[Pages S791-S821]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

FAIR MINIMUM WAGE ACT OF 2007

The PRESIDING OFFICER. Under the previous order, the hour of 2 p.m.
having arrived, the Senate will proceed to the consideration of H.R. 2,
which the clerk will report by title.
The assistant legislative clerk read as follows:

A bill (H.R. 2) to amend the Fair Labor Standards Act of
1938 to provide for an increase in the Federal minimum wage.

The PRESIDING OFFICER. The majority leader is recognized.

Amendment No. 100

(Purpose: In the nature of a substitute)

Mr. REID. Mr. President, I send a substitute to the desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Nevada [Mr. Reid], for Mr. Baucus,
proposes an amendment numbered 100.

Mr. REID. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in today's Record under ``Text of
Amendments.'')
Mr. REID. Mr. President, that amendment is on behalf of Senator
Baucus. I failed to mention that.
The PRESIDING OFFICER. The Republican leader is recognized.

Amendment No. 101 To Amendment No. 100

(Purpose: To provide Congress a second look at wasteful spending by
establishing enhanced rescission authority under fast-track procedures)

Mr. McCONNELL. Mr. President, I believe there is an amendment of
Senator Gregg's at the desk. I call it up for its immediate
consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows

:The Senator from Kentucky [Mr. McConnell], for Mr. Gregg,
for himself, Mr. DeMint, Mr. McConnell, Mr. Lott, Mr. Kyl,
Mrs. Hutchison, Mr. Cornyn, Mr. Allard, Mr. Crapo, Mr.
Bunning, Mr. Vitter, Mr. Brownback, Mrs. Dole, Mr. Alexander,
Mr. Thomas, Mr. Craig, Mr. Burr, Mr. McCain, Mr. Sununu, Mr.
Enzi, Mr. Martinez, Mr. Chambliss, Mr. Sessions, Mr. Coleman,
Mr. Graham, Mr. Voinovich, Mr. Isakson, Mr. Coburn, Mr.
Ensign, and Mr. Thune, proposes an amendment numbered 101 to
amendment No. 100.

(The amendment is printed in today's Record under ``Text of
Amendments.'')
The PRESIDING OFFICER. The majority leader.

Cloture Motion

Mr. REID. Mr. President, I send to the desk a motion to invoke
cloture.
The PRESIDING OFFICER. The cloture motion having been presented under
rule XXII, the Chair directs the clerk to read the motion.
The assistant legislative clerk read as follows:

Cloture Motion

We the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
do hereby move to bring to a close debate on the pending
Gregg amendment No. 101 to the substitute amendment to H.R.
2, a bill to amend the Fair Labor Standards Act of 1938 to
provide for an increase in the Federal minimum wage.
Harry Reid, Mitch McConnell, Judd Gregg, Craig Thomas,
John E. Sununu, James Inhofe, Jon Kyl, Johnny Isakson,
Tom Coburn, Mike Crapo, Wayne Allard, Lamar Alexander,
John Cornyn, Jim Bunning, John Ensign, David Vitter,
Bob Corker.

Mr. REID. Mr. President, let me say briefly, we are now at the point
where we said we would be last week. Again, I have said on a number of
occasions that I appreciate the courtesy of the Senator from New
Hampshire. This is an issue which he believes in very strongly. I just
finished a conversation with Senator Byrd in his office a short time
ago, and he does not believe in it. This is what legislation is all
about, and we look forward to voting on this amendment. We will vote on
it Wednesday, or we will, as I said, meet with the distinguished
Republican leader later today and we will decide if we need to vote on
it more quickly or we need to take all that time--whatever the rules
call for, unless we are able to work with Senator Gregg and Senator
McConnell to move that more quickly.
The PRESIDING OFFICER. The Republican leader.
Mr. McCONNELL. Yes. Let me indicate my admiration for Senator Gregg
in persisting in offering this very important amendment.
I thank the majority leader for working with us to get consideration
of this extremely important measure, and we look forward to beginning
the debate.
The PRESIDING OFFICER. The Senator from New Hampshire.
Mr. GREGG. Mr. President, if the leaders have completed their
statements, I would ask for recognition.
Mr. President, first, let me begin by thanking the majority leader
and the Republican leader for their efforts here in allowing me to
bring forward this amendment at this time. As we know, 2 weeks ago I
offered this amendment. At the time, I offered it because I felt it was
appropriate to the lobbying reform vehicle, as the lobbying reform
vehicle had been greatly involved in the issue of what is known
as earmarks. Earmarks are where certain Senators put specific language
into a bill which allows spending to occur for a specific item.

I am not inherently opposed to earmarks. Many are very genuinely of
good purpose. And I have used it in cases to benefit programs which I
thought were appropriate. In fact, I think the legislative branch has a
right to direct spending. If you do not direct spending as a
legislative branch, then the executive branch has the authority to
direct spending, and the practical effect of that is the legislative
branch is giving up one of its key powers, which is the power over
spending.
However, there have, over the years, been abuses of the earmark
process. We all know that. We have seen it. And there have actually
been abuses which have been unethical. We have seen that

[[Page S792]]

in recent times. So the key, I believe, to earmark reform is
transparency and allowing the Congress and the people we represent to
see what is being earmarked, and allow the Congress to actually have to
vote on it.
The idea of the enhanced rescission proposal, which I have here--and
I call it a second-look-at-waste proposal--is to allow the President to
send back to the Congress items which he or she feels were
inappropriately put in some other bill and which did not receive an up-
or-down vote.
Now, how could that happen, people might ask? It happens very simply.
A lot of vehicles we pass here, a lot of laws we pass here, a lot of
spending proposals we pass here involve literally tens of billions,
sometimes hundreds of billions of dollars in spending. What will happen
is these bills, which have these huge conglomerates of spending
activity in them--which are known as omnibus bills--sometimes we find
embedded in them little items, smaller items of spending which were put
in there for the purposes of accomplishing specific activity by Members
of the Congress, sometimes at the specific request of people who have
been asking for those programs.
The President, of course, does not have the choice of going in and
saying: Well, that is a bad program or that is an inappropriate
program. He or she must sign the entire bill, the whole bill--a $10
billion bill, $100 billion bill, $300 billion bill. That bill must be
signed in its entirety. Pieces of it cannot be separated out.
So what this second-look-at-waste amendment does is allow the
President, on four different occasions, to send back to the Congress a
group of what would be earmarks in most instances for the Congress to
vote on again, and essentially say to the Congress: Well, those items
which were buried in this great big bill--those specific little items--
should be reviewed and Congress should have to vote them up or down.
Congress then, by a majority vote, must vote on whether it approves
those specific spending items. That is called enhanced rescission. It
is not a line-item veto. A line-item veto is where the President can go
in and line-item out a specific item and then send it back to the
Congress, and the Congress by a two-thirds vote must vote to override
the President's proposal to eliminate the spending. In this instance,
the Congress retains the right to spend this money if a majority of the
Congress decides to spend the money in either House--in either House.
So as a practical matter, it is a much weaker--dramatically weaker--
proposal than what is known as the line-item veto, which passed here in
the early 1990s and was ruled unconstitutional. In fact, this amendment
has been drafted so it will be constitutional. And, in fact, it has
been drafted in a way that basically tracks rather precisely and very
closely the language that was offered by Senator Daschle and Senator
Byrd back in 1995 and was then called enhanced rescission.
We made one major change in the initiative which we proposed last
week to make it even closer to the language of Senator Daschle and
Senator Byrd in that we have included in this proposal, which has been
filed here today, enhanced rescission which includes the right to
strike. What does that mean? That means the Senate will have the right
to look at the package of rescissions sent up by the President, which
might be two, it might be three, it might be 10, and the Senate does
not have to vote up or down the entire package; the Senate can actually
go in and vote up or down specific items within that. So it even gives
the Senate, and the House for that matter, significantly more authority
over this process.
The proposal we are putting forward is what we call second look at
waste, what was called, back in 1995 when it was offered by Senator
Daschle and Senator Byrd, fast-track rescission. It is not a line-item
veto.
I want to reinforce this point because what is shown on this chart
references the Daschle language of 1995 and the amendment which we have
offered today. You can see that the two agree on almost all the key
elements.
The Daschle language established a fast-track process for
consideration of Presidential rescissions. We do the same thing. The
Daschle language required congressional affirmation of the rescissions.
We do the same thing. The Daschle language allowed the President to
suspend funds for a maximum of 45 days. We do the same thing.
On the left side of the chart are Senator Daschle's proposals,
supported by Senator Byrd and 20 other Members on that side of the
aisle. It did not permit the President to resubmit a submitted
rescission request. We do the same thing.
It allowed for the rescission of discretionary funding and targeted
tax benefits. We do the same thing--only allowed motions to strike, no
amendments. So you can move to strike, the same thing as the Daschle
amendment. It required rescinded savings to go to the deficit so it
could not be respent. That also we do.
Now, the two big changes we have from Senator Daschle's proposal: We
allow rescissions of new mandatory programs, not existing mandatory
programs. You cannot go in and rescind a farm program that already
exists or a VA program that exists. No. A new mandatory program. And we
do not allow the rescissions to occur as often, or the President to
send up as many rescissions as he could have under Senator Daschle's
and Senator Byrd's amendment. We only allow the President to send up
four rescission requests. Under Senator Daschle's and Senator Byrd's
amendment, you could arguably send up 13 rescission requests. So we
have significantly limited the ability of the President to sort of game
the system and also tie up the Congress.
It is important to understand this change we have made actually
significantly increases congressional authority over the rescission
process, as does this one. This other change gives the President
additional activity on congressional mandatory spending. Why did we put
that in there? Well, because today 60 percent of Federal spending is
mandatory spending. The simple fact is that if you do not address
mandatory spending in new mandatory programs, then you are taking out
the ability to address the budget in a significant way.
Now, I noticed Senator Conrad, in one of his very well-stated
statements in regard to this enhanced rescission, second-look-at-waste
program, said: Well, this puts a gaping hole in any agreement that
would be reached between the Senate and the President on how to handle
even entitlements. I do not believe that. I do not believe that. I
think if the Senate and the President reach an agreement on how to
handle entitlements, part of that agreement is going to be that the
enhanced rescission program that is proposed here is not going to
apply. That is logical, reasonable, and the way it is going to work.

Obviously, the Congress is not going to give up that much authority
if we are going to reach that type of agreement, and I do hope we reach
such agreement. That would be good for us as a Nation.
Again, I emphasize we have put in this new amendment, as it has been
sent up, the motion to strike. This was an issue of considerable
disagreement on the floor. A lot of Members believed that by not giving
us a motion to strike, we were giving too much power to the executive
on the issue of enhanced rescission. Senator Daschle and Senator Byrd,
in their amendment in 1995, had that language. The administration is
not happy with that language. I can argue it both ways. But I think in
order to have consistency between both and because it is a significant
right to retain with the legislative branch, we have put it back in.
I also think it is important to note that any savings go to deficit
reduction. Deficit reduction should be our goal. If the President sends
up something he thinks is wasteful and we agree, let's rescind it and
send it to reduce the deficit rather than rescinding it and sending it
on to be spent. That makes a lot of sense.
To show you how different this is than the line-item veto, back in
1995, when we had the line-item veto--and remember, when we passed it,
11 members of the other party who are presently serving in the Senate
voted for the line-item veto: Senators Baucus, Biden, Dorgan, Feingold,
Feinstein, Harkin, Kennedy, Kerry, Kohl, Lieberman, and Wyden; I voted
for the line-item veto--that was ruled unconstitutional. That was
dramatically

[[Page S793]]

more power given to the executive. This basically gives no power to the
executive other than to ask the Congress to take another look and vote
again. So one would presume that the folks who voted for the line-item
veto back in 1995, unless they have changed their view, would be
supportive of a much more weaker fast-track rescission approach in
2007.
In addition, the Daschle amendment, which was supported by Senator
Byrd and others, had 20 Democratic cosponsors--and it was essentially
the same amendment we are offering today--Senators Akaka, Baucus,
Biden, Bingaman, Boxer, Byrd, Conrad, Dodd, Dorgan, Feingold, Harkin,
Inouye, Kohl, Lautenberg, Leahy, Levin, Mikulski, Murray, Reid, and
Rockefeller. All supported the Daschle rescission language, which is
essentially the language we have offered today, especially now that we
put in language relative to a motion to strike.
To read a couple quotes that I believe are informative and accurate,
back in 1995, Senator Feinstein said about the proposal:

Really, what a line-item veto is all about is deterrence,
and that deterrence is aimed at pork barrel [spending]. I
sincerely believe that a line-item veto will work.

Senator Feingold said:

The line-item veto is about getting rid of those items
after the President has them on his desk. I think this will
prove to be a useful tool in eliminating some of the things
that have happened in the Congress that have been held up
really to public ridicule.

That is the line-item veto they were talking about, a much stronger
language than this enhanced rescission language.
Senator Byrd on the Daschle language said:

The Daschle substitute does not result in any shift of
power from the legislative branch to the executive. It is
clear cut. It gives the President the opportunity to get a
vote . . . So I am 100 percent behind the substitute by Mr.
Daschle.

Senator Dodd said:

I support the substitute offered by Senator Daschle. I
believe it is a reasonable line-item veto alternative. It
requires both houses of Congress to vote on the President's
rescission list and sets up a fast-track procedure to ensure
that a vote occurs in a prompt and timely manner.

That is an accurate statement as to what it does.
Then, Senator Levin, in March 1996--all these quotes are from 1995-
96--

I, for instance, very much favor the version which the
Senator from West Virginia has offered, which will be voted
upon later this afternoon. That so-called expedited
rescission process, it seems to me, is constitutional and is
something which we can in good conscience, at least I can in
good conscience, support.

Senator Levin is one of our true constitutional scholars in this
institution.
And Senator Biden, in 1996, said:

Mr. President, I have long supported an experiment with a
line-item veto power for the President.

So he supported the line-item veto. Again, I note that this is
nowhere near the line-item veto language.
In fact, this language has been vetted, vetted aggressively, not only
by Senator Daschle when he offered it back in 1995 but since then with
a variety of individuals who are constitutional scholars, to make sure
it settles the issue and does not, in any way, take from the Congress
the power of the purse, which is the issue that, of course, was raised
against the line-item veto in Clinton v. The City of New York, which
struck down the line-item veto on the grounds that it did go too far in
violating the presentment clause. This language does not do that
because it retains to the Senate and to the House absolute authority
over spending. It simply asks them, through the Executive, to take a
second look at an item that might otherwise--and, in fact, for all
practical purposes--never get a clear vote. It was something that was
buried in some larger bill. Because we have retained the right to
strike, we have even gone further by saying that the entire package
which the President sends up, assuming he sent up more than one item to
rescind, would be subject to a right to strike.
So the Congress has the ability to pick and choose in its second-look
process as to what it thinks makes sense and what it doesn't think
makes sense. There is probably going to be a lot of stuff sent up that
the Congress agrees with, because some things happen in these major
bills where items get in that people don't notice, and certainly a
majority of the Congress feels, if they took another look at it, they
would not be inclined to support.
Equally important is the restriction on the President, which is
different from the Daschle-Byrd amendment, which is that we only allow
him to do this four times. That is important. I am willing to go back
from four and maybe take it back further. Senator Lott came to the
floor and said he didn't like the idea of four. If we get this thing
moving along, I am willing to take a look at less rescission packages.
But the President, under the original Daschle amendment in 1995, had 13
shots at the apple because he could do it on each appropriations bill.
At that time, we had 13 appropriations bills; now we have 12. But
today, under this amendment, he will only have four chances to package
ideas, initiatives he thinks were inappropriately buried in some bill,
send them back up and say: Take another look at this. I have to get 51
votes to support taking out this item.

