the system in a very short time, in 2004, for example. You cannot have it both ways. If we are ready for contingency deployment, certainly the information should be available to the Congress. And this legislation would ask for that information. We also recommend a provision that requires the Pentagon's director of testing and evaluation to assess the potential operational effectiveness of the major missile defense systems on an annual basis. This would help the administration and Congress determine whether a contingency deployment of a missile defense system is appropriate. There has to be a certain operational threshold before deploying the system. Who better than the director of testing and evaluation to make that assessment. It also requires the Joint Requirement Oversight Council to annually assess the costs and performance in relation to military requirements. This is the statutory role of the JROC for all military programs. Missile defense is too important to bypass such a review. As I mentioned earlier, the Chiefs were not even asked to provide their views with respect to these missile defense priorities. That should be corrected also. That should be something the Secretary of Defense would want to have and would insist be included. Now, we are endeavoring to bring this legislation to the floor representing a commitment to missile defense but also a commitment to the overall defense and security of the United States, to be able to assure our constituents that we have looked carefully and deliberately at all these programs and are aware of these programs, that we support these programs, but we don't do it blindly. We do it on an informed basis and are able to tell them: We are doing what we can, indeed, all we can, in a thoughtful, deliberate, careful, professional way, to enhance the security of the United States in terms of missile defense and in terms of overall defense. We are, in fact, doing our job. I believe the legislation we have brought from the subcommittee to the committee and to the floor does this. It is a product of careful deliberation. It is a product of many hours of work by staff and Members. It is a product that is designed to enhance the security of the United States. I believe it does. I hope my colleagues agree and concur. I yield the floor.

Mr. REED. Mr. President, I rise today to express my support for the fiscal year 2003 Defense authorization bill. I believe this bill provides the needed resources to compensate and to reward the men and women in uniform who are doing an extraordinary job protecting this country across the globe and here at home. I also think the bill will provide the funding and the direction to continue the transformation of our military forces so that we are able to meet the new emerging threats of this new century. This year, I again served as chairman of the Strategic Subcommittee. This subcommittee focuses on strategic systems, space systems, missile defense, intelligence, surveillance, and reconnaissance programs, and the national security functions of the Department of Energy. The subcommittee and the full committee held seven hearings dealing with matters in the subcommittee's jurisdiction. The issues addressed by the subcommittee cover a wide range of subjects. These issues include the Nuclear Posture Review, which the Defense Department issued in December, which covers our strategic nuclear plan; the creation of a new Missile Defense Agency, which replaced the Ballistic Missile Defense Organization; increased concerns about the security of nuclear weapons and materials; the need to substantially restructure several space programs; and proposed reductions to the number of deployed nuclear weapons in the context of the new and very commendable agreement with Russia. Let me turn, first, to the issues of strategic systems. The strategic systems that fall within the jurisdiction of the Strategic Subcommittee include long-range bombers, the land-based and sea-based ballistic missile forces, and the broad range of matters pertaining to nuclear weapons in the Department of Defense. In the area of strategic systems, the bill, as reported, adds $23 million to keep the Minuteman III ICBM upgrade programs and the effort to retire the Peacekeeper on track, as has been requested by the Air Force in their list of unfunded requirements. The Peacekeeper and the Minuteman III missiles are both land-based missile systems. When the Peacekeeper is retired, Minuteman III will be the only land-based system, so it is very important to ensure, for our nuclear deterrence, that the process of retirement of Peacekeeper and modernization of Minuteman III continues at the appropriate pace. Under the terms of the Nuclear Posture Review, the Department of Defense plans to eliminate all 50 of the Peacekeeper missiles and download the 500 Minuteman III missiles from their current multi- warhead configuration to a single warhead. This is a significant step in reducing the threat posed by nuclear weapons and one of the major reasons that the United States and Russia were able to come to an agreement. Reducing the number of warheads on the Minuteman III to one warhead per missile, and removing all of the warheads from retiring Peacekeeper missiles, is a key to achieving the goals of a reduced number of deployed missiles that are at the heart of the agreement with the United States and Russia. The commitment is to reduce