What is the purpose of all this? That is the technical purpose in
describing it, but what is the real purpose of all this? The real
purpose is to get to the issue of managing the Federal purse. Congress
has the right to the Federal purse. That is the most important power
Congress has. I have listened to the explanation of the Senator from
West Virginia on this for many years, and he says it more eloquently
than anyone else. Everyone has to agree with his position. The power of
the purse is the power of the legislative branch. But this is about
managing that power. This is about when a bill comes roaring through
that has $300 or $400, $500 billion of initiative in it, called an
omnibus bill usually, and you have to pass it because the Government
closes if you don't. This is about saying: All right, there is going to
be a process where we can take another look at some specific items in
that bill without giving up to the Executive power which the Executive
should not have, which is the capacity to line item something and force
us into a supermajority.
That is what this is about. That is why I presume Senator Daschle
offered it back in 1995, and that is why I offer it today. In the end,
it is going to give us better discipline over our own fiscal house. It
is going to make us better stewards of the taxpayers' dollars. We will
be able to say to the taxpayer: Yes, that bill may have been a $500
billion bill. Maybe there were some things in there that we shouldn't
have done. We are going take a second look at it to make sure those
things were not wasteful. We are going to pass the bill because we need
to pass the bill to keep the Government going, but we will have a
chance to take a second look. It is just good management, without
giving up the authority of the legislative branch, in my humble
opinion.
I hope that Members who take a look at this will consider it
carefully. I know it has been caught up in the dialog of politics. I
regret that. I regret that last week it got caught up and was
represented by some as being an attempt to poison the lobbying bill.
That was never my intention. I didn't even think of that, quite
honestly, when I offered this amendment. I didn't know it was going to
be so controversial. I thought I would just get a vote. That was not my
intention, and I don't think it was anybody's intention on our side. It
got caught up in the broader fight of what we do sometimes around here.
We let process overwhelm substance. It got characterized by the talking
head community out there as both a legislative attempt to kill the
lobbying bill and a legislative attempt to show the power of the
minority. It wasn't any of that. It was simply an attempt by me to
bring forward what I thought was good legislation which would be
constructive to our process of fiscal discipline, which happens to be
one of my high priorities.
Now it is on the minimum wage bill. I greatly appreciate the Senator
from Nevada and especially the Senator from Massachusetts and the
Senator from Wyoming, who have to manage this bill, being courteous
enough to allow their bill to already have an amendment on it that
maybe isn't immediately related to their bill. This, however, was not
my choice. I would have preferred to have it on the lobbying bill,
which it was immediately

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related to. That was an earmark bill. That had a lot to do with
earmarks. This has a lot to do with earmarks. But nobody can argue that
this is the wrong vehicle because I didn't choose this vehicle. This
vehicle was chosen for me. That is why we are doing it here.
When we get to the motion on cloture, I hope people will vote for it
on its merits and will not vote for it on some procedural argument,
such as this is the wrong vehicle. Because I think people are sort of
estopped, to use one of our legal phrases--I remember that phrase from
law school--from claiming that this is the wrong vehicle. Because as a
practical matter, I was told to put it on this vehicle. I didn't choose
it. I was told. I am trying to be helpful. So that is why it is here.
That is the presentation in brief. There will be more discussion as
we move down the road. I look forward to hearing from everyone. I hope
people will take a hard look at the actual substance of the amendment.
Substantively, it is not a line-item veto. It is essentially the
``daughter of Daschle,'' for lack of a better term. I would hope that
we would consider it on its merits as such. It will give us a chance to
govern better and to handle the purse, which we are charged with by our
constituents, more frugally and efficiently.
I yield the floor.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. I thank the Chair.
Mr. President, may I ask the Chair, there is no time limitation on
speeches at this point, is there?
The PRESIDING OFFICER. There is no time limit in effect.
Mr. BYRD. Mr. President, the very able and distinguished Senator from
Kansas wants to speak for 5 minutes or more. I ask unanimous consent
that I may yield to the distinguished Senator for 5 minutes or 6 or 7
minutes or whatever he wants at this time, without losing my right to
the floor.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BYRD. Mr. President, how much time does the Senator want?
Mr. ROBERTS. Mr. President, I believe I can get my remarks done in 5
or 6 minutes.
Mr. BYRD. The Senator doesn't have to be in a great hurry. I know the
Senator is reasonable and he will take such time as he may desire and
it is not going to be too much. I yield to the Senator for that purpose
without losing my right to the floor.
The PRESIDING OFFICER. The Senator from Kansas is recognized.

Western Kansas Snowstorms

Mr. ROBERTS. Mr. President, I am going to address a decision that has
just been announced by FEMA regarding emergency assistance to the
citizens of my State of Kansas.
I rise today to thank all those who have aided thousands and
thousands of Kansans stranded by snow and ice over the course of the
past few weeks. I want to give them some much needed good news.
First, let us remember the situation. Late last month, a large winter
storm spread over 30 inches of very heavy snow and up to 3 inches of
ice on top of that over much of my State. Fifteen-foot drifts were very
common in western Kansas. At the time, 65,000 Kansans were without
power. Snow blocked all major roadways, and many impacted Kansans, many
people in small communities, were able to survive only because their
friends and neighbors pitched in to help each other.
I came to the Chamber in the aftermath of the storm with charts
showing the damage--11,000 utility poles down, transmission lines
down--and some very pertinent charts in regard to stranded livestock. I
was worried about the state of assistance in our country out on the
High Plains. Many financial and economic livelihoods were in danger. In
Kansas, farmers remained unable to reach their herds of cattle and keep
them fed and watered.
Quite frankly, I was a little worried about the Federal response. I
know when we have disasters, FEMA responds as best they possibly can.
We have heard a lot about Katrina and forest fires and floods and other
situations, but here we had a record disaster in regard to a blizzard
and ice in communities that were isolated. I was a little concerned
about it. In the midst of this record destruction, let me say that the
National Guard, the Department of Transportation, local emergency
responders, nonprofit organizations, and regional FEMA representatives
really stepped to the plate. Frankly, the swift and selfless response
of so many has been almost overwhelming.
Almost immediately, in the wake of this storm, our Governor, Kathleen
Sebelius, declared a state of emergency, and we all got to work. The
National Guard, at the direction of GEN Tod Bunting, sprung to action,
and they delivered bales of hay and generators to those with stranded
cattle and also aided in emergency services with helicopters and any
other equipment that would work under the circumstances.
The Red Cross, the Salvation Army, and the Association of General
Contractors from the private sector also proved vital in providing
Kansans simply a place to stay warm. I must particularly thank the
State's emergency management officials, working with the regional FEMA
office, for the countless hours they worked to expedite the requests
for public assistance.
FEMA workers get a lot of brickbat when things get very tough and
complicated and difficult. This time, they certainly deserve a great
deal of credit. Over the course of the past few weeks, local
governments and certain nonprofits serving Kansans needed their Federal
Government desperately, and the cry for help was answered. But the best
news came a few moments ago when I received a call from the FEMA office
here in Washington. I received notice that all remaining categories of
public assistance have been approved for the State of Kansas. This is
the news we have been waiting for. This gives the State reimbursement
for a large portion of the $360 million in damage that has been
documented to date. It includes such vital assistance for public
buildings and utility and road repair.

Mr. President, we believe in self-help in Kansas, and most of the
time we can handle our own problems. But in working through this
disaster, we desperately needed Federal help. Federal help came, and
Federal help came in record time, and it came because of the
cooperation of local and State and national organizations--primarily
FEMA--and it was a situation where everybody worked together and got
the job done.
On this particular occasion, let me say thank you to all of those
people who worked so hard and all of the people in Kansas whom I am so
proud to represent. I look forward to the receipt of this assistance
and the continued support that our communities in Kansas have seen from
all levels of government.
I yield the floor, and I yield my time back to the Senator from West
Virginia. I thank him for allowing me to make this statement.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
Mr. KENNEDY. Mr. President, I ask unanimous consent that at the
conclusion of the remarks of the Senator from West Virginia, the
Senator from North Dakota, Mr. Conrad, be recognized for 15 minutes,
and then after Senator Conrad, I be recognized, and after I am
recognized, the Senator from Wyoming be recognized.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
The Senator from West Virginia is recognized.
Mr. BYRD. Mr. President, I very much admire the able Senator from New
Hampshire. I like him. As Shakespeare said, ``He's a man after my own
kidney.'' That about says it all, I guess. That is the way I feel about
the Senator from New Hampshire. He and I served together in the last
Congress as chairman and ranking member, respectively, of the Senate
Appropriations Homeland Security Subcommittee. I also have the pleasure
of serving with him on the Senate Budget Committee, where he has been
chairman--and I mean chairman--and is now the ranking member.
The Senator from New Hampshire is one of the finest, one of the
brightest, one of the most illustrious Senators serving today. I want
Senators to know--and, of course, the Congressional Record will
reflect--that as much as I oppose the line-item veto--and that is
saying a mouthful--I very

[[Page S795]]

much respect the Senator from New Hampshire who has attached his name
to it.
In his remarks last week on his line-item veto amendment, the very
able Senator from New Hampshire, Mr. Gregg, noted that this is not a
new issue before the Senate. He correctly noted that the Senate passed
a line-item veto measure in 1996, which was later nullified by the U.S.
Supreme Court--the highest court of the land--in 1998.
It is appropriate, very appropriate, that Senators know something
about the history of this issue, particularly those Senators who were
not here when the Senate last considered this piece of garbage called
the line-item veto. I can say plenty about this line-item veto. I call
it garbage. I can call it worst things than that, but I won't right
now.
Senators will recall, I believe, that the House of Representatives in
the early 1990s passed a series of legislative line-item vetoes, or
expedited rescissions, like the one now before this body. Because of
constitutional concerns and a lack of support, none of those bills ever
passed the Senate.
Senators will recall that in the summer of 1993, I delivered 14
speeches--I mean, they were cracker jacks, and, man, that is not the
end of the line, either--later published as ``The Senate of the Roman
Republic.'' They were addresses on the history of Roman
constitutionalism on this very topic. Senators will recall that when
the 104th Congress passed the Line-Item Veto Act of 1996, I was one of
the most outspoken opponents.
I argued against giving any President--any President, any President,
even a Democratic President; that makes no difference, even a
Democratic President--a line-item veto or a or so-called enhanced
rescission authority.
Senators will recall that after President Clinton signed into law the
Line-Item Veto Act of 1996 I, Robert C. Byrd, a Senator from the State
of West Virginia, joined with Senator Carl Levin and the late, God
bless his name, Daniel Patrick Moynihan--oh, were he here today--in
bringing suit--get that--in bringing suit in Federal court against the
Director of the Office of Management and Budget, then Franklin Raines,
arguing that the act unconstitutionally authorized the President to
cancel certain spending and revenue measures without observing the
procedures outlined in the presentment clause of article I, section 7.
That suit, Raines v. Byrd, was dismissed by the U.S. Supreme Court
for lack of standing, but the arguments, I say, but the arguments were
later validated in 1998, when the Court nullified the Line-Item Veto
Act in Clinton v. City of New York.
Now, I am no stranger to this issue. I am no stranger to this issue.
I have served with the eight Democratic and Republican Presidents since
Harry Truman who have asked for line-item veto authority. And I have
watched, as the Senate has said ``no,'' n-o, no--the hardest word in
the English language to say--I watched as the Senate has said ``no'' to
all but one. And where the Senate erred in yielding to a President's
request for such power, I was there when the Supreme Court nullified
the Senate's actions. I was there.
The first question ever asked was asked of Adam. The first question
ever asked--I hope the Chair is listening closely, my friend in the
chair--in all of the centuries of the human race, the first question
ever asked was: Adam, where art thou? I won't go into the time and
place where that was asked. Everybody ought to know it. Adam, where art
thou?
Well, where was Robert C. Byrd when the Supreme Court nullified the
Senate's actions? I was there when the Supreme Court nullified the
Senate's actions.
I do not speak lightly about this subject--hear me now, if you want
to take me on, on this question--and to refer Shakespeare:

And damned be him that first cries, ``Hold, enough!''

I do not say it is a proposal that stands in stark defiance of the
Constitution without many decades of congressional experience and a
deep, deep reverence for the Constitution of the United States, and
when I speak about line-item veto today, and in the coming days, if
necessary, I speak to all Senators of both parties about the oaths we
swear and particularly the one we take upon entry into this office.
We take an oath before God and man to support and defend the
Constitution of the United States of America.
I speak today on a subject that broaches the most serious of
constitutional questions. Now pending before the Senate is a
legislative line-item veto proposal offered as an amendment by Senator
Gregg and others to the minimum wage bill. The amendment would alter by
statute the constitutional role of the President of the United States
in the legislative process. The President does have a role in the
legislative process. The amendment would alter by statute the
constitutional role of the President in the legislative process. It
would allow the President to sign a spending bill into law and then to
strip from that bill any spending items he dislikes. Let me say that
again.
I have already said that the amendment would alter by statute the
constitutional role of the President in the legislative process. It
would allow the President, one man, to sign a spending bill into law
and then--get this--strip from that bill any spending items he
dislikes.
Through a process known as expedited rescission, the President could
force an additional vote by the Congress on spending items that do not
mimic his budget request and impound the funding that he, the President
of the United States, does not like until the Congress votes again.
Such a proposal is a lethal, aggrandizement of the Chief Executive's
role in the legislative process. Lethal, deadly. Such a proposal is a
lethal aggrandizement of the Chief Executive's role in the legislative
process. It is a gross, colossal distortion of the congressional power
of the purse. It is a dangerous, dangerous proposition, a wolf in
sheep's clothing of fiscal responsibility. Wolf, wolf, wolf, that's
what it is.
The Constitution, I say to Senators--hear me out there, my friends in
West Virginia and throughout the land--the Constitution is explicit and
precise about the role of the President in the legislative process. The
President has a role in the legislative process. Read the Constitution,
article I, section 7. Here is what it says:

Every Bill which shall have passed the House of
Representatives and the Senate, shall, before it become a
Law, be presented to the President of the United States; if
he approve he shall sign it, but if not he shall return it,
with his Objections. . . .

The President must act within 10 days, Sundays excepted. And once he,
the President, has decided to forgo a veto, it is his constitutional
responsibility under article II to ``take care that the laws be
faithfully executed.''
President George Washington interpreted his responsibility this way,
and I quote the immortal first President of this land, the Father of
our Country, the Commander in Chief at Valley Forge, George Washington.
President George Washington interpreted his responsibility this way:
``I''--meaning George Washington, the President of the United States--
``must approve all the parts of a bill or reject it in toto''--totally.
No other way. Take it or leave it.

I must approve all the parts of a bill, or reject it in
toto.

The Father of our Country was right. It isn't Robert Byrd talking.
That was George Washington. Now come to Robert Byrd. I continue:
A legislative line-item veto effectively creates a third option for
the President of the United States--a third option, talking about the
line-item veto. It adds a new dimension to executive power, one that is
not found in the Constitution. Instead of vetoing and returning a whole
bill to the Congress before it becomes law, under the Gregg amendment,
under the amendment by my distinguished friend Senator Gregg, the
President can resubmit only those provisions he opposes, and he can do
so after a bill becomes law. Did you get that? Instead of vetoing and
returning a whole bill to the Congress before it becomes law, under the
Gregg amendment--and I speak with great respect--the President can
submit only those provisions he opposes and do so after a bill becomes
law.
What are we doing here? The President can sign a bill into law and
then strip it of the provisions that he

[[Page S796]]

doesn't like. Let me say that again. Are you hearing me? What am I
doing? What am I saying here? I can't believe it. The President can
sign a bill into law and then, after he has signed the bill into law,
he can strip it of the provisions he does not like.
Have you ever heard of anything so radical? Instead of the President
weighing in before a bill becomes law, he can ignore the pros and cons
of debate and wait until well after it has become law. Am I in my
senses when I read this? Can you believe it? He can literally ignore
both public opinion and congressional debate and deliberation. He can
pull out anything he does not like from legislation passed by both
Houses of Congress--get that, now. This is one man downtown. He may be
a Republican, he may be a Democrat, he may be a Socialist or whatever--
whatever the people elect down there at the White House in the future.
He can pull out anything he doesn't like from legislation that has been
passed by both Houses of Congress and insist on a second run through
the legislative process.
The Gregg amendment allows the President to decide what is in a bill
considered by the Senate or not in a bill after it has become law. It
would allow the President to decide when the Senate considers a
spending or revenue item and under what political conditions the Senate
considers these measures. Such a proposal is a dangerous departure from
the separation of powers doctrine, which aims to prevent any one branch
of the Government from seizing both the power to make and to execute a
law. The separation of powers dividing inherently legislative and
executive functions between two separate and equal branches is a
fundamental defense against overzealous and unwise acts by either the
President of the United States or the Congress of the United States.

In Federalist No. 51 James Madison writes--this is not Robert C. Byrd
who wrote it. In Federalist No. 51, James Madison writes:

But the great security against a gradual concentration of
the several powers in the same department consists in giving
to those who administer each department the necessary
constitutional means and personal motives to resist
encroachments of the others . . . Ambition must be made to
counteract ambition. . . .

So by empowering the President to craft legislation, the Congress
would be ceding the constitutional means of the people to resist
executive encroachments.
Let me say that again. By empowering the President of the United
States to craft legislation, the Congress would be ceding the
constitutional means of the people to resist executive encroachments.
For up to 1 year after every bill is passed and signed into law--get
this--the President could use this power to manipulate Senators--how
about that--or advance his political agenda. Any President. I am not
just referring to Mr. Bush. I am starting with him, but I am talking
about any President, Republican or Democrat. The President could use
this power that Mr. Gregg's amendment would give to the President--
remember, this isn't the last President, Mr. Bush. There will be
others. The President could use this power to manipulate Senators or
advance his political agenda. Under the Gregg amendment, a President
could punish or reward recalcitrant Members of Congress by targeting or
sparing their interests under the expedited rescission process.
Every debate between the Congress and the White House could be
swayed, influenced, by this new power of the President of the United
States to influence Senators: You, Mr. Conrad; you, Mr. Byrd; you, Mr.
and Mrs. or Miss Senator--he can use this power over Senators to
influence them. What kind of power are we talking about? It would
subject every Member and the interests of their constituents and States
to the political capricious and unchecked whims of a Chief Executive.
You better think about this. You better think about it. The Gregg
amendment provides the President, any President--Democratic, Republican
or otherwise--with a mechanism to rewrite legislation after it has
passed the Congress. Where are we going? Instead of 10 days to act on a
bill, the Gregg amendment would provide the President with up to 365
days. Hear me, friends, Romans, countrymen. Friends, Americans,
countrymen, lend me your ears. Instead of 10 days to act on a bill, the
Gregg amendment would provide the President with up to 365 days to act
on a bill. This is a provision that is unconstitutional on its face. I
don't believe that Senator over there sitting in the chair, in the
chair to my left, would go along with that. That is Senator Conrad, for
the record.
Within 10 days of the Congress submitting a bill to the President, we
know if it has become the law of the land. Under the Gregg measure,
nobody--except the President--for up to 1 year after an act is signed
into law, will know if all of the provisions of a bill will be carried
into effect. One can imagine the confusion of not knowing, for up to 1
year, whether all of the provisions of a single bill will become law.
Imagine what happens if the Congress passes a major legislative package
such as a Social Security and Medicare reform package, which affects
the retirement and health care benefits of many millions of people and
the payroll taxes of many millions more. Imagine the President
dismantling that package, listen now. Imagine the President dismantling
that package months after it has been passed by the Congress. Are you
listening? Hear me. How wise and practical will this line-item veto
seem then? This line-item veto is an anathema to the Framers' careful
balancing of powers within the legislative process because it allows
the President, any President, to aggressively--listen to me, my friends
on the other side of the aisle; I am not just talking about Mr. Bush or
Mr. Republican President--allows a President to aggressively impose his
will on the legislative branch in regard to budgetary matters. I will
say that once again. This line-item veto is an anathema to the Framers'
careful balancing of powers within the legislative process because it
allows a President, any President, to aggressively--and I mean
aggressively--impose his, the President's, will, be he Republican or
Democratic, on the legislative branch in regard to budgetary matters.

This line-item veto amendment goes far--and I mean far--beyond the
President simply making recommendations to the Congress. It makes the
President, any President, a lawmaker. It is a complete reversal of the
legislative process. We do not need to rewrite the Constitution in
order to legislate. We do not need to defer extraordinary and
unconstitutional powers to the President, any President, in order to
ensure that Congress uses its power of the purse in an ethical and
rational and wise manner.
We should remember that the President has not exercised his existing
constitutional authorities. The President--this President--has only
vetoed one authorization bill, and he has never, never vetoed a
spending or revenue bill. The President has not submitted a single
rescission proposal as currently allowed under the Budget Act. Rather
than dealing with the President's failed budget choices, the suggestion
here today is that enlarging the President's power in the budget
process will somehow magically--somehow magically--reduce these
foreboding and menacing deficits. It will not. The suggestion here
today is that handing the power to make laws to the President will
somehow improve the quality of congressional budget decisions. This
suggestion is without foundation. This nefarious line-item veto will
only further politicize and degrade a process which is already too much
of a political football.
Senators--Senator Byrd being one--take an oath--yes, an oath before
God. The ancient Romans felt that an oath was sacred. They would give
their lives--I won't go into Roman history at this point--they would
give their lives to preserve an oath. Senators take an oath to preserve
and protect the Constitution. A lack of understanding about the reasons
for entrusting the purse strings to the hands of the Congress, and the
unwise tax and spending decisions of this administration, must never,
never be allowed to propel such an unconstitutional and dangerous as
the legislative line-item veto.
I tell you, ladies and gentlemen, I will stand here until my bones
crumble under me, until I have no further breath, if necessary, to let
such a proposal become law. Why would we ever want to hand more power
to a President who has already grabbed far too much power--any
President? Why would we ever want to bargain away our most important
tool for protecting the liberties of the people or for derailing a
disastrous war? Why would we

[[Page S797]]

ever want to fall for this legislative pig-in-a-poke that could cripple
this body, the Congress of the United States?
So I urge Senators to listen. This isn't the last word by any means
that I could have, let alone many other Senators here. Resist this
assault on the Constitution and the Congress. I urge Senators--yes, I
urge Senators--Senators--there is no greater name under the
Constitution. Who was that great Roman Emperor who said, when he was
about to become the Emperor ``I still revere the name of Senator.''
That is 476, I believe, A.D. It was Majorian, I believe, who said, ``I
still revere the name of Senator.'' Senator. Did you hear that?
I urge Senators to resist this assault. I am talking about a line-
item veto now. You ain't heard nothing yet. I urge Senators to resist
this assault on the Congress and on the Constitution of the United
States and on the people, the people of the United States.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from North Dakota is recognized.
Mr. CONRAD. Mr. President, I hope colleagues have been listening to
the Senator from West Virginia, Mr. Byrd. He is a wise man. He is an
experienced man. And what he has been warning this body about this
amendment is the truth. This is a dangerous amendment. It is offered by
somebody with whom I work closely. Senator Gregg is the former chairman
of the Budget Committee. As the incoming chairman of the Budget
Committee, we work together virtually every day. I respect him. I like
him. But I believe this amendment is profoundly dangerous.
It is suggested that this amendment will help deal with our budget
shortfall. It will not. Virtually everyone who has examined it will say
it makes virtually no difference with respect to our deficits and debt.
What it will do, without question, is transfer power to the President
of the United States. Senator Byrd has made it clear that it is not a
question of this President; it is a question of any President. Make no
mistake, I believe this measure and any measure like it is
unconstitutional.
The Founding Fathers had great wisdom. They did not want to repeat
the abuses of the King, so they wanted the spending to be in the hands
of the bodies closest to the people--the House of Representatives and
the U.S. Senate. They did not want any individual, any President, to
have the power of the purse because they recognized the inherent
dangers in concentrating power in the hands of one person.
Anybody who has any doubt about how this would be used--perhaps by
this President but certainly by some President--only needs to reflect
on what has happened in the past when people had this kind of unchecked
power. I was told by a colleague of ours who served in a State
legislature about a situation where the Governor had this kind of
power. She got legislation passed that was very important to her. She
was called to the Governor's office, and the Governor had her
legislation on one side of his desk and a bill he wanted on the other
side of his desk. He told her: You know, I am probably going to have to
line-item veto your legislation. But I have this bill which is
important to me, and if you could see your way clear on that, I might
be able to help you on your legislation.
Anyone who doubts this President or a future President would use that
power on Members of this body ought to think again.
The problems with this line-item veto proposal--and we know line-item
veto proposals in the past have been declared unconstitutional by the
Supreme Court. I believe this measure would be declared
unconstitutional, but we shouldn't abdicate our responsibility. We
shouldn't wait for the Supreme Court to make a judgment. We should make
this judgment. This line-item veto proposal represents an abdication of
congressional responsibility. It shifts too much power to the executive
branch, and with very little impact on the deficit. It provides a
President up to 1 year to submit rescission requests. It requires
Congress to vote within 10 days. It provides no opportunity to
filibuster proposed rescissions. And it allows a President to cancel
new mandatory spending proposals passed by Congress, such as those
dealing with Social Security, Medicare, veterans, and agriculture.
Colleagues, that is an extraordinary grant of power to any President.
Just with this final piece on mandatory spending, we know we have big
problems in the future with Medicare and Social Security. We might
labor for months to come to an agreement with the President on the
future of those programs, and then under this amendment, after the
difficult compromises had been reached, this President or a future
President could go back and cherry-pick the provisions he or she did
not like. I hope colleagues are listening. That is truly an
extraordinary grant of power to this President or any President.
Here is what USA Today said last year in reference to line-item veto.
They called it a convenient distraction.

The vast bulk of the deficit is not the result of self-
aggrandizing line items, infuriating as they are. The deficit
is primarily caused by unwillingness to make hard choices on
benefit programs or to levy the taxes to pay for the true
cost of government.

A convenient distraction.
This is what the Roanoke Times said last year with respect to this or
a similar proposal:

The President already has the only tool he needs: the veto.
That Bush has declined to challenge Congress in five-plus
years is his choice. The White House no doubt sees reviving
this debate as a means of distracting people from the
missteps, miscalculations, mistruths, and mistakes that have
dogged Bush and sent his approval rating south.
The current problems are not systemic; they are
ideological. A [line-item] veto will not magically grant
lawmakers and the President fiscal discipline and economic
sense.

Here is what the former Acting CBO Director, Mr. Marron, said in
testimony before the House last year about line-item veto:

Such tools, however, cannot establish fiscal discipline
unless there is a political consensus to do so . . . In the
absence of that consensus, the proposed changes to the
rescission process . . . are unlikely to greatly affect the
budget's bottom line.

The proponent of this amendment said this last year:

Passage of the [line-item veto] legislation would be a
``political victory'' that would not address long-term
problems posed by growing entitlement programs.

This is the statement of the author of this amendment last year.
He went on to say further:

It would have ``very little impact'' on the budget deficit.

He was telling the truth.
Here is what a conservative columnist said about the line-item veto
proposal, George Will.

It would aggravate an imbalance in our constitutional
system that has been growing for seven decades: The expansion
of executive power at the expense of the legislature.

I hope colleagues are listening. I truly believe this is a dangerous
amendment.
A scholar at the American Enterprise Institute went even further and
called the proposal ``shameful.'' This is what he said:

The larger reality is that this [line-item] veto proposal
gives the President a great additional mischief-making
capability, to pluck out items to punish lawmakers he doesn't
like, or to threaten individual lawmakers to get votes on
other things, without having any noticeable impact on budget
growth or restraint.

I hope colleagues are listening. We are going to have a change in
President in 2 years. This amendment might live forever and
fundamentally erode the basic concept of a House and a Senate and the
division of powers between the legislative branch and the executive
branch.
Mr. Ornstein, from the American Enterprise Institute, went on to say:

More broadly, it simply shows the lack of institutional
integrity and patriotism by the majority in Congress. They
have lots of ways to put the responsibility of budget
restraint where it belongs--on themselves. Instead, they
willingly, even eagerly, try to turn their most basic power
over to the President. Shameful, just shameful.

That was last year.
Senator Gregg has indicated his proposal closely tracks the proposal
of our colleague, Senator Daschle, from 1995. It does not. There are
significant differences.
Can the President propose to rescind a few mandatory items, such as
Social Security and Medicare reforms? The Gregg proposal, yes; Senator
Daschle, no. That is a profound difference. Mandatory proposals would
be subject to the President's line-item veto under the Gregg amendment,
not under the

[[Page S798]]

Daschle amendment. That proposal alone is enough to lead anyone who
supported the Daschle proposal to oppose this one.
Second, can the President propose rescissions from multiple bills in
one rescissions package? Under the Gregg measure, yes; under the
Daschle proposal, no.
What difference does that make? Let me give an example. Remember the
bridge to nowhere? That was something that people responded to,
depending on its merits. A lot of people thought it was a waste of
money. The President could couple that measure, which many would have
supported in terms of elimination, with something that was less well-
known that really had merit. Under the Gregg proposal, you could
jackpot unpopular things with popular things and get them eliminated,
giving the President an extraordinary power to leverage individual
Members of Congress to get votes from them on completely unrelated
matters.
For example, maybe the President puts up a controversial judge and
then uses this power to leverage a Senator to vote for a judge that he
might not otherwise support in exchange for allowing that Senator's
spending proposal to go forward. That is a dangerous power.
Finally, how long does the President have to propose rescissions?
Under the Daschle proposal, 20 days, or in the next budget; under the
Gregg proposal, 1 year.
I truly believe this is an extraordinarily dangerous amendment. It is
dangerous to the balance of powers between the executive branch and the
legislative branch of Government. It is an extraordinary granting of
power to a President. Remember, the next President might be of a
different party. I would make this same speech if a Democrat were
advancing it. I would make this same speech if a Democrat were the
President of the United States.
This is a dangerous amendment. It will do virtually nothing about our
deficit, but it will transfer power to a President who already has too
much power.
I hope my colleagues pay very close attention to this debate. I hope
they reject the Gregg amendment.
I thank the chairman and ranking member for their extraordinary
courtesy today to allow this discussion to go forward before they have
even given their opening remarks. That is truly extraordinary in terms
of their graciousness. And we appreciate Senator Kennedy and Senator
Enzi.
Mr. BYRD. Will the Senator yield?
Mr. CONRAD. Yes.
Mr. BYRD. Let me thank him for this magnificent speech. Let me thank
Senator Kennedy and Senator Enzi for their remarkable patience and
their consideration always. I thank the distinguished Senator for this
magnificent speech.
I yield the floor.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, what is the business now before the
Senate?
The PRESIDING OFFICER. Amendment No. 101, the McConnell for Gregg
amendment to the Reid substitute to H.R. 2.
Mr. KENNEDY. The Reid substitute effectively is the increase in the
minimum wage; am I correct?
The PRESIDING OFFICER (Mr. Durbin). That is correct.
Mr. KENNEDY. Mr. President, I say to the Senator from West Virginia
and to the Senator from North Dakota as well as the Senator from New
Hampshire, this has been an enormously important 2 hours in terms of
the discussion and debate about the proposal of the Senator from New
Hampshire. Over this period of time I am very hopeful our colleagues
paid close attention to this debate because it is an extremely
important issue that stretches the whole question of constitutional
powers, the relationship between the Executive and the Congress.
We have had these individuals speak to this issue. They are
knowledgeable, thoughtful colleagues who have spent a good deal of time
on this matter.
It is of enormous consequence, the outcome of this proposal. I am
enormously appreciative particularly of Senator Byrd and Senator Conrad
for the excellence of their presentation and for the extremely
convincing arguments they have made. The power of their arguments I
find enormously compelling, and I hope our colleagues will consider it
favorably as they make up their minds when we vote on this issue on
Wednesday, the day after tomorrow.
This has been an extremely important debate. I am grateful to those
who have participated in it. I thank, in particular, again, the Senator
from West Virginia who is constant in his commitment and protection of
the Constitution and the protection of the Senate as our Founding
Fathers saw it and believed in it and chartered it in the Constitution.
We are extremely grateful for this debate and discussion. I personally
thank the Senator from West Virginia for bringing such clarity and
recall of historical importance to this debate and discussion over the
period of the last 2 hours. We are very grateful to him as we always
are when he talks about the role of the Senate and also about the
division of powers under the Constitution. We thank the Senator.
Mr. BYRD. Will the Senator yield?
Mr. KENNEDY. I am happy to yield.
Mr. BYRD. Mr. President, I thank the very able and highly respected
Senator from Massachusetts, my favorite Senator of this age, for what
he has said.
I thank the distinguished Senator from North Dakota for his
remarkable statement. It will be in the Record for 1,000 years. There
is nothing I could say to embellish it, to add to it, to subtract from
it, or to comment on except to say it is one of the great speeches I
have heard in this Senate. And I have heard a lot. I have been here a
long time. Next year will be my 50th year. The Senator from North
Dakota is a leader among men, a leader among Senators. I commend him. I
thank him.
I thank all Senators, and I thank the Chair.
I yield the floor.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, we now bring the focus and attention of
the Senate on an issue of enormous importance and consequence to
working families in this country. Americans understand the issues of
fairness. They understand the importance of work. Americans have
believed, for a long period of time, if you work hard and play by the
rules, you should not have to live in poverty in the United States of
America. They have supported, Republicans and Democrats alike, a fair
minimum wage over the period of the last 70 years. Republicans and
Democrats alike have supported that concept, which is basic and
fundamental in terms of a free society and a free economy. That is the
issue we are going to address today because over the period of these
last 10 years, we have had intense opposition from Republican
leadership over an increase in the minimum wage.
Now, with the change of leadership in the House of Representatives
and the Senate of the United States, our Democratic colleagues, with
Speaker Pelosi, and now with Senator Reid, have put this issue of
fairness before the Senate as a priority issue.
We welcome the opportunity to address it. It is one that is easily
comprehensible, and it should not take a long time to debate. There are
still those in this body who oppose it, and we expect to have
amendments to try to undermine this very simple and fundamental concept
of saying to those individuals who are at the bottom rung of the
economic ladder: If you work hard and play by the rules 40 hours a week
in the United States of America, you ought to at least be able to have
a wage so you are not going to continue to live in poverty. We are also
trying to say, if you have a minimum wage job, that should not condemn
you to a life in poverty.
Now, let me go back over what this minimum wage is all about and give
some sense about who is affected by the minimum wage and what has
happened to it in recent times.
This chart reflects where the minimum wage has been in terms of its
purchasing power from 1960 to 2005. If you look at where we are, as of
2005, you see a steady decrease in the purchasing power of the minimum
wage worker, who today earns $5.15 an hour. If you look back, again, in
terms of the purchasing power of the minimum wage worker in the 1960s,
it was about $7 an hour. It was close to $9 in 1967,