the number of deployed nuclear warheads to the range of 1,700 to 2,200 from the present approximately 6,000 deployed warheads. Also, this will provide more stability, as missiles with single warheads, in the context of deterrence policy, are a more stable element than multi-warhead missiles. These are all encouraging developments, but it is necessary to keep this process on track by the additional funds which we have added to this legislation. The subcommittee is also concerned about ensuring that the long-range bomber fleet is modernized and maintained. These bombers, particularly the B-2 and the B-52, have repeatedly showed their usefulness in conflicts from Desert Storm to present operations. There are no plans to replace these bombers in the near future. In fact, in 2000, when the Air Force last reviewed the projected lifetime of these bombers, they determined they could rely on these bombers for an additional 30 years. The reality is, the pilots who will retire the B-52 and B-2 bombers have not yet been born. We have to maintain these systems, upgrade their electronics and avionics, to make sure they are still a valuable and decisive part of our forces. This bill would include an additional $28 million to address shortfalls in the B-2 and B-52 bomber programs, and also approves the request by the Department of Defense to reduce and consolidate the B-1 fleet. Adding these additional funds is absolutely necessary if the Air Force projections are correct, and we will have these systems--the B-2 and the B-52--in our inventory for an additional 30 years. Turning to the area of space, another jurisdiction of the Strategic Subcommittee, we considered a variety of very important Defense Department space programs. These programs include satellite programs that provide communications, weather, global positioning systems, early warning, and other satellites for defense and national security purposes. Space programs are critical to the effective use of our Nation's military forces, and each day they grow in importance. This is a very important aspect of our deliberations. We also included in our consideration the ability of the United States to continue to effectively launch space vehicles by looking at the east coast ranges in Florida and the west coast ranges in California. The bill includes funding at the requested levels for most of the Department of Defense space programs. There are some exceptions, however. The committee has added $29 million to continue to improve the readiness and operations safety at the east coast and west coast space launch and range facilities. If we cannot launch vehicles into space, we cannot ensure that we have the appropriate constellation of satellites to communicate, to provide intelligence resources, to provide global positioning signals--all the things that are critical to the success of our military forces in the field. These ranges are important, and these additional funds will upgrade their ability to continue to play a vital role in our national security. The bill also includes reductions in certain space programs. One of these programs is the Space-Based Infrared Radar-High or SBIRS-High satellite program. This is a satellite program which is critical to replacing an older and aging system of satellites that provides early warning of missile launches and other activities of concern to the United States. The worldwide reach of this satellite system is key to its ability to warn of any launches and to provide other critical intelligence. But this program has been plagued with serious problems. It is overbudget and years behind schedule. It is in the process of being restructured by the Department of Defense. Reflecting this restructuring, the bill reduces the over $800 million budget request for SBIRS-High by $100 million so that this restructuring can literally catch up with the funding stream. I think this is an appropriate way to continue to maintain the defense capabilities of the United States while recognizing a program that is in the midst of serious restructuring by the Department of Defense. The bill also reduces the requested funding for another satellite that has had a troubled history; and that is the Advanced Extremely High Frequency, or Advanced EHF satellite. This satellite program is designed to ensure that the Department of Defense and the military services will retain the ability to have a reliable and survivable communication. Advanced EHF, like SBIRS-High, is a replacement for a current system. But, here again, the program is in serious trouble, overbudget and behind schedule. It, too, is being structured. This restructuring made $95 million available that the Air Force requested be shifted to other high-priority programs. And we have followed their advice and their suggestion. Space programs are critical to the operations of the U.S. military. As I indicated, with each day, they become more and more critical. But several of these programs, not only the SBIRS-High program and the Advanced EHF communications satellite program, are experiencing significant problems with cost growth and schedule slippage. Some of the problems with the space programs appear to be connected with the oversight and management of the programs. To address this, the bill includes a legislative provision to ensure the adequate oversight of space programs. This provision would direct the Office of the Secretary of Defense to maintain oversight of space programs and would require the Secretary to submit to Congress a plan on how oversight by OSD and the joint staff will be accomplished. This provision is included largely as a result of testimony before the Strategic Subcommittee in March of 2002 and will ensure that OSD remains and retains an oversight role for space programs. Under Secretary of the Air Force Peter Teets, when testifying before the subcommittee, stated that the Air Force is facing significant challenges in several of our most important space programs. This bill attempts to address these concerns by ensuring that adequate oversight by the Department of Defense is maintained. Let me again stress the importance of these programs. We have all been amazed by the extraordinary success of our military forces in Afghanistan. If you listened to the reports of the special forces troops conducting these operations on the ground, one of the key weapons they had was not a cannon or an M-16, it was a global- positioning, range-finding, targeting device which will operate magnificently as long as we have GPS satellites and comparable satellites in the air. So communications and satellites are critical to the special forces soldier on the ground, the aviator in the air, every member of our military forces. We are endeavoring to maintain, to enhance, and to secure the future of our space operations within this legislation. Let me turn now to another aspect of our responsibilities. That is the intelligence, surveillance and reconnaissance functions. This area includes programs such as the Global Hawk and the Predator unmanned aerial vehicles, or UAVs. We have long supported these very innovative and sophisticated weapons. They have shown their worth, particularly Predator in Afghanistan, and therefore the committee recommends fully funding the administration's request to accelerate the development and procurement of UAVs. Another area we have supported--and in fact we provide additional support in the legislation--is the acquisition of commercial satellite imagery by the Department of Defense. The bill includes an additional $30 million to authorize the Department to buy commercially available imagery to supplement and complement the imagery which we collect through our own assets. This will enhance our ability to conduct operations. This is an initiative strongly supported by Senator Allard, ranking member of the committee. We join in his support of this very worthy enterprise and endeavor. Let me turn to some of the aspects in the subcommittee that touch upon the responsibilities of the Department of Energy when it comes to nuclear weapons. We include several provisions addressing DOE programs. The first would ensure that Congress continues to exercise its oversight responsibility with respect to funding for future nuclear weapons activities. This is absolutely important. In December the administration released a Nuclear Posture Review. This Nuclear Posture Review has been criticized, challenged, identified as perhaps blurring the line between nuclear and conventional responses. This is an area where there is much concern. Again, it reinforces the need for Congress to be informed and responsive to evolving policy with respect to development and deployment and use, potentially--we hope never--of nuclear weapons. If you look at the Nuclear Posture Review, you will see throughout a new triad which includes offensive strike systems which are described as including both nuclear and nonnuclear. You will see that in the context and literal words of the Nuclear Posture Review, they have talked about ``in setting requirements for nuclear strike capabilities, distinctions can be made among the contingencies for which the United States must be prepared. Contingencies can generally be categorized as immediate, potential, or unexpected.'' In the realm of immediate, potential, or unexpected contingencies, they list countries such as North Korea, Iraq, Iran, Syria, and Libya. These are countries which may be endeavoring to develop nuclear weapons but at this time are not declared nuclear powers, raising the issue of whether we would abandon a long-term policy that we would not use nuclear weapons as a first strike on a nonnuclear power unless they attack us in conjunction with a nuclear power. This uncertainty, ambiguity, exists. Perhaps it has always existed, but it underscores the need for Congress to be informed, to be part of this evolving discussion and debate about nuclear policy. Therefore, we would ask that the Department of Energy specifically request funds for any new or modified nuclear weapons. There is no money in this budget for such weapons, but I think at this juncture we have to go on record to ask for that type of specific information and not rely upon finding it buried in some larger account. It is an important issue. It is a critical issue. After the tensions between Pakistan and India, that have not yet subsided totally, no one needs to be reminded about the horrendous impact of the potential use of a nuclear weapon. Therefore, it is vitally important that this Congress be informed of any potential developments of new weapons by the United States. The budget request did include $15.5 million for a feasibility study of a robust nuclear earth penetrator weapon. The bill denies funding for this purpose and directs the Secretaries of Energy and