[[Page S799]]

1968. And then it went along, and still the purchasing power was about
$7 an hour. Then we saw the gradual decline through the 1980s. In spite
of our efforts to get President Reagan to increase the minimum wage, we
were unable to do so.
Then, we had two times where we got a very modest increase in the
minimum wage, in 1991 and then again in 1997. But we have not seen an
increase in the minimum wage in the last 10 years, and we have seen the
purchasing power of the minimum wage worker reach perhaps its all-time
low at the present time.
This red line on the chart indicates, with the passage of the
increase in the minimum wage over a 2-year period, bringing it to
$7.25, it would still be below the purchasing power of the 20 years
between 1960 and 1980, but at least it would give increasing hope to
millions of Americans who are working at the minimum wage.
This issue of the minimum wage is a women's issue because so many of
those who receive the minimum wage are women. So it is a women's issue.
So many of those women have children, so it is a children's issue and a
women's issue. It is a family issue because how that family is going to
live, depending upon where the minimum wage is, how that child is going
to be brought up, is going to depend on what that parent is able to
provide for that child.
So it is a women's issue. It is a children's issue. It is a civil
rights issue because so many of those who enter the job market, who
enter it at the minimum wage, are men and women of color. So it is a
civil rights issue, a children's issue, a women's issue, and, most of
all, a fairness issue. That is something the American people can
understand.
This chart shows what has happened to productivity in the United
States. Generally speaking, if you look back over the years of 1960,
1965, 1970, 1975, we see that the minimum wage related to the increase
in productivity. As workers became more productive, an important part
of that increased productivity was passed on to the workers themselves,
as it should be in a fair society.
But what we see at the present time is that the productivity has
increased 165 percent over the period of the last 45 years, and the
minimum wage, in terms of the total purchasing power over that period
of time, has actually gone down. The minimum wage has not only not kept
up with productivity, it has even fallen further behind. Productivity
was always the issue to be judged when we had debates on the minimum
wage years ago that asked: What has happened to the increase in
productivity? We can justify an increase in the minimum wage in terms
of wages if they produce more. We have seen a dramatic increase in
productivity but virtually no increase and a decline in the purchasing
power of minimum wage workers.
Here we see the real minimum wage decline: Twenty percent in the 10
years of Republican opposition. The value of it in 1997, $13,448; in
2007, $10,700--$6,000 below the poverty level for a family of three.
And this chart shows the Federal poverty level in this country in
1960, 1965, 1970, 1975, all the way through 1980. For 20 years, this
country said: OK, we will have a minimum wage, and we will keep it at
least at the poverty level so individuals will not fall behind. If they
work hard and play by the rules, they at least will not have to live in
poverty. As this chart shows, we see now it is $6,000 below the poverty
level for a family of three who is earning the minimum wage.
Since 1980, we have only had two increases in the minimum wage. Now,
in the last 10 years, we have had none. That is the issue. Having to
take the time to try to go through this and explain why we need an
increase in the minimum wage, and why we are going to hear from the
other side, those who are in opposition to it, is extraordinary to me
with these figures.
Look what has happened. If we try to measure poverty in the Bush
economy between 2000 and 2005, there are 5.4 million more people living
in poverty today than in the year 2000, largely because of the failure
of the Congress to increase the minimum wage. These are the figures.
These are the statistics. They do not talk about real lives, how these
people struggle. They do not tell about the lost dreams of these
families. They do not talk about the shattered conditions of the
children who are in these kinds of conditions.
There are 5\1/2\ million new people who have gone into poverty in the
United States of America, the strongest economy in the world, basically
as a result of the failure to increase the minimum wage.
Look what has happened to children. There are 1.3 million more
children in poverty today than we had 5 years ago--1.3 million more
children in poverty today--primarily because of the failure to increase
the minimum wage.

Well, we have to ask ourselves: Where are we as a country and a
nation in terms of child poverty? Look at this chart. Of all the
industrialized nations of the world, the United States has the highest
child poverty rate--the highest poverty rate for children in the
industrialized world. There are the figures. There are the statistics.
It is not even close, and it is going up.
While we are having the extraordinary profits on Wall Street, what is
happening on Main Street? What is happening in the small communities,
small farms, small towns, and in the major urban areas of this country?
What is happening to the children of this Nation? There is not a person
in this Chamber who, in the last 5 days, has not made a speech about
how our future is about our children. Everyone goes out and talks about
the importance of our children in our democracy and our country. Look
what is happening. They talk about it and refuse to do something that
can make a big difference. That is child poverty.
When you look at child poverty and look over the figures and
statistics, there is nothing terribly surprising about this, with a
national average of 17.6 percent. We see who takes the major burdens,
the Latinos and African Americans, those women and children of color.
We are trying to talk about one country and one society, one history,
and, nonetheless, we see the growing disparity in the increased number
of families in poverty, the disparity with the increased number of
children in poverty, and the disparity between the various communities
in our Nation.
Is this what this country wants? We are not saying that the total
answer is the increase in the minimum wage, but it makes a major
difference. And we can show you, and will show you, why that is so.
We see the figures now in terms of what has happened in terms of
statistics. But what does this mean on some of the issues that relate
to the conditions of our fellow citizens? Let's take the issue of
hunger. Not many people are talking about the challenges and the
problems of hunger in our society. This is from the USDA, household
food security in the United States, pointing out the increasing number
of families who are on the verge of hunger in our economy has increased
by 2 million. In the industrialized world, we are No. 1 in child
poverty, and we see an increasing number of our fellow citizens in
terms of hunger.
How does that impact in terms of children? Mr. President, 12.4
million children are hungry now every single day in the United States
of America, and that number is growing. We can look at the number of
children who go to bed hungry at night. This quote is from Lisa Hamler-
Fugitt, who is the executive director of the Ohio Association of Second
Harvest Foodbanks:

Thirty-five percent of the people that we serve are
children.

Thirty-five percent are children.

I see these children, and I think what are we teaching
them? That in America, you can work 40 hours a week and still
not earn enough to buy food?

That is what is happening. That is what is happening in the United
States of America now, today. And we have to spend hours in this body,
after we have had the adequate pay increases of $30,000 for Members of
Congress in the last 10 years, and try to convince people to go to a
$7.25 minimum wage? And we are going to hear opposition to this? This
is what is happening out across this country.
So we know what is out there in terms of hunger, how this reflects
itself, the fact that they are not getting the adequate income, how it
impacts particular children in our society.
This reflects, at no surprise to anyone--this is the National Low
Income

[[Page S800]]

Housing Coalition--about how many hours you have to work at the minimum
wage to be able to afford a two-bedroom apartment. This is for an
average family of three. These are the hours you have to work in 1
week. You would have to work 229 hours a week in my State of
Massachusetts at the minimum wage to be able to afford it; 140 hours a
week down in Louisiana. Across the country, out in the Southwest, we
are looking at New Mexico; Arizona, 149 hours a week; Missouri, 119
hours a week; even Wyoming, 112 hours a week.
This illustrates pressures on these families, their difficulty to be
able to provide food for their children, let alone providing for their
housing.
The increase, this is how it reflects itself. We propose an increase
in the minimum wage to $7.25. This is what it means. It means 2 years
of childcare for a minimum wage family. It means full tuition at a
community college. This is what it could mean to a family. It means a
year and a half of heat and electricity. We have seen the reductions in
the fuel assistance programs in the recent times, which has been
devastating in my part of the country. It means more than a year of
groceries. It means more than 8 months of rent.
This might not make a big deal of difference to a lot of people, but
it makes an enormous amount of difference to these families who are
earning the minimum wage. This is how it reflects itself: a year of
groceries, 8 months of rent, a year and a half of heat and electricity,
tuition at a community college--an opportunity for hope for some of
these individuals--and also 2 years of childcare, to help with the
problems in terms of childcare, the difficulty that these families have
in trying to work for the minimum wage and have someone who is going to
care and look out for their children. There are heartrending stories to
that effect.
This chart reiterates the fact that the great majority, 60, 61
percent, of those working are women, so it is primarily a women's
issue. Great numbers of those women have children, so this is a special
issue for women.
Here we show that about 1.4 million single parents, most of whom are
women, would benefit from an increase in the minimum wage. Some will
say, on the one hand, it doesn't affect all that many people. Then why
not have an increase in the minimum wage? It doesn't, in terms of the
percentage increase in the total payroll of this country, it is
infinitesimal, an increase in the minimum wage. I will come to that in
a minute. But don't tell me it doesn't make a great deal of difference
to the over 1 million single parents, most of whom are women, who would
benefit from an increase in the minimum wage.
This tells the story of Diana, a single mother of three from Buffalo,
who works for a childcare center, making the minimum wage. She has to
rely on food stamps and Medicaid to provide for her family. Increasing
the minimum wage will allow her to ``decrease her reliance on
government subsidies and . . . pursue her dream of self-sufficiency and
a better life for herself and her family.''
It is interesting, the fact that if we do not increase the minimum
wage, we are effectively subsidizing many businesses. Because these
families are eligible for food stamps or maybe some could get some fuel
assistance, other kinds of support services, who do you think is paying
for those programs? Working families. So you get a decent minimum wage
out there, and it reduces the pressure on those programs. That means
less pressure on our working families who are going to have to pay in.
The increase in the minimum wage will benefit more than 6 million
children whose parents will receive a raise. Six million children in
this country will benefit because of the increase in the minimum wage.
It is a children's issue, a women's issue. This is what this is about.
What happens when children are living a better quality life? Look at
this chart: Better attendance, concentration and performance at school,
higher test scores and graduation rates. We are going to be debating No
Child Left Behind. We are going to be wondering how we can make a
difference in terms of children in our schools. There are a number of
things that can make a difference to the children: a qualified teacher,
classrooms where children can learn, supplementary services, parental
involvement. A number of things can make a difference to the children.
But one thing we know for sure: If the children can't see the
blackboard, if they need glasses, or they can't hear a teacher because
they need some kind of help, we tried to do this with the CHIP program
to help them. In the CHIP program, it is not required, but a lot of
States do provide those. But if the child is going to be hungry, the
child is not going to pay attention. We have all kinds of examples for
that. We will mention that at another time.
But 6.4 million children will benefit from an increase in the minimum
wage: better concentration, performance at school, higher test scores,
higher graduation rates, stronger immune systems, better health, fewer
expensive hospital visits, fewer run-ins in the juvenile justice
system--investing in the children. Again, 6.4 million will benefit from
an increase in the minimum wage, and this will be part of the benefits
that will come from those increases.
We have seen a higher minimum wage improves children's futures. For
families living in poverty, a $400 increase in family income will
dramatically increase children's test scores. This is from the
Institute of Research on Poverty, on reading and math. This shows the
difference in terms of the test scores. Children who are going to be
fed, children who are going to have the kind of support do better in
schools.
We mentioned earlier the problems of poverty falling
disproportionately on those individuals of color. This chart shows that
individuals of color benefit from the higher minimum wage. People of
color make up 36 percent of all minimum wage workers. If we are able to
get an increase in that, it will obviously benefit them.
We talked about children for a time and the impact it has on
children. I will spend a few minutes talking about the number of
elderly struggling with the problems of poverty. The number of elderly
struggling will increase dramatically over the next several years. The
best estimate--and this is by the Nation's poor, near-poor older
population; it is a very important and significant study--shows the
number of elderly who are going to live in poverty, increasing some 41
percent over the period of the next years. And we can understand that
because we see the decline in wages according to age. This chart shows
declining wages for men as well as women, all set in motion, again, by
the issue about where they are going to start off on the minimum wage.
So we are going to have significant increases.
This is the RAND study in terms of our seniors who are going to be
living in poverty. They will certainly benefit from this.
Here is an elderly worker, Peggy Fraley, a 60-year-old grandmother
from Wichita, KS, who works as a receptionist for $5.15 an hour. She
lives with her daughter, who also earns the minimum wage, and her five
grandchildren. She says: We can barely make it, but we have each other.
That is richer sometimes.
This has a real impact. We have been talking a lot about statistics,
but it affects people in the most basic and fundamental ways.
Over the period of these recent years where the Senate has failed to
act, a number of States have moved ahead. You will see on this chart
the red States are the States where they have a minimum wage which is
higher than the Federal. These are red States as well as the blue
States, with the minimum wage at or below the Federal level. This is
what has happened in the country over the period of the last 10 years.

Now let's see, we have pointed out what has been happening in terms
of children, people living in poverty, children in poverty. High
minimum wage States, meaning those we have just mentioned here that
have had some increase in the minimum wage, have lower poverty rates.
That should not be surprising. It is all true. You can take it right
across the line. The States that have increased their minimum wage are
all below the national average in terms of the poverty rate, 12.7
percent. So this has a real impact. And look at what it has with regard
to child poverty rates. Remember, I mentioned we

[[Page S801]]

are the No. 1 industrial society with the number of children living in
poverty. Look what happens in the States where we have actually
increased the minimum wage. Just about every one of those is below the
national average on child poverty. Increasing the minimum wage has a
real impact in terms of child poverty in this country.
I will show what has happened in some other countries. I will show
what has happened in other States. Let's see what happened in other
countries. We always hear, well, if we do this, it is going to be a
disaster to the economy and, therefore, we can't afford to have that
because we are going to lose jobs or we will slow down the economy. We
are going to throw those people out of work we are trying to help. We
are going to hurt their community and we will hurt their families.
Right? Wrong.
Let's look at the two countries which have raised their minimum wage
the most over the last 5 years. That is Great Britain and Ireland. What
are the two countries in Europe that have the best economies? Britain
and Ireland. What are their minimum wages? Great Britain is now $10.57
an hour. Ireland is $10.80 an hour. And what has been the result? They
have the strongest economies and the second strongest economy, and
Britain has brought 2 million children out of poverty. Ireland has
reduced its number of children who are in poverty by 40 percent. Look
at this: Child poverty, dramatic increase in the minimum wage. They
have a strong economy and a dramatic reduction in child poverty. And
here we have an increase in child poverty, keeping the minimum wage.
Look at what has happened in terms of Great Britain. They have taken
2 million children out of poverty, and we have seen 1.4 million
children go into poverty. Five years ago, Great Britain had the highest
number of children in poverty of any of the European countries. And
Tony Blair, to his credit, said: We are going to do something about it,
and we are going to effectively eliminate child poverty in this decade.
They are well on the way to doing so, demonstrating what we have said.
That is, you can make a difference with regard to children. You can
make a difference in terms of the issues of poverty by increasing the
minimum wage.
Now let me take the States. What has happened to the States? You can
say that is interesting, what has happened in those countries. But
let's take a look at the States that have had an increase in the
minimum wage. States with higher minimum wages create more jobs. This
is from the Fiscal Policy Institute, March 30, 2006, overall employment
growth from January 1998 to January 2006. In the 11 States with a
minimum wage higher than $5.15, it has been 9.7 percent. In States with
the minimum wage at $5.15, it is 7.5 percent. I thought if you raised
the minimum wage, it was supposed to go down. You weren't supposed to
grow as fast. And you weren't supposed to have increasing employment.
But quite clearly, this isn't the fact.
Let's take the States where they are creating businesses. People say,
if you raise the minimum wage, we are going to put a lot of businesses
out of work. Is that right? No, that is wrong, too. Here are the 10
States with a minimum wage higher than $5.15. States with higher
minimum wages create more small businesses. Overall growth in the
number of small businesses, 1998 to 2003, 5.4 percent where you get a
minimum wage higher than $5.15, and 4.2 percent where they have had
$5.15--more employment, more growth of businesses. This is the result,
if you look in other areas as well.
This is States with higher minimum wages on retail jobs. In States
with a minimum wage higher than $5.15 an hour, the employment growth is
10 percent in retail jobs; 3.7 percent where the minimum wage is $5.15.
We don't expect the NFIB to support this proposal. But what we do
find is that many employers and small businesses do. Malcolm Davis
supports raising the minimum wage. This was in the News Observer, a
newspaper. He is a small business owner, is proud to say:

My lowest paid employee makes $8 per hour. With only 11
employees, things are tight, to say the least. If I can find
a way to be fair with my employees in rural eastern North
Carolina, why can't our government? Try driving to work and
raising a family on the minimum wage.
This is more typical than not, Mr. President. Look at this. This is a
Gallup Poll of May 9, 2006. Eighty-six percent of small business owners
say the minimum wage doesn't affect their businesses. Question: How
does the minimum wage affect your business? Eighty-six percent say no
effect. Gallup Poll, 2006. Positive effect, 5; negative effect, 8
percent.
Let's look at what has been happening in our country over the period
of the recent years in terms of the tax incentives. I think we ought to
have an increase. I am going to vote to increase the minimum wage
without providing additional kinds of tax incentives. All this proposal
does basically is recover the purchasing power we had 10 years ago.
There is no reason--we have seen countries that have raised the minimum
wage doing very well--why we should add more tax breaks and increase
the deficit. Businesses receive billions of dollars while minimum wage
workers receive nothing.
This chart is from Citizens for Tax Justice. That is over the last 10
years. There has been $276 billion in tax incentives for corporations--
small businesses, $36 billion--and we have had no raise for the minimum
wage workers. We are still being asked now to do more when we have seen
these kinds of tax breaks for corporations and businesses. I don't
think it is necessary that we provide the additional tax breaks. Here
we have seen productivity and profits skyrocket while the minimum wage
plummets.
This comes from the Bureau of Labor Statistics. Profits are up over
45 percent; productivity, total 29 percent; and the minimum wage and
output per hours are down 20 percent. So it gives you an idea about
what has been happening out in the economy just generally.
Mr. President, I think this is, above all, a moral issue. The members
of our great faiths have all spoken clearly about this issue. Here is
the quote from Justice Roll, January 2007:

More than 1,000 Christian, Jewish, and Muslim faith leaders
say minimum wage workers deserve a prompt, clean minimum wage
increase with no strings attached.