Defense to submit a report to Congress setting forth the military requirements, the characteristics and types of targets the nuclear earth penetrator would hold at risk, the employment policies of such a nuclear earth penetrator, and an assessment of the capabilities of conventional weapons against these potential targets. Once again, in the context of a statement by administration officials about the, perhaps, rejection of long-term policy, the nonfirst use against nonnuclear powers, and the ambiguity that has been created, it is essential to stop and look at justification for creating this weapon system. We already have a nuclear earth penetrator. It is the B61-11; it has been publicly reported. We have the system in place. It is incumbent upon the Departments of Energy and Defense to say why we need to modify another system to do a similar job. I will also point out there has been some suggestion that what the Department of Energy might be working on is a small mini-nuke that would be less troublesome in terms of radiation, in terms of the impact. Quite seriously, once we cross the nuclear threshold, the size of the weapon may be less important than the fact that we have crossed the threshold. From the candidates that might be chosen to modify for this robust nuclear earth penetrator, these are very large weapons, hundreds of kilotons, at least six or seven times the destructive force that was used upon Hiroshima. We have to be very careful. The bill goes ahead and denies the funds and asks the Department of Energy to justify with the report several parameters which are necessary before they go forward, if they do go forward. The last DOE provision I would like to speak about is a provision that would focus additional resources, $100 million, in cleanup efforts to clean up DOE sites throughout the country that have been polluted by the nuclear activities going back more than 50 years. It is essential to make our commitment to communities throughout this country that have hosted DOE facilities and now see the ground around them literally contaminated, in many cases by nuclear operations. This is very important. Let me turn to one of the most contentious and challenging issues before the subcommittee. That is the issue of ballistic missile defense. I want to take some time and go into some detail because there are misconceptions and misinformation about what the subcommittee did and what the committee finally approved. Let me start with the very broad picture. The administration requested $7.6 billion for missile defense. The committee recommends $6.8 billion, a reduction of $812 million, or 11 percent. I should point out that the budget for missile defense has grown dramatically in the last several years. We are still funding this program at a very robust $6.8 billion. The $812 million reduction in ballistic missile defense was transferred to more immediate and pressing needs in the view of the committee. The most significant, in terms of dollars, was $690 million for additional shipbuilding, which will provide advanced procurement for a new submarine, a new destroyer, and a new troop transport ship, all immediate and vital needs for our military forces. Some of the additional money would be used to increase the security of the Department of Energy facilities. Again, after the last several weeks, where we thought an al-Qaida operative was making his way to the United States to steal radioactive material to construct a ``dirty'' bomb, the need for enhanced security at DOE sites, as well as many other sites that have radiological material, cannot be underestimated. Let me talk in general terms about the ballistic missile threat and the programs that are evolving to meet that threat. First, historically and generally, we have categorized this in two ways: short-range threats and the longer range threat of the intercontinental ballistic missile. The reality is that many countries have short-range missiles, some of which are capable of mounting chemical and biological warheads. They are an immediate present threat to U.S. forces deployed throughout the world and to U.S. allies throughout the world. Intercontinental ballistic missiles are those, obviously, that travel long distances and are designed to strike the homeland of the United States. Those two distinctions have formed most of our programmatic response for many decades. The administration has come in and, in some respects, blurred the lines between these two distinctions. Rather than the traditional distinction between theater missile and national missile defense, between the short- and medium-range missiles and the longer range intercontinental ballistic missiles, they have talked about creating a missile defense consisting of the boost phase defense systems--those systems designed to strike a missile when it leaves the launch pad, in the 2 or 3 minutes before it gets into the upper atmosphere; in fact, outside of the atmosphere in some cases--a midcourse phase, as the term indicates, which would destroy the missile in the middle of its flight; and the terminal phase, which is the final point where the missile is heading toward its target, coming down rapidly towards its target. Now, there is a certain logic to this. I have to be fair about that. If one looks at defense in other contexts, such as the more terrestrial contexts of a land battle, defense in depth is a watchword--long-range