They make an excellent statement, and it is a convincing one.
Mr. President, these give you at least some idea of what is at issue.
We have tried over the few minutes that we have had to point out where
the trend lines are, to show the statistics that show that an increase
in the minimum wage is morally correct. It will strengthen our economy,
and it will make a difference to children and to women and make a
difference to men and women of color. It is basically a fairness issue.
It will strengthen our economy. It is the right thing to do. It is long
overdue.
I thank our Democratic leaders, Speaker Pelosi and Senator Reid, for
giving it the high priority it deserves. We ought to get about the
business of getting this legislation enacted, and enacted speedily, for
those individuals who are out there day in and day out, men and women
of dignity and men and women of pride, who take a sense of pride in the
job they do, even though the jobs are very menial. Maybe it is a
teacher's aide or someone looking out after the elderly in elderly
homes or someone cleaning out the buildings of American commerce. They
are men and women of dignity, and they take pride in the jobs that they
do.
America has said it values work, and America says it values
individuals who want to work hard and play by the rules. We are calling
upon this Senate now to say these working families have waited long
enough. Those individuals who work 40 hours a week, 52 weeks of the
year in this Nation of ours should not have to be condemned to living a
life in poverty.
That is the issue. Does work pay? Do we recognize our fellow citizens
and say that we are going to respect them and we want to be one country
with one history and one destiny, one Nation? Let's pass the increase
in the minimum wage.
Mr. President, I thank my friend and colleague, Senator Enzi, for all
of his good work. There are a great many issues on which we agree;
there are some on which we differ. I always value his insight on any of
these issues and, needless to say, we enjoy working together. I thank
him for all of his cooperation on this issue, as on many other issues.
We give assurance to our friends in the Senate that we are going

[[Page S802]]

to get a lot of good work done for the people of this country in this
session.
I yield the floor.
The PRESIDING OFFICER. The Senator from Wyoming is recognized.
Mr. ENZI. Mr. President, I thank the Chairman for his kind words. I
admire him for the passion he puts into every issue he works on, and
people will notice that he works on a lot of issues. He and I have had
this debate three times over the last 2 years. We have varied a little
bit on the amount of the increase, and I have always tried to get
something in there for small businesses to take care of the increase,
or to offset the increase a little so that these small businesses can
continue to function and provide employment opportunities.
I come from a small business background. But not from small business
as defined by the Federal government. The Federal definition is a
business with less than 500 employees. Any business that we had in our
State that was that large--and I am not sure we have any headquartered
in our State--would be considered big business. I am talking about the
mom-and-pop shops where the person who does the accounting also sweeps
the sidewalks and cleans the toilets and waits on customers--definitely
not in that order. This is a significant segment of small business
across this country. They generate 60 to 80 percent of the net new jobs
annually over the last decade. Raising the minimum wage will affect
them more substantially than businesses with as many as 500 or more
employees.
In the context of a minimum wage increase, I have always asked that
actions be taken to offset the impact of an increase for small
businesses. I want to thank Senator Baucus and Senator Grassley for
their work in the Finance Committee to come up with such a package.
That package is now contained in the Reid amendment that has been
submitted. I think this package makes a substantial difference and
makes a raise in the minimum wage possible. I think had we worked
toward this kind of a situation earlier, the minimum wage might have
happened earlier. Unfortunately, the times that the minimum wage issue
arose in the past 2 years were situations where it was unamendable. It
had to be a take-it-or-leave-it--my proposal or Senator Kennedy's
proposal, and we left them both.
Any proposal on which the two of us have been able to reach agreement
has been very successful in making it through the Senate and the House
and getting signed by the President. It is not an easy task to pass a
bill. I don't have to tell the Senator from Massachusetts that. He has
been around here practicing the art of legislating a long time. I am
one of the newcomers; I have only been here 10 years. I have noticed,
however, that legislating means either finding a compromise, or finding
a third way.
On this particular bill, we may find that third way. There will no
doubt be additional amendments to this bill. I like situations where
bills can be amended. I have been in situations where they could not. I
have been on the side with the majority of votes in those situations
and have not always felt comfortable. So I thank Majority Leader Reid
for having a situation where there can be amendments.
I ask my side of the aisle not to make amendments that are onerous or
wide-ranging but that stick to the subject and see what the best
possible package is that we can come up with.
I will speak first to the underlying substitute that has been laid
down on this bill. There hasn't been any comment on that yet, even
though we have had 2 hours 40 minutes worth of debate. Of course, we
started first with Senator Gregg's amendment. I want to mention that
this first amendment was an agreement to keep the ethics bill from
having a different approach. I appreciate the effort of both parties to
allow that to come up. While that will be voted on as a part of the
minimum wage, it is not a part of the minimum wage. It allows a vote on
that as an up-or-down vote. I am pleased there was some compromise on
that and some ability to do that.
I listened to the hour and a half of debate on that amendment and the
concern over whether trading votes would happen. Something this body
ought to consider, perhaps, is a law that we have in Wyoming that
prohibits the trading of votes on any issue and makes it a felony that
has to be reported by both sides if an offer is made. It makes each
issue stand on its own.
So I will speak first to the underlying substitute that was laid down
on this bill because it provides the tax relief we have been talking
about for a long time, and this is tax relief that has been agreed upon
in a very bipartisan way. Senator Grassley and Senator Baucus often
work together, and that is why the Finance Committee is so successful
in moving things along. They have come up with tax relief for very
small businesses that will aid them in meeting their burden of a
minimum wage increase. I have long advocated that we must provide a
measure of tax and regulatory relief to businesses that will face these
higher mandated costs.
The substitute amendment consists of the following provisions: First,
it would increase current section 179 expensing by extending the
increased expensing of qualified business property allowed for small
businesses until 2011. Without an extension, the amount which may be
expensed will drop by more than 75 percent. If we pass this extension,
we will allow small business owners who are making investments in the
future of their business to retain more of their earnings, and these
additional funds can be used to retain and hire new employees, thereby
balancing out the effect of the minimum wage increase.
Now, we have talked about families and children, and I want to tell
you the small businesses that we are talking about are the small
businesses that are run by families that, in most instances, have
children. Quite often, the small businesses are run by young people. In
my own case, I got married, and a week later we started a shoe store.
We had kids, and the kids got to learn a little about the retail trade
by having to work and help us out. So I have some personal background
and experience in running a small business.
Second, the amendment would provide a 15-year recovery period for
leasehold improvements and certain restaurant buildings and related
improvements. This provision improves current law by including new
restaurants, retail space, and improvements by extending the broadened
provision. Restaurants and retail employ a very large percentage of
minimum wage workers and are most impacted by mandated increases in the
Federal wage. This portion of the amendment extends relief to these
businesses and seeks to avoid dislocation and decreased employment
opportunities for restaurant and other workers.
Third, the amendment would allow noncorporate taxpayers with annual
gross receipts of less than $10 million to use the cash method of
accounting for purchases and sales of merchandise.
Under current law, those small business taxpayers are generally
required to use the accrual method for such purchases and sales, even
though they may use the cash accounting method for overall accounting.
This simplification and clarification of accounting methods would
assist small businesses by reducing their administrative costs, which
would free up more resources to maintain employment levels.
I realize most people in America may not know the difference between
cash accounting and accrual accounting. I can tell them, accrual
accounting is a lot more complicated because one has to guess on the
percentages of expenditures and then later make corrections for actual
amount, whereas under cash accounting, one takes the actual money
coming in and the actual money that goes out. It is a much simpler
accounting system. We want to make sure those small businesses have
that opportunity.
Fourth, the amendment expands work opportunity tax incentives. This
allows employers credit against wages for targeted individuals,
including those on welfare, qualified veterans, and high-risk youth.
These populations, again, are most likely to lose jobs in an
environment where employers are forced to bear increased salary costs.
This program would be extended for 5 years.
Fifth, the substitute also creates a voluntary certification program
for professional employer organizations that meet the standards of
solvency and responsibility and that maintain ongoing certification by
the IRS.

[[Page S803]]

Lastly, the amendment provides for a series of clarifications and
modifications to the tax and accounting provisions that govern
subchapter S corporations. Many small businesses are organized under
the provisions of subchapter S of the Internal Revenue Code.
Incidentally, the ones that are organized under subchapter S pay taxes
on the earnings each and every year as opposed to a corporation that
only pays some corporate taxes and then on distribution has to pay the
rest of the taxes.
I can't leave this topic of small businesses without commenting
briefly on a matter of great concern to these businesses, the
employees, and the families that depend on them. I am speaking, of
course, about the rise in cost of small business health insurance.
Although cost growth has begun to slow a bit, premiums for small
businesses have been rising unsustainably at near double-digit rates
for more than half a decade, which is more than double the rate of
inflation of wage growth. For much of the last Congress, my colleagues
and I engaged in an aggressive and bipartisan effort to tackle this
problem. Indeed, the small business health plan legislation I authored
with Senator Ben Nelson came within just a few votes of overcoming a
filibuster last May. Our legislation would enable small businesses to
pool their negotiating across State borders to have a big enough pool
to effectively negotiate against the big insurance companies and thus
hold down costs and widen access to coverage while preserving the
strong role for State oversight and consumer protection.
Progress on this critical issue is moving forward. I have had
interesting discussions with people from both sides of the aisle. I
think the discussions have been promising. There is a long way to go,
but I think we have built a solid foundation, and that foundation
continues to grow as we move into a new year and a new Congress.
Small business health insurance reform is vitally important, and I
realize there may be some sentiment that the issue should be resolved
in the context of the minimum wage debate. However, I firmly believe
that offering a version of last year's small business health plan as an
amendment to the pending minimum wage legislation would be premature
and would not help us move forward toward securing meaningful small
group health insurance relief in this Congress or minimum wage or help
for small businesses. Rather, the best way to achieve real small
business health care reform is to proceed forcefully to build on the
significant progress we made last year.
Development of small business health legislation is a process that is
well along, and I believe success is in sight. We are on a promising
track, and we should stick with it. That promising track, of course, is
having bipartisan discussions about what needs to be done in health to
keep the insurance rates down, to provide better access to people.
Senator Kennedy and I have been having some discussions on
principles. That is the way we have been attacking the pieces of
legislation we do around here. We set down principles and then meet
with stakeholders and talk about what difficulties those principles
provide for them. Then we come up with a bill that will hopefully find
a way through the maze. It is extremely difficult, but the increase in
interest in health insurance has risen so greatly that I think this
will be a prime topic for people in the next year and hopefully a
solution within the next year.
I would also be remiss if I didn't mention, as I have many times in
the past, that while an increase in the minimum wage will be a kick-
start for some workers, it doesn't address the fundamental issue of
chronic low wage earners. Regardless of how we increase the minimum
wage today, those who earn it will still be the lowest paid tomorrow.
The minimum wage needs to be for all workers what it is for most--a
starting point. Our policy should be directed at giving all workers the
opportunity to move up the wage ladder, not merely moving the ladder's
lowest rung up.
As a former small business owner, I know these entry-level jobs are a
gateway into the workforce for people without skills and without
experience. Minimum wage usually goes to those with minimum skills.
These skills-based wage jobs can open the door to better jobs and
better lives for low-skilled workers if we give them the tools they
need to succeed. My colleagues know that I strongly believe we must do
more in this department. For the past two Congresses, one of my major
priorities has been reauthorizing and improving the Nation's job-
training system that was created by the Workforce Investment Act. This
law will help to provide American workers with the skills they need to
compete in the global economy. Education and the acquisition of job
skills represent the surest path to economic opportunity and security
in the global job market. Increasing skills increases jobs, increases
wages, and lifts the lowest boat into a bigger boat.

Over the past few years, this bill has received unanimous support in
both the HELP Committee, which has reported it out twice, and the full
Senate, which has passed it twice. But I have to say that election-year
politics and political positioning have prevented this important bill
from becoming law.
We tried to preconference a lot of the bills that came out of the
HELP Committee last Congress. We were successful on many. That means
the House agreed with the Senate position with some changes prior even
to the time the Senate passed a bill, and then the House would pass the
same bill, and as a result, the Health, Education, Labor, and Pensions
Committee got 27 bills through the legislative process and signed by
the President. That is quite a contrast to what happens with most
committees.
The Workforce Investment Act was not able to be preconferenced. I
hope it can be now. I believe there is a little better understanding of
some of the objections and also some of the benefits. I believe this
bill will make it through the process and will start an estimated
900,000 people a year on a better career path. It can only happen if it
is not a casualty of Congress's inability to overcome its worst
partisan instincts. That would be inexcusable.
Outside the glare of election-year politics, I hope we can quickly
pass this job-training bill that will truly improve the wages and lives
of workers in this country. The Senate has passed it twice. We have
spent 4 years working on it.
The potential skills gap facing American workers only deepens when we
are compared to our competitors around the world. As chairman of the
committee, I was able to travel to some of the foreign countries which
are among some of our toughest competitors in the world market. I came
home believing strongly that we must focus more seriously on the
acquisition and improvement of job and job-related skills. While many
of us feel good about what we are doing today when we raise the minimum
wage, I intend to make sure we do not neglect to address the far more
pressing concerns for American workers: the increasing skills gap and
the availability of health insurance. I anticipate we will get to work
on these issues at a separate time.

Amendment No. 103 to Amendment No. 100

Mr. ENZI. Mr. President, at this point, I have permission to lay down
an amendment on behalf of Senator Snowe. I send an amendment to the
desk.
The PRESIDING OFFICER. Without objection, the pending amendment is
set aside. The clerk will report the amendment.
The bill clerk read as follows:

The Senator from Wyoming [Mr. Enzi], for Ms. Snowe, for
herself, Mr. Enzi, and Ms. Landrieu, proposes an amendment
numbered 103 to amendment No. 100.

The amendment is as follows:

(Purpose: To enhance compliance assistance for small businesses)

At the appropriate place, insert the following:

SEC. __. ENHANCED COMPLIANCE ASSISTANCE FOR SMALL BUSINESSES.