fires, intermediate fires, and close fires. So there is a logic to this, and it might be unwitting, but there is a blurring and distortion that I think can be misinterpreted--and I think it has been in many cases--with respect to the actual programs we are trying to develop and the progress on those programs. One case in point is a recent article in the Wall Street Journal, on June 18, where it talks about discussions by General Kadish, about the Navy theater-wide missile system, on which the Journal opined in this article: The move would represent the first deployment of a defensive missile shield since a system was first proposed by President Reagan in the 1980s. What General Kadish was talking about was a theater missile, not a national missile system. In point of fact, the PAC-3 system, a land based theater system, is being operationally tested now and likely will be deployed. Certainly it is further along in development than this proposed sea based system. This type of blurring of the lines in recalibration and renaming of systems I think has created a lot of misunderstanding. Hopefully, we can add some clarity today. As I mentioned before, theater ballistic missiles have long threatened forward deployed U.S. forces. For years we have confronted the potential of a real-time missile attack in North Korea and in other places. Long-range missiles were the source of our long and, fortunately, stalemated cold war with the Soviet Union. They had the capacity to fire missiles intercontinentally. We were able to wait them out or, through deterrence, through our strategic policy, we were able to bring the cold war to a conclusion, and also to have a situation in which now we are making real progress with Russia in terms of strategic arms control. So this distinction between theater missiles and ICBMs is significant. I think it is appropriate at this point to try to go through the list of the systems which have been developed, which we have been developing, and systems that are the underpinning of this new constellation of missile defenses the administration talks about. I ask unanimous consent to have printed an article by Philip Coyle, former director of operational test and evaluation in the Department of Defense, in the Arms Control Today of May 2002. It summarizes in excellent detail the systems we are talking about today.

Mr. REED

Mr. REED. Madam President, I rise to acknowledge the fact that today, 6 months after President Bush announced the U.S. intention to withdraw from the ABM Treaty, the Treaty lapses. The 30-year old treaty, which most consider to be the cornerstone of arms control, now no longer exists. The significance of today has gone largely unnoticed. Press coverage has been minimal so most American will likely not realize what happens today. The objections of Russia and China to the withdrawal have been muted. Our European allies have reluctantly accepted the withdrawal. Some would say that this lack of fanfare proves that the ABM Treaty was a relic of the cold war and needed to be renounced. I would argue that while today's withdrawal seems insignificant at this moment, it has profound implications for the future. When President Bush announced his intention to withdraw from the treaty, he stated: ``I have conclude the ABM Treaty hinders our government's ability to develop ways to protect our people from future terrorist or rogue-state missile attacks.'' I would argue that this statement is incorrect. First, the greatest threat from terrorists is not from a long range missile but from methods we have witnessed and watched for since September 11 conventional transportation like planes and cargo ships, used as weapons. Secondly, any testing of missile defenses that could be planned for the next several years would not violate the ABM Treaty. We simply do not have the technology yet to test a system in violation of the treaty. An article in today's New York Times states that on Saturday, ground will be broken for a missile test site in Fort Greely Alaska. The article states that this test site would violate the treaty. That is not correct. Under Article IV of the ABM treaty and paragraph 5 of a 1978 agreed statement, the U.S. simply has to notify Russia of U.S. intent to build another test range. As a matter fact, the fiscal year 2002 Defense authorization act authorized the funding for the Alaska test bed prior to the President's announcement to withdraw from the treaty. As a supporter of the ABM Treaty and a member of the Senate Armed Services Committee, I can assure you that Congress clearly had no intent to authorize an action that would violate the treaty. The technologies which would indeed violate the ABM Treaty, sea-based and space-based systems, are mere concepts that are years away from constituting an action that would violate the treaty. In sum, despite the claims of the President, there was no compelling reason to withdraw at this time. In addition, today, the United States becomes the first nation since World War II to withdraw from a major international security agreement. In the past 50 years only one other nation has attempted such an action. In 1993 North Korea announced its intention to withdraw from the Nuclear Nonproliferation Treaty which caused an international crisis until North Korea reconsidered. The U.S. withdrawal has not caused an international crisis, but it does send a subtle signal. If the U.S. can withdraw from a treaty at any time without compelling reasons, what is to stop Russia or China from withdrawing from an agreement? Furthermore, what basis would the U.S. have for objecting to such a withdrawal since our nation began the trend? This administration must keep in mind that other nations can also take unilateral actions, but we might not be as comfortable with those decisions. Indeed, as we seek to eliminate the threat of weapons of mass destruction, this withdrawal sends the opposite signal. As I mentioned before, the ABM treaty was the cornerstone of arms control. With the cornerstone gone, there are worries about an increase in nuclear proliferation. As Joseph Cirincione said, ``No matter what some people may tell you, each side's nuclear force is based primarily on the calculation of the other side's force.'' If China believes its force could be defeated by a U.S. missile shield, China may decide it is in its best interest to increase the number of weapons in its arsenal to overwhelm the shield. If China increases its nuclear missile production, neighboring rival India may find it necessary to recalculate the size of its force. Of course, Pakistan would then increase its inventory to match India. So, while there seems to be little consequence to cessation of the ABM Treaty today, if we are not careful it could be the spark of a new arms race. As of today, the ABM Treaty no longer exists. But our work has just begun. Withdrawing from this treaty dictates that we redouble our efforts on other nonproliferation and arms control agreements. Since September 11, every American has become acutely aware of the need to eliminate and secure nuclear materials so that they do not become the weapon of a terrorist. The only way we will not regret today's action is to prove by future actions that the U.S. is truly committed to arms control and nonproliferation. The United States should robustly fund Cooperative Threat Reduction programs. The United States should pursue further negotiations with the Russians and agree to actually dismantle some weapons rather simply place them in storage. The United States should also ratify the Comprehensive Test Ban Treaty. In his withdrawal announcement last December 13, President Bush said, ``This is not a day for looking back, but a day for looking forward . . . '' I agree. We cannot look back to a treaty that no longer exists, but we must work diligently from this day forward to ensure that the United States is taking the steps necessary to maintain the peace and security once sustained by the ABM Treaty.

Mr. REED

Mr. REED. Mr. President, I yield myself 10 minutes of the opposition time.

Mr. REED. Mr. President, this is a very auspicious moment in our history, not just this debate in the Senate but the fact that we are in the midst of a war with extraordinary demands, fiscal demands as well as demands of patriotism, on the country. Yesterday we raised the debt limit. We are in a situation where there are efforts to fund worthy programs that are supported on both sides. First, of course, is national security, homeland defense, but also an educational proposal that the President championed. Yet at this time, we are considering the total repeal of the estate tax. A great deal of the discussion is rhetorical. I think it is useful to point out some of the facts with respect to the estate tax. First, no estate less than $1 million is taxed at all today, which excludes the vast majority of Americans. In fact, if most Americans are asked what they are worried about at the end of their days, it is not the estate tax. It is paying for long-term care. It is affording a nursing home without having to sell their home or dig deeply into their savings. That is what most Americans worry about. They are not worried about the estate tax. Ninety-eight percent of estates pay no estate taxes at all. In 1999, fewer than 49,000 out of 2.3 million estates--that is only 2.1 percent--paid any estate taxes whatsoever. This percentage is projected to drop as the exemption rises from $650,000 in 1999 to $3.5 million in the year 2009. Now, the estate tax repeal will benefit some Americans, very few Americans, and the wealthiest Americans. Estates larger than $5 million paid half of all estate taxes, and if we look at the 467 largest estates, worth at least $20 million, they paid nearly one-quarter of the estate taxes paid. So this is a benefit that will not be fairly shared by all Americans. It will be significantly shared by very wealthy Americans. Now it should be pointed out, too, that no estate tax is paid if a spouse survives. That spouse does not have to pay estate taxes. Currently, as I indicated, an individual can pass along up to $1 million without estate taxes, and that increases to $3.5 million in the year 2009, and a couple can pass along twice that amount because of the spousal rules. Furthermore, only a small fraction of taxable estates consisting primarily of family-owned small businesses or farm assets pay estate taxes. This is a topic that receives a lot of rhetorical attention, but the reality is this: In 1999, only 1.4 percent of taxable estates were farm estates, and only 1.1 percent were small businesses. There are already special provisions that are provided for these farms and for these small businesses, such as allowing additional sums to be bequeathed tax free and also deferring payments on taxes for