(a) In General.--Section 212 of the Small Business
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 601
note) is amended by striking subsection (a) and inserting the
following:
``(a) Compliance Guide.--
``(1) In general.--For each rule or group of related rules
for which an agency is required to prepare a final regulatory
flexibility analysis under section 605(b) of title 5, United
States Code, the agency shall publish 1 or more guides to
assist small entities in complying with the rule and shall
entitle such

[[Page S804]]

publications `small entity compliance guides'.
``(2) Publication of guides.--The publication of each guide
under this subsection shall include--
``(A) the posting of the guide in an easily identified
location on the website of the agency; and
``(B) distribution of the guide to known industry contacts,
such as small entities, associations, or industry leaders
affected by the rule.
``(3) Publication date.--An agency shall publish each guide
(including the posting and distribution of the guide as
described under paragraph (2))--
``(A) on the same date as the date of publication of the
final rule (or as soon as possible after that date); and
``(B) not later than the date on which the requirements of
that rule become effective.
``(4) Compliance actions.--
``(A) In general.--Each guide shall explain the actions a
small entity is required to take to comply with a rule.
``(B) Explanation.--The explanation under subparagraph
(A)--
``(i) shall include a description of actions needed to meet
the requirements of a rule, to enable a small entity to know
when such requirements are met; and
``(ii) if determined appropriate by the agency, may include
a description of possible procedures, such as conducting
tests, that may assist a small entity in meeting such
requirements.
``(C) Procedures.--Procedures described under subparagraph
(B)(ii)--
``(i) shall be suggestions to assist small entities; and
``(ii) shall not be additional requirements relating to the
rule.
``(5) Agency preparation of guides.--The agency shall, in
its sole discretion, taking into account the subject matter
of the rule and the language of relevant statutes, ensure
that the guide is written using sufficiently plain language
likely to be understood by affected small entities. Agencies
may prepare separate guides covering groups or classes of
similarly affected small entities and may cooperate with
associations of small entities to develop and distribute such
guides. An agency may prepare guides and apply this section
with respect to a rule or a group of related rules.
``(6) Reporting.--Not later than 1 year after the date of
enactment of the Small Business Compliance Assistance
Enhancement Act of 2007, and annually thereafter, the head of
each agency shall submit a report to the Committee on Small
Business and Entrepreneurship of the Senate and the Committee
on Small Business of the House of Representatives describing
the status of the agency's compliance with paragraphs (1)
through (5).''.
(b) Technical and Conforming Amendment.--Section 211(3) of
the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 601 note) is amended by inserting ``and
entitled'' after ``designated''.

Mr. ENZI. Mr. President, I rise today in support of the amendment
offered by Senator Snowe. This amendment would provide some measure of
relief to those small businesses which bear the economic burden of
nearly 41 percent of the increase in the Federal minimum wage. Small
businesses not only employ the bulk of the minimum wage workers, they
have also been the engine for economic growth.
Small business has been responsible for the majority of new job
creation, generating between 60 and 80 percent of the net new jobs
annually over the last decade, and it is small businesses which have
traditionally provided the only entry port for new workers into the job
market.
I congratulate Senator Snowe for her persistence on this amendment.
She has worked on it a number of times and revised it to the present
situation. I suspect if there are any objections, we would be willing
to work on it additionally.
But we must recognize that raising the Federal minimum wage, whatever
else effects there may be, significantly increases the costs for many
of these businesses. I mentioned that an increase of 41 percent in
labor costs has to be accounted for somehow. Curtailing services,
reducing employee complements, and forgoing expansions are some of the
many options considered by these businesses in the face of increased
costs. The inescapable fact is that increased labor costs heighten the
risk of both employment dislocation and decreased job opportunity for
the very individuals an increase in the minimum wage is designed to
benefit. Unless we are prudent and balance such mandated cost increases
for some measure of relief for affected small businesses, we risk
serious unintended consequences. Simply put, an increase in the minimum
wage is of no value at all to a worker who does not have a job or a job
seeker who has no prospects of employment.
As a Senator from a rural, low-population State, I would like to
point out another reality. In many cases, heavily populated areas with
high costs of living have already, in fact, adjusted their minimum wage
levels either by law or by market forces, which actually work.
The town I am from is a boomtown, it is an energy center. If one
drives by the Arby's restaurant, the lit-up moving marque sign says:
Now hiring, $9.50 an hour plus benefits; you name the hours. If you go
in and apply, they will tell you that if they can pick the hours, it is
$10.50 an hour.
In many areas, market forces are working. There are construction
companies that go from one site to another hiring people away from
other construction companies. We have a shortage of people to work in
Wyoming. Of course, that requires relocating to the frontier, which is
what a lot of people consider Wyoming. Horace Greeley said: Go west,
young man. I would say: Go west, young man and young woman. There are
coal operations out there, primarily surface mines. They need people to
drive coal, or haul trucks. These trucks are 28 feet long, 28 feet
wide, and 28 feet tall. They haul a lot of coal. We move 1 million tons
of coal a day out of our county. How can we do that? We have a coal
seam that is 50- to 90-feet thick, and it is only under 60 to 90 feet
of dirt.
When I was mayor and Senator Rockefeller was Governor, he came out to
see our mines. Taking him back out to the airport, I always remember
what he said: You folks don't mine coal here.
I said: What do you mean?
He said: You just back up trains and you load them.
We have coal which is low in sulfur and other chemicals, which makes
it useful across the United States. Some of the States also known as
coal States take our coal and mix it with their coal, and they can help
meet the clean air standards that way. We are low in Btu, so they
increase the Btu by using their coal. If someone has a clean drug
record and no experience and can drive anything, they can be trained to
drive one of these coal haul trucks and make $60,000 to $80,000 a year,
and even more with overtime. It is a very flexible market. So there are
job opportunities out there. But they may be nontraditional jobs, and
they may require moving to another part of the country.
One will find Wyoming can use a little bit more population. We are
trying to reach a population of half a million people. We are 350 miles
a side on our State, so we are bigger than most of the States.
At any rate, there are areas which would be most dramatically
affected by the minimum wage increase and those are lower cost of
living areas. They are often rural and sparsely populated. In those
areas, employers will feel the most pressure on their bottom lines. In
those areas, employees will have the fewest opportunities to find other
employment if they are let go. So a reasonable approach to the minimum
wage issue must take those realities into account. If we are going to
dramatically increase the costs for some businesses by a wage mandate,
we should provide some measure of relief to those same businesses. If
we do not, we harm not only those small businesses, we ultimately harm
the individuals they employ.
The sound and well-reasoned amendment that is offered by Senator
Snowe accomplishes these ends through reasonable and targeted
regulatory relief for those small businesses that are most negatively
impacted by a wage increase mandate. I am pleased to be a cosponsor of
the amendment along with Senator Landrieu. The Snowe amendment provides
some regulatory relief by requiring that the Federal agencies which
issue new rules and regulations which impact small businesses also
provide those employers with plainly written and readily available
guidance that explains what employers must do to be in compliance with
these rules and regulations.
All employers incur costs keeping up with the obligations Government
imposes on them and determining how to meet those obligations. Small
businesses regularly incur administrative costs in monitoring Federal
regulatory changes and developing compliance programs. There is no
question that the burden of Federal regulations falls more heavily on
small business. This chart shows the cost of complying with

[[Page S805]]

Federal regulations. The per-employee compliance cost for firms with 20
or fewer employees is $7,647. The per-employee compliance cost for
firms with 500 or more employees is only $5,282.
So the per-employee compliance costs are 45 percent more for our
smallest employers than they are for our largest. Congress has
previously recognized the necessity of providing small businesses
relief from those compliance and monitoring costs, yet a GAO study has
shown the goal of providing small businesses relief from high
compliance monitoring costs is far from fully met. The regulatory
provision in this amendment seeks to ensure that goal is finally
realized. The need for this type of compliance assistance was
recognized by my colleague from Maine, Senator Snowe, the author of
this amendment and proponent of this proposal in this Congress as well
as the last two Congresses. I am pleased to again cosponsor the bill
authored by Senator Snowe. The bill continues to enjoy broad bipartisan
support from our colleagues, including Senators Kerry and Landrieu.
This regulatory amendment will not only have the benefit of decreasing
administrative costs for small employers, it also has the further
benefit of increasing compliance levels by ensuring that all employers
know the rules of the road and the means to comply with them.
Through the Banking Committee, on which I also serve, we have been
able to suggest and get several advisory committees started. Those
advisory committees have small businesspeople on them who advise how
different statutes as well as rules and regulations affect them, and
their input has had considerable impact. This amendment is one of the
type things those groups would suggest.
When we write Federal regulation, we often make it very complicated
and it is in a very legalistic form. I helped Senator Sarbanes on the
Sarbanes-Oxley bill. I brought an accounting perspective to that. I was
pleased he listened to it. But one of the factors we missed in that
legislation, or you cannot cover in that broad of a bill, is the impact
of small business versus big business.
Again, the advisory committees have said what is needed is a better
explanation for small business that they can understand. They do not
have the specialists big business has. They can't afford them.
Consequently, they do not have easy accessible advice on how these
legalistic terms actually work. It is the significant difference in
cost that we are concerned about here.
It is a relatively simple amendment, but one that could make a
significant difference. The substitute amendment to the underlying
bill, as I mentioned, went through the Finance Committee. It did not go
through the Health, Education, Labor and Pensions Committee, and it did
not go through the Banking Committee, so there was no opportunity to
suggest this kind of amendment at either of those points. But it is
something the Small Business Committee has worked on a number of times.
Senator Snowe has been the chairman and is now the ranking member of
the Small Business Committee. I hope we will recognize her effort as
well as the bipartisan effort coming out of that committee to provide
this kind of a change.
I think when the week is done, or maybe even less time than that, we
will be at a point where there will be both a minimum wage increase and
some help for small businesses that will offset the impact and keep the
economy moving.
I yield the floor.
Mr. SESSIONS. Madam President, is there an order of business?
The PRESIDING OFFICER (Ms. Stabenow). There is no order at this time.
Mr. SESSIONS. I yield to the Senator from Maryland to discuss this
order of business. I wish to discuss that a little bit.
Mr. CARDIN. If the Senator will yield, I am prepared to make a
unanimous consent request that after I complete my comments, Senator
Bingaman will be recognized for 10 minutes, and then the Senator will
be recognized for up to 15 minutes, and then Senator Menendez for up to
15 minutes.
Mr. SESSIONS. How long does the Senator expect to be?
Mr. CARDIN. No more than 5 to 7 minutes.
Mr. SESSIONS. That is fine from my perspective.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
The Senator from Maryland is recognized.
Mr. CARDIN. Madam President, I take this time in support of the
increase of the minimum wage to $7.25. I compliment Senator Kennedy for
his leadership on this issue. I agree with Senator Enzi that this needs
to be done in a bipartisan manner, and I am pleased by the way we are
proceeding in the consideration of the increase in the minimum wage.
I would first make the point that increasing the minimum wage will
have a positive impact on small business. I agree with the comments
that have been made that small business is the economic engine of our
Nation and we need to do everything we can to make it healthier for
small businesses in this country, but increasing the minimum wage will
have a positive effect. I say that because when you look at the total
impact on payrolls in this country, by increasing the minimum wage to
$7.25 per hour, it represents about one-fifth of 1 percent of the
entire payroll of our Nation. It is not going to have a dramatic impact
on the cost of labor. What it does is try to help wage earners in this
country who are suffering.
I believe in a liveable wage. I believe we need to do much better
than a minimum wage, but you need to increase the minimum wage if we
are going to be able to get to a liveable wage in this country. We need
to do something about the disparities among the incomes of wage earners
of America.
We had a hearing in the Budget Committee not long ago. The Chairman
of the Federal Reserve System talked about the fact that this Nation
among the industrial nations in the world has the largest disparity
among wealth in wage earners. We need to do something about that.
Increasing the minimum wage will have a positive impact on those
issues.
The fiscal policy group looked at the effect of minimum wage
increases of States that have gone above the Federal minimum wage. I
represent one of those States. Maryland has increased its minimum wage
to $6.15 per hour. The growth rates in the States that have increased
the minimum wage are actually higher than those that have the Federal
minimum wage, a growth rate of 9.4 percent versus a growth rate of 6.6
percent.
Every time Congress has increased the minimum wage in prior
Congresses, it has had a positive impact on the overall growth of our
economy. When you look at the minimum wage increases, if wage earners
at the minimum wage had received the same increase in the minimum wage
that the CEOs have received over the last 15 years, the minimum wage
earners in fast food restaurants today would be making over $23 an
hour.
This is an issue that needs to be addressed. Who is affected by it?
There are 6.6 million Americans who make the minimum wage. It
disproportionately affects women. Although women represent 48 percent
of the workforce of America, they represent 61 percent of those who are
at the minimum wage. Over 70 percent of the people receiving minimum
wage are over 20 years of age, and over one-third are parents--760,000
are single moms.
I mention that because today, if you work 52 weeks a year, 40 hours a
week, and you are a family of 2, you live below the poverty rate. You
are doing everything right, working 40 hours a week, don't take a day
off for the entire year, yet you are still below the Federal poverty
rate.
That should not be in America. We can do better than that. Since the
last time we increased the minimum wage, the per capita cost of health
care has risen by 60 percent, college costs have increased by 51
percent for public schools, debts for students graduated from college
have more than doubled, credit debt has increased by 46 percent, and we
have the lowest effective minimum wage in 50 years. The last time we
increased the minimum wage was 10 years ago. I was proud to have voted
for that when I was in the other body. It is now time that we follow or
pass what the other body has done and increase the minimum wage to
$7.25 an hour over a three-stage process. It is the right thing to do.

[[Page S806]]

It is not only right for our economy, it is not only the right thing
to do as far as how it affects the individual wage earner in trying to
bring about some fairness, but it is the right thing to do in regard to
what is correct for our country on civil rights.
Let me quote a famous American who said:

We know of no more critical civil rights issue facing
Congress today than the need to increase the Federal minimum
wage and extend its coverage.

That was stated by Dr. Martin Luther King, Jr., March 18, 1966, when
the minimum wage was comparable in purchasing power to what it is today
when Congress finally increased the minimum wage. We should have
increased the minimum wage before now. We have the opportunity to do
this in this Congress. Now is the time for us to act. Now is the time
for us to work in a bipartisan manner as we have on previous increases
in the minimum wage. I hope my colleagues will work on this bill and
get it done this week. It is the right thing to do. It will help our
economy, and it is long overdue.
I yield the floor.
The PRESIDING OFFICER. The distinguished Senator from New Mexico.
Mr. BINGAMAN. Madam President, I ask unanimous consent that I be
allowed to speak as in morning business for 10 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.

Global Warming

Mr. BINGAMAN. Madam President, the issue of global warming is more
and more on the minds of Americans. There is good reason why it is. I
think we are familiar now with the litany of adverse consequences that
is associated with unlimited release of greenhouse gases into the
atmosphere. The scientific reports are warning us about rising sea
levels, about dangerous heat waves, about increasingly devastating
hurricanes and other weather events. There are always uncertainties
about understanding the Earth's climate, but one thing is clear:
Uncontrolled release of greenhouse gases into the atmosphere with no
real strategy to reduce those gases is irresponsible and dangerous at
this point in our history. It is a great challenge that we face to
reduce these emissions in this country and countries around the world.
Even individual States within the United States, and regions of this
country, are leading the way in dealing with this issue.

The truth is, unless the United States as a whole and the developing
countries that have rapidly growing economies find a way to reduce
emissions, we are likely to see this entire planet covered with a
blanket of gases that will take centuries to dissipate.
In 2005 the Senate passed a resolution setting forth an approach to
tackling the challenges of climate change. That resolution called for
adoption of a mandatory, economy-wide program that will slow, stop, and
then reverse greenhouse gas emissions without harming the economy and
that will encourage action by developing nations. Meeting those various
tests set out in that resolution will require a bipartisan commitment
to understand the impact of any legislative approach.
Today I am joining with my colleague, Senator Specter from
Pennsylvania, in circulating a bipartisan discussion draft on global
warming legislation. The choice to release this discussion draft
reflects our desire to modify or approve that legislation in the coming
months before it is introduced. This is our commitment to create a
bipartisan process that will focus discussion in a constructive
direction.
I see three main challenges that we face in this process. First, we
need to persuade our colleagues on the program that we have chosen;
that is, a cap and trade proposal that incorporates market-based
mechanisms and funding for technology development. In 2005 over 53
Members of the Senate went on record in support of such a proposal by
defending that sense-of-the-Senate resolution and voting for it. We
need to continue to expand that number. We need to engage the
administration, which has refused to support such measures for reducing
greenhouse gases.
To begin to meet this first challenge, I would like to call the
attention of my colleagues to two documents. The first is an analysis
by the Department of Energy's Energy Information Administration, or
EIA. This was in September of last year. I joined with five other
Senators in submitting a request, a discussion draft to the Energy
Information Administration asking them to analyze it. Earlier this
month, they returned with very favorable results, showing that it is
possible to implement a cap-and-trade proposal that begins to reduce
the growth of greenhouse gas emissions without harming the economy. The
Energy Information Administration of this administration showed that
the program has only minor impacts on gross domestic product--a quarter
of 1 percent by 2030. That is equal to slowing the rate of economic
growth by roughly 1 month over the next 20-plus years.
I ask unanimous consent to have printed in the Record the executive
summary of this EIA analysis following the completion of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See Exhibit 1.)
Mr. BINGAMAN. The second document to which I wish to call attention
is a study by the nonpartisan Congressional Budget Office. In October
of 2005, Senator Jeffords and I asked CBO to address a debate that has
been occurring in the Senate. Most experts agree that significant cuts
in fossil fuel use is required if we are to reduce greenhouse gas
emissions. But there has been a debate about whether the appropriate
strategy was to exclusively fund technology development through tax
incentives and through Federal programs or, on the contrary, to put a
price on carbon by implementing a cap-and-trade proposal. CBO's
analysis demonstrated that the most effective policy was a combination
of these two.
I ask unanimous consent to have printed in the Record the summary of
that CBO report following the completion of my remarks as well.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See Exhibit 2.)
Mr. BINGAMAN. Madam President, the second challenge we face in this
debate is to figure out the appropriate way to structure a cap-and-
trade program. Putting targets and timetables aside for a moment and
determining the appropriate structure of a cap-and-trade system in
order that it functions properly will require an enormous amount of
focus and attention. For over a year, I have worked in a bipartisan
manner with my colleague from New Mexico, Senator Domenici, to explore
many of these issues. In February of last year we released a white
paper from the Energy Committee entitled, ``Design Elements of a
Mandatory Market-Based Greenhouse Gas Regulatory System.'' That white
paper laid out four basic questions about the design of the cap-and-
trade proposal. I was very encouraged that we received detailed and
constructive comments from over 150 major companies, NGOs, and
individuals.

On April 4, 2006, we hosted a day-long workshop with 29 of these
respondents talking about their reaction to the white paper. This was
the first such discussion in Congress to have taken place. My
colleagues can find a transcript of this conference on the U.S.
Government Printing Office Web site. I also ask unanimous consent to
have printed in the Record a joint statement from my colleague, Senator
Domenici, and myself that summarized the conference.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See Exhibit 3.)
Mr. BINGAMAN. Madam President, the third challenge we face in making
progress on this issue is getting political consensus on the right
levels of control. Here I am talking about the level of stringency and
the aggressiveness of the program. There have already been a number of
bills introduced this year. I commend all my colleagues who dedicated
their time and effort to addressing this issue. First and foremost, of
course, Senators Lieberman and McCain have reintroduced their
legislation. These two Senators have been leaders on the issue from the
beginning. Also, Senators Sanders and Boxer have reintroduced
legislation that Senator Jeffords drafted last year, and I commend them
for their leadership and their bold vision. As chairs of the two
committees engage in the debate on global warming issues, I plan to
work very closely with Senator Boxer to ensure that everything we do

[[Page S807]]

will keep momentum on global warming legislation moving forward.
I also commend Senators Feinstein and Carper for working together to
introduce legislation last week. Senator Feinstein was on our Energy
Committee. She is not on that committee in this Congress, and she will
be missed. But her leadership in this area is very important.
I also would like to acknowledge and congratulate the efforts of the
U.S. Climate Action Partnership. This is a unique and diverse group of
industry and NGOs that have come together to offer principles on global
warming legislation and recommendations for that legislation.
With all these bills and strategies for reducing greenhouse gases on
the table, it is vital that we work together to craft sensible policy
that can be enacted sooner rather than later. The science tells us that
action is needed immediately and that the longer we delay the more
difficult the problem will be. I believe the modest impacts that are
identified from our proposal, the one Senator Specter and I are
circulating, as shown by the Energy Information Administration
analysis, will provide a basis to explore somewhat more aggressive
reduction targets. It is for this reason that we do not want to
introduce our bill without first giving great deliberation to different
targets and approaches that could gain political consensus in passing
legislation.
One thing is clear: We cannot delay. For this reason, I hope to
promote a legislative approach that will reflect a constructive center
in this often polarized debate.
In circulating this discussion draft, Senator Specter and I are
setting forth a process. The first step of the process is to invite
Senate offices to a series of workshops with experts on the issue to
educate and understand the impacts of the legislation. These sessions
will be open to Senate staff. We also, of course, want to invite
participation or observation by representatives from the
administration. The first of the workshops will be February 2 in the
afternoon.
We also need to hear from the public and interested stakeholders. In
the coming weeks, Senator Specter and I will be outlining a process to
meet with stakeholders from industry, labor, environmental groups, and
others. We plan to solicit their comments on the legislative text. A
copy of the discussion draft and supporting documents will be posted on
the Energy Committee Web site--energy.senate.gov. I encourage
interested parties to look at that draft and to monitor the Web site
for further developments.
Madam President, following all of the other items that I have
mentioned to be printed in the Record, I ask unanimous consent that the
discussion draft that Senator Specter and I are circulating also be
printed in the Record following the other documents.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See Exhibit 4.)

Exhibit 1

Energy Market and Economic Impacts of a Proposal To Reduce Greenhouse
Gas Intensity With a Cap and Trade System, January 2007

(Energy Information Administration, Office of Integrated Analysis and
Forecasting, U.S. Department of Energy, Washington, DC)

Executive Summary

Background

This report responds to a request from Senators Bingaman,
Landrieu, Murkowski, Specter, Salazar, and Lugar for an
analysis of a proposal that would regulate emissions of
greenhouse gases (GHGs) through a national allowance cap-and-
trade system. Under this proposal, suppliers of fossil fuel
and other covered sources of GHGs would be required to submit
government-issued allowances based on the emissions of their
respective products. The gases covered in this analysis of
the proposal include energy-related carbon dioxide, methane
from coal mining, nitrous oxide from nitric acid and adipic
acid production, hydrofluorocarbons, perfluorocarbons, and
sulfur hexafluoride.
The program would establish annual emissions caps based on
targeted reductions in greenhouse gas intensity, defined as
emissions per dollar of Gross Domestic Product (GDP). The
targeted reduction in GHG intensity would be 2.6 percent
annually between 2012 and 2021, then increase to 3.0 percent
per year beginning in 2022. To limit its potential cost, the
program includes a ``safety-valve'' provision that allows
regulated entities to pay a pre-established emissions fee in
lieu of submitting an allowance. The safety-valve price is
initially set at $7 (in nominal dollars) per metric ton of
carbon dioxide equivalent (MMTCO<inf>2</inf>e) in 2012 and
increases each year by 5 percent over the projected rate of
inflation, as measured by the projected increase in the
implicit GDP price deflator. In 2004 dollars, the safety
valve rises from $5.89 in 2012 to $14.18 in 2030.
The proposal calls for initially allocating 90 percent of
the allowances for free to various affected groups, but the
proportion of allowances to be auctioned grows from 10
percent in 2012 to 38 percent in 2030. The revenue from the
auctions and any safety-valve payments are accumulated into a
``Climate Change Trust Fund,'' capped at $50 billion, to
provide incentives and pay for research, development, and
deployment of technologies to reduce greenhouse gas
emissions. The U.S. Treasury would retain any revenue
collected in excess of the $50-billion limit.
As specified in the request for the analysis, EIA
considered both a Phased Auction case, which allocates
allowances as specified in the proposal, and a Full Auction
case, in which all allowances are assumed to be auctioned
beginning in 2012. Because they share the same emissions
targets and safety valve prices, the energy sector impacts in
the Phased and Full Auction cases are very similar. The only
areas where the impacts in the two cases differ are for
electricity prices and the economic impacts associated with
collection and use of revenue from the sale of allowances.
Several additional sensitivity cases examine the impacts of
higher and lower safety valves and limiting the use of
emission reduction credits, or offsets, from noncovered
entities. The proposal and its variants were modeled using
the National Energy Modeling System and compared to the
reference case projections from the Annual Energy Outlook
2006 (AEO2006).
The analysis presented in this report builds on previous
EIA analyses addressing GHG limitation, including earlier EIA
reports requested by Senator Bingaman, Senator Salazar, and
Senators Inhofe, McCain, and Lieberman. All of the analysis
cases incorporate the economic and technology assumptions
used in the AEO2006 reference case. While increased
expenditures for research and development (R&D) resulting
from the creation of the Climate Change Trust Fund are
expected to lead to some technology improvements, a
statistically reliable relationship between the level of R&D
spending for specific technologies and the impacts of those
expenditures has not been developed. Furthermore, the impact
of Federal R&D is also difficult to assess, because the
levels of private sector R&D expenditures usually are unknown
and often far exceed R&D spending by the Federal Government.
However, the recent reports for Senators Bingaman and
Salazar include additional sensitivity analyses on the
assumptions made regarding the availability of GHG emissions
reductions outside the energy sector and the pace of advances
in technology used to produce and consume energy. The report
for Senators Inhofe, McCain, and Lieberman also examines the
economic implications of possible alternative approaches to
recycling revenues collected by government under a cap-and-
trade program in which significant amounts of government
revenue is collected from allowance auctions. Alternative
assumptions in these areas can have a major impact on the
results obtained, and the insights from those prior
sensitivity cases would also be applicable to the proposal
analyzed this report. Readers interested in how the results
reported below might be affected by different assumptions in
these areas are encouraged to review the earlier reports.
The modeled impacts of the proposal are summarized below.
Reported results apply for the $7 Phased Auction case, unless
otherwise stated. Energy and allowance prices are reported in
2004 dollars for compatibility with AEO2006. Macroeconomic
time series such as GDP and consumption expenditures are
reported in 2000 chain-weighted dollars to maintain
consistency with standard reports of U.S. economic
statistics. Projections of the aggregate value of allowances
and auction revenues and fiscal impacts on the budget surplus
are reported in nominal dollars, as are deposits relating to
the Climate Change Trust Fund.

Results

Emissions and Allowance Prices
The proposal leads to lower GHG emissions than in the
reference case, but the intensity reduction targets are not
fully achieved after 2025. Some regulated entities would opt
to make safety-valve payments beginning in 2026, the year in
which the market value of allowances is projected to reach
the safety-valve level (Table ES1). With the higher safety-
valve prices in the $9 Phased Auction sensitivity case, the
intensity targets are attained through 2029.
Relative to the reference case, covered GHG emissions less
offsets are 562 MMTCO<inf>2</inf>e (7.4 percent) lower in
2020 and 1,259 MMTCO<inf>2</inf>e (14.4 percent) lower in
2030 in the Phased Auction case. Covered GHG emissions grow
by 24 percent between 2004 and 2030, about half the increase
in the reference case.
In the early years of the program, when allowance prices
are relatively low, reductions in GHG emissions outside the
energy sector are the predominant source of emissions
reductions. In 2020, reductions of GHGs other than energy-
related CO<inf>2</inf>, estimated based on information
provided by the Environmental Protection Agency, account for
nearly 66 percent of the total reductions. By 2030, however,
the higher allowance prices lead to a

[[Page S808]]

significant shift in energy decisions, particularly in the
electricity sector, and the reduction in energy-related
CO<inf>2</inf> emissions account for almost 58 percent of
total GHG emissions reductions.
An allowance allocation incentive for carbon sequestration,
available only in the Phased Auction case, is projected to
result in an additional emissions impact of 296
MMTCO<inf>2</inf>e in 2020 and 311 MMTCO<inf>2</inf>e in
2030, or about 4 percent of covered emissions.
In 2004 dollars, the allowance prices rise from just over
$3.70 per metric tons CO<inf>2</inf> equivalent in 2012 to
the safety valve price of $14.18 metric tons CO<inf>2</inf>
equivalent in 2030.
Energy Markets
The cost of GHG allowances is passed through to consumers,
raising the price of fossil fuels charged and providing an
incentive to lower energy use and shift away from fossil
fuels, particularly in the electric power sector.
When allowance costs are included, the average delivered
price of coal to power plants in 2020 increases from $1.39
per million Btu in the reference case to $2.06, an increase
of 48 percent. By 2030 the change grows from $1.51 per
million Btu in the reference case to $2.73 per million Btu,
an increase of 81 percent.
Electricity prices are somewhat lower in the Phased Auction
case than in the Full Auction case because the Phased Auction
provides a portion of the allowances to the electric power
sector for free, a benefit that is passed on to ratepayers
where the recipients are subject to cost-of-service
regulation. Electricity prices in 2020 are 3.6 and 5.6
percent higher than in the reference case in the Phased and
Full Auction cases, respectively. In 2030, electricity prices
are 11 and 13 percent above the reference case level.
Electricity price impacts are likely to vary across states
and regions due to differences in State regulatory regimes
and in the fuel mix used for generation in each area.
Relative to the reference case, annual per household energy
expenditures in 2020 are 2.6 percent ($41) higher in the
Phased Auction case and 3.6 percent ($58) higher in the Full
Auction case. By 2030, projected annual per household energy
expenditures range from 7.0 percent to 8.1 percent ($118 to
$136) higher in the two cases. The difference primarily
reflects the lower electricity prices in the Phased Auction
case.
Coal use is projected to continue to grow, but at a much
slower rate than in the reference case. Total energy from
coal increases by 23 percent between 2004 and 2030, less than
half the 53-percent increase projected in the reference case
over the same time period.
The proposal significantly boosts nuclear capacity
additions and generation. The projected 47-gigawatt increase
in nuclear capacity between 2004 and 2030 allows nuclear to
continue to provide about 20 percent of the Nation's
electricity in 2030. In the reference case, nuclear capacity
increases by only 9 gigawatts between 2005 and 2030.
The proposal also adds significantly to renewable
generation. In the reference case, renewable generation is
projected to increase from 358 billion kilowatt hours in 2004
to 559 billion kilowatt hours in 2030. In the Phased Auction
case, renewable generation increases to 572 billion kilowatt
hours by 2020 and 823 billion kilowatt hours by 2030. Most of
the increase in renewable generation is expected to be from
non-hydroelectric renewable generators, mainly biomass and
wind.
Retail gasoline prices in 2030 are $0.11 per gallon higher
in 2030 compared to the AE02006 reference case, leading to
modest changes in vehicle purchase and travel decisions. The
transportation sector provides only a small amount of
emissions reduction.
Economy
While the Phased Auction and Full Auction cases have
similar energy market impacts, the macroeconomic impacts of
the two cases differ because of differences in the revenue
flows associated with emission allowances.
In the Phased Auction case, the $50-billion cap (nominal
dollars) on the maximum cumulative deposits to the Climate
Change Trust Fund is reached in 2017, and all subsequent
revenues from allowance sales or safety valve payments go to
the U.S. Treasury. This leads to a $59-billion reduction in
the Federal deficit by 2030. However, in the Full Auction
case, the revenues flowing to the government are much larger,
resulting in a $200-billion reduction in the Federal deficit
in 2030.
In the Phased Auction case, wholesale energy prices rise
steadily and, by 2030, are approximately 12 percent above the
reference case levels (after inflation). This translates into
8-percent higher energy prices at the consumer level by 2030
and a 1-percent increase in the All-Urban Consumer Price
Index (CPI) above the reference case level.
In the Phased Auction case, discounted total GDP (in 2000
dollars) over the 2009-2030 time period is $232 billion (0.10
percent) lower than in the reference case, while discounted
real consumer spending is $236 billion (0.14 percent) lower.
In 2030, in the Phased Auction case, real GDP is projected to
be $59 billion (0.26 percent) lower than in the reference
case, while aggregate consumption expenditures, which relate
more directly to impacts on consumers, are $55 billion (0.36
percent) lower. The reductions in GDP and consumption
reflect the rise in energy prices and the resulting
decline in personal disposable income.
While higher energy costs and lower consumption
expenditures tend to discourage investment, many provisions
of the bill help to support investment activity. The value of
allowances allocated to States is substantial, and some
portion of the allowance revenue would likely result in
increased investment. In addition, the portion of the
allowance allocated to the private sector generates funds
which would help spur private investment in energy saving
technologies.