up to 14 years. Farm estates in 1999 pay only 0.7 percent of all Federal estate taxes collected, and so this is not a crisis of sweeping proportions that is engulfing every farm in America--only very few farms, very wealthy estates. Even among these family-owned farms and small businesses that might actually pay estate taxes, there is scant evidence the tax has a real impact on their operations; that, in fact, they have to sell the farm to pay the taxes or sell the small business to pay the taxes. One thing that is important to note, a great deal of an estate is made up of unrealized capital gains. The deceased bought property 50 years ago very inexpensively. Today that property is worth a great deal. Under the current system, the heirs get that property with a stepped-up basis and so if they choose to sell the property after they have paid the estate tax or after they have been exempt from the estate tax, they really pay no capital gains whatsoever because significant portions of the property are unrealized capital gains on which no capital gains tax has ever been assessed against the property. There is another argument that is made by proponents, and that argument is the fact that repealing of capital gains will stimulate economic growth in America, will increase savings, will increase our overall growth. A new report from the Joint Economic Committee and the Democratic staff points out that these claims are exaggerated at best. Repeal would affect very few families and have very little impact on total capital accumulation in the United States. The tax is very small itself, relative to family net worth. The gross value of taxable estates comprised only 0.3 percent of the total net worth of the household sector, and the estate tax itself claimed less than 0.06 percent. That is what the estate tax claims in terms of the household sector of America. Repeal would have a small, uncertain effect on individuals' private saving. There is no real indication that saving will increase. In fact, it is likely or possible that consumption could increase as people took estimated estate tax payments and decided they were not due any longer under the proposed regime, they would be spent. It is unclear whether this proposal will increase national saving. Without increased national saving, we will not have the kind of economic growth we want. This repeal, if enacted, will dramatically and definitely affect the revenues going not just to the Federal Government but to State governments. The Joint Committee on Taxation estimates permanent repeal would cost, in 2012 alone, $56 billion. Others suggest that estimate is rather conservative. There would also be comparable losses at the State level. At a time when we are seeing a deficit situation in the United States, that deficit will be compounded by the loss of the estate tax. It will result in a decrease in public and national saving. As a result, we will not be stimulating the kind of growth we want, for many reasons, including the fact that the purported savings from compliance costs might not be realized either, since most estates, most investors, most people with property will continue, regardless of the estate tax, to plan for the disposition of their assets and engage legal counsel. The notion that we will save and streamline the cost of providing for the future is not substantiated by the reality of what people do every day. Now, can we afford to repeal the estate tax? I don't think we can, particularly in a situation where we are seeing the cost likely in the second decade to balloon to $750 billion. We are considering in the next few weeks legislation both sides support. First, a pharmaceutical benefit for seniors. Will that cost billions of dollars? Yes, it will. Where will that money come from? Right now, it is coming from the Social Security fund and Federal debt if we propose it and pass it. This will make our proposals much more difficult to enact and fund. It is easier to enact than to fund a pharmaceutical benefit. The Department of Defense is proposing a missile defense system supported by both sides. They are reluctant to tell us what the life cycle cost will be over 20 years. Why? Because those costs are likely to be in the hundreds of billions of dollars. Where do we get that money? We are in a deficit now. We will be in a worse situation if we pass the permanent repeal of the estate tax. We have to recognize that each day we wake up, we encounter a new threat to our national security. Two days ago, the FBI announced they seized a terrorist who was plotting to detonate a radioactive device in the United States, causing us to ask fundamental questions: Are all of our university laboratories with isotopes fully protected? Are all of our reactors, academic and utility reactors, fully protected against theft? That is not an inconsequential cost, but it is a cost we cannot avoid. If we pass this, we will be in a more difficult position to meet those responsibilities. I urge we reject this approach and adopt the approach suggested by Senator Conrad that raises the exemption level, making it quite clear and obvious we are not going to penalize those smaller estates, we are not going to penalize the proverbial and somewhat, in many cases, elusive family farms that are threatened by this estate tax. I hope we can do that. I hope we reject this proposal and adopt the Conrad proposal. I yield the floor.