TABLE ES1.--SUMMARY ENERGY MARKET RESULTS FOR THE REFERENCE AND $7 PHASED AUCTION CASES
----------------------------------------------------------------------------------------------------------------
2020 2030
---------------------------------------------------
Projection 2004 AE02006 Phased AE02006 Phased
reference auction reference auction
----------------------------------------------------------------------------------------------------------------
Emissions of Greenhouse Gases (million metric
tons CO2 equivalent)

Energy-Related Carbon Dioxide.............. 5,900 7,119 6,926 8,114 7,387
Other Covered Emissions.................... 259 452 195 627 235
----------------------------------------------------------------
Total Covered emissions.................. 6,159 7,571 7,121 8,742 7,622
----------------------------------------------------------------
Total Greenhouse Gases..................... 7,122 8,649 8,087 9,930 8,671

Emissions Reduction from Reference Case
(million metric tons CO2 equivalent

Energy-Related Carbon Dioxide.............. -- -- 193 -- 727
Other Covered Emissions.................... -- -- 258 -- 392
Nonenergy Offset Credits................... -- -- 111 -- 140
Carbon Sequestration....................... -- -- 296 -- 311
----------------------------------------------------------------
Total Emission Reductions................ -- -- 562 -- 1,259
----------------------------------------------------------------
Total (including sequestration)........ -- -- 858 -- 1,570
Allowance Price (2004 Dollars per metric -- -- 7.15 -- 14.18
ton CO2 equivalent).......................

Delivered Energy Prices (2004 dollars per unit
indicated) (includes allowance costs)

Motor Gasoline (per gallon)................ 1.90 2.08 2.14 2.19 2.30
Jet Fuel (per gallon)...................... 1.22 1.42 1.50 1.56 1.69
Distillate (per gallon).................... 1.74 1.93 2.04 2.06 2.25
Natural Gas (per thousand cubic feet)...... 7.74 7.14 7.55 8.22 9.10
Residential.............................. 10.72 10.48 10.87 11.67 12.59
Electric Power........................... 6.07 5.53 5.99 6.41 7.39
Coal, Electric Power (per million Btu)..... 1.39 1.39 2.06 1.51 2.73
Electricity (cents per kilowatthour)....... 7.57 7.25 7.51 7.51 8.31

Fossil Energy Consumption quadrillion Btu)

Petroleum.................................. 40.1 48.1 47.2 53.6 52.0
Natural Gas................................ 23.1 27.7 27.4 27.7 27.9
Coal....................................... 22.5 27.6 26.4 34.5 27.7

Electricity Generation (billion kilowatthours)

Petroleum.................................. 120 107 49 115 49
Natural Gas................................ 702 1,103 1,184 993 1,190
Coal....................................... 1,977 2,505 2,370 3,381 2,530
Nuclear.................................... 789 871 871 871 1,168
Renewable.................................. 358 515 572 559 823
----------------------------------------------------------------
Total.................................... 3,955 5,108 5,055 5,926 5,768
----------------------------------------------------------------------------------------------------------------
Source: National Energy Modeling System runs AE02006.Dlll905A and BL_PHASED7.D112006B.

[[Page S809]]

GDP and consumption impacts in the Full Auction case are
substantially larger than those in the Phased Auction case.
Relative to the reference case, discounted total GDP (in 2000
dollars) over the 2009-2030 time period in the Full Auction
case is $462 billion (0.19 percent lower), while discounted
real consumer spending is $483 billion (0.29 percent) lower.
In 2030, projected real GDP in the Full Auction case is $94
billion (0.41 percent) lower than in the reference case,
while aggregate consumption is $106 billion (0.69 percent)
lower, almost twice the estimated consumption loss in the
Phased Auction case. These results reflect the substantially
higher level of auction revenues under the Full Auction case,
which, by assumption, are not re-circulated into the economy
beyond the $50 billion in expenditures from the Climate
Change Trust Fund. Because these estimated impacts could
change significantly under alternative revenue recycling
assumptions, these results do not imply a general conclusion
that a Phased Auction will necessarily result in lesser
impacts on GDP and consumption than a Full Auction.
____

Exhibit 2

A CBO Paper, September 2006: Evaluating the Role of Prices and R&D in
Reducing Carbon Dioxide Emissions

Summary and Introduction

Several important human activities--most notably the
worldwide burning of coal, oil, and natural gas--are
gradually increasing the concentrations of carbon dioxide and
other greenhouse gases in the atmosphere and, in the view of
many climate scientists, are gradually warming the global
climate. That warming, and any long-term damage that might
result from it, could be reduced by restraining the growth of
greenhouse gas emissions and ultimately limiting them to a
level that stabilized atmospheric concentrations.
The magnitude of warming and the damages that might result
are highly uncertain, in part because they depend on the
amount of emissions that will occur both now and in the
future, how the global climate system will respond to rising
concentrations of greenhouse gases in the atmosphere, and how
changes in climate will affect the health of human and
natural systems. The costs of restraining emissions are also
highly uncertain, in part because they will depend on the
development of new technologies. From an economic point of
view, the challenge to policymakers is to implement policies
that balance the uncertain costs of restraining emissions
against the benefits of avoiding uncertain damages from
global warming or that minimize the cost of achieving a
target level of concentrations or level of annual emissions.
Researchers have studied the relative efficacy--as well as
the appropriate timing--of various policies that might
discourage emissions of carbon dioxide (referred to as carbon
emissions in the rest of this paper), which makes up the vast
majority of greenhouse gases, and restrain the growth of its
atmospheric concentration. This paper presents qualitative
findings from that research, which are largely dependent of
any particular estimate of the costs or benefits of reducing
emissions. The paper's conclusions are summarized below.
Policies for reducing carbon emissions
The possibility of climate change involves two distinct
``market failures'' that prevent unregulated markets from
achieving the appropriate balance between fossil fuel use and
changes in the climate. One market failure involves the
external effects of emissions from the combustion of fossil
fuels--that is, the costs that are imposed on society by the
use of fossil fuels but that are not reflected in the prices
paid for them. The other market failure is a general
underinvestment in research and development (R&D) that occurs
because investments in innovation may yield ``spillover''
benefits to society that do not translate into profits for
the innovating firm. The first market failure yields
inefficiently high use of fossil fuels; the second yields
inefficiently low R&D.
Because there are two separate market failures, an
efficient response is likely to involve two separate types of
policies:
One type of policy would reduce carbon emissions by
increasing the costs of emitting carbon, both in the near
term and in the future, to reflect the damages that those
emissions are expected to cause.
The other type of policy would increase federal support for
R&D on various technologies that could help restrain the
growth of carbon emissions and would create spillover
benefits.
Policymakers could increase the cost of emitting carbon by
setting a price on those emissions. That could be
accomplished by taxing fossil fuels in proportion to
their carbon content (which is released when the fuels are
burned) or by establishing a ``cap-and-trade'' program
under which policymakers would set an overall cap on
emissions but allow fossil fuel suppliers to trade rights
(called allowances) to those limited emissions. Either a
tax or a cap-and-trade program would cause the prices of
goods and services to rise to reflect the amount of carbon
emitted as a result of their consumption. To the extent
that a carbon tax or allowance price reflected the present
value of expected damages, such policies would encourage
users of fossil fuels to account for the costs they impose
on others through their emissions of greenhouse gases.
Researchers generally conclude that the appropriate price
for carbon would be relatively low in the near term but would
rise substantially over time, resulting in relatively modest
reductions in emissions in the near term followed by larger
reductions in the future. Phasing in price increases would
allow firms to gradually replace their stock of physical
capital associated with energy use and to gain experience in
using new technologies that emit less carbon. Firms would
have an incentive to invest in developing new technologies on
the basis of their expectations about future prices for
emissions.
Federal support could be provided for the research and
development of technologies that would lead to lower
emissions. Such technologies could include improvements in
energy efficiency; advances in low- or zero emissions
technologies (such as nuclear, wind, or solar power); and
development of sequestration technologies, which capture and
store carbon for long periods. Federal support would probably
be most cost-effective if it went toward basic research on
technologies that are in the early stages of development.
Such research is more likely to be underfunded in the absence
of government support because it is more likely to create
knowledge that is beneficial to other firms but that does not
generate profits for the firm conducting the research.
The interaction and timing of policies
Pricing and R&D policies are neither mutually exclusive nor
entirely independent--both could be implemented
simultaneously, and each would tend to enhance the other.
Pricing policies would tend to encourage the use of existing
carbon-reducing technologies as well as provide incentives
for firms to develop new ones; federal funding of R&D would
augment private efforts; and successful R&D investments would
reduce the price required to achieve a given level of
reductions in emissions.
Neither policy alone is likely to be as effective as a
strategy involving both policies. Relying exclusively on R&D
funding in the near term, for example, does not appear likely
to be consistent with the goal of balancing costs and
benefits or the goal of minimizing the costs of meeting an
emissions reduction target. At any point in time, there is a
cost continuum for emissions reductions, ranging from low-
cost to high-cost opportunities. Unless R&D efforts virtually
eliminated the value of near-term reductions in emissions (an
outcome that appears unlikely given reasonable assumptions
about the payoff of R&D efforts), waiting to begin initial
pricing (to encourage low-cost reductions) would increase the
overall cost of reducing emissions in the long run.
Near-term reductions in emissions achieved with existing
technologies could be valuable even if fundamentally new
energy technologies would be needed to prevent the buildup of
greenhouse gases in the atmosphere from reaching a point that
triggered a rapid increase in damages. Near-term reductions
could take advantage of low-cost opportunities to avoid
adding to the stock of gases in the atmosphere and could
allow additional time for new technologies to be developed
and put in place. That additional time could prove quite
valuable, given that R&D efforts are highly uncertain and
that the process of putting new energy systems in place could
be slow and costly.
Determining the appropriate mix of policies to address
climate change is complicated by the fact that future
policies would be layered on a complex mix of current and
past policies, all of which affect today's use of fossil
fuels and their alternatives as well as the amount of R&D.
The analyses reviewed in this paper typically do not account
for existing policies or for the administrative costs of
implementing a carbon-pricing program or of initiating a
larger (and perhaps redesigned) R&D program for carbon-
reducing technologies. However, the qualitative conclusion
reached in those analyses--that costs would be minimized
by a combination of gradually increasing emissions prices
coupled with subsidies for R&D--is not likely to be
affected by such considerations.
A global concern
The causes and consequences of climate change are global,
and reductions in U.S. emissions alone would be unlikely to
have a significant impact. Cost-effective mitigation policies
would require coordinated international efforts and would
involve overcoming institutional barriers to the diffusion of
new technologies in developing countries, such as India and
China. If a domestic carbon-pricing program significantly
increased the prices of U.S.produced goods--and was not
matched by efforts to reduce emissions in other countries--it
could cause carbon-intensive industries to relocate to
countries without similar restrictions, diminishing the
environmental benefits of a domestic program.
However, successful domestic R&D efforts, whether funded by
the public or private sector, could lower the costs of
reducing carbon emissions in other countries as well as
within the United States. Some new technologies, such as
those that yielded improvements in energy efficiency, might
be deployed without additional incentives. Other innovations,
such as sequestration technologies or alternative energy
technologies that reduce carbon emissions but cost more than
their fossil-fuel-based alternatives, would be unlikely to be
deployed without financial incentives to reduce carbon
emission.

[[Page S810]]

____
Exhibit 3

chairman and ranking member statement: climate change conference

On April 4, 2006, the Senate Committee on Energy and
Natural Resources held a conference to discuss critical
issues involved in the design of a mandatory greenhouse gas
(GHG) program. More than 300 people attended the event and
over 160 organizations and individuals submitted detailed
written comments.
Although the issue of climate change continues to elicit a
diverse array of opinions, we are encouraged that a number of
general themes are emerging that could form the basis of
eventual solutions to reducing greenhouse gas emissions.
The following discussion reflects our perception of key
areas where there appears to be a narrowing of disagreement
and in some cases an emerging consensus. Of course it is not
our intent to imply that there is now or will ever be an
absolute unanimity of opinion on issues related to climate
change, especially on a greenhouse gas regulatory mechanism.
Nevertheless, we remain committed to exploring the
development of solutions consistent with the requirements set
forth in the June 22, 2005, Sense of the Senate Resolution.
We continue to work together with our colleagues on the
Committee on Energy and Natural Resources and throughout the
Senate to fashion reasonable policy solutions to the key
issues identified at the April 4, 2006, Workshop and look
forward to ongoing input and engagement from interested
stakeholders.

conceptual direction for reducing greenhouse gas emissions

In both the written submissions and comments at the
workshop, many participants and respondents expressed the
view that the risks associated with a changing climate
justified the adoption of mandatory limits on greenhouse gas
emissions. While opinions varied on the stringency of initial
limits, there was support for the notion that a program
should begin modestly and strengthen gradually over time.
Consistent with the success of the acid rain program and
other market-based approaches, most participants supported a
market-based approach that would set a ``forward price'' on
greenhouse gas emissions in order to provide both the
flexibility and incentive needed to accelerate technology
development and deployment.
Most participants recognized that if the price signal
initially imposed under a domestic regime is modest, it is
unlikely to be strong enough to motivate the development and
deployment of the key technologies that will ultimately be
needed to eventually eliminate GHG emissions. In order to
speed technology deployment, there was general agreement that
some portion of the proceeds of a permit auction should be
used to enhance current technology incentives. Again there
was disagreement about the appropriate size of a permit
auction and the means of directing these resources toward
technology innovation. Ultimately, we perceive agreement
that a GHG policy should provide a combination of a market
signal and increased incentives for technology innovation.
In addition to general support for the overall goals of the
Sense of the Senate Resolution, we are encouraged by the
similarity of views with respect to several of the key
questions raised in the White Paper:
Economy-wide approach: A threshold decision in designing a
mandatory GHG emission reduction program is whether the
program should address GHG's on an economy-wide basis or
whether the program should focus on the GHG emissions of just
one or more sectors of the economy. In general, there was
agreement on the need for economy-wide action to address the
wide diversity of sources of GHG's. Many participants argued
that an economy-wide program is the most equitable and
efficient approach.
Upstream or hybrid point of regulation: Most participants
supported either an entirely upstream or a hybrid approach
for point of regulation. In an ``upstream'' regulatory
approach, the point of regulation is placed closer to energy
producers and suppliers than to end-use consumers.
Specifically, a requirement to acquire permits or allowances
for emissions associated with fossil fuel use might apply to
coal mining companies, petroleum refiners, and natural gas
shippers, processors or pipelines rather than to the
``smokestack'' entities (e.g., electric utilities, large
industrial plants). Under a ``hybrid'' approach, major
stationary sources that burn coal would be regulated at the
point of combustion, while natural gas and petroleum related
emissions would be addressed upstream (at refineries for
petroleum and at either shippers, processors, or pipelines
for natural gas). Regulating the carbon content of fuels at
the point in which energy enters the economy was described by
many as providing the most complete coverage through the most
manageable regulatory approach. However, several participants
noted that the efficiency of an upstream program would not be
diminished if only major stationary sources were carved out
for regulation at the source of combustion. They note that
these sources are limited in number and already have the
monitoring and knowledge in place necessary to implement such
requirements due to participation in the acid rain program.
Offsets and set-asides: There was general agreement about
the benefits of emission reduction projects at sources
outside of a cap on GHG emissions. However, there was some
disagreement about how to ensure the environmental integrity
of these types of projects. Some panelists argued that
offsets could provide low-cost emission reductions and could
create incentives for new technologies and approaches. In
particular, a few panelists specifically mentioned the
potential for offset opportunities in the agricultural
sector. Others noted that offsets could dilute the
environmental benefit of a mandatory program unless they are
accompanied by rigorous and standardized baseline and
measurement protocols. An additional option would be to
dedicate a percentage of allowances from within a program's
overall allowance allocation for offset activities that are
less easily verified.
Links to other trading programs: Ultimately, GHG emissions
cannot be reduced absent an effort that includes meaningful
participation from all nations with significant GHG
emissions. An emission reduction program in the U.S. could be
designed to leave open the possibility of trading with GHG
systems in other countries. Most panelists at the conference
agreed that linking to other domestic emissions trading
programs is theoretically more efficient. However, a few
panelists also noted that differences in the design of
domestic trading programs (e.g., different target levels,
different monitoring and verification systems) may complicate
linking programs and make it politically difficult in the
near-term.
Developing country action: Many participants agreed that an
important component of a U.S. GHG program should encourage
major trading partners and large emitters of GHG's to take
actions that are comparable to those taken by the U.S.
Panelists noted that ultimately, action by major developing
countries like China and India is critical to address climate
change. There was also discussion of the competitive
implications if the U.S. takes action to address climate
change and other major trading partners do not. Not all, but
many panelists said that the U.S. should not wait for
developing countries to act. Rather, the U.S. should take a
cautious first step toward mandatory action with additional
action conditioned on an evaluation of the efforts of major
developing country emitters. There was debate about how to
measure progress when different countries have different
national circumstances. There was also discussion about the
best process for evaluating the actions of developing
countries and about how much discretion there should be in
this process.
Allowance distribution: Multiple views were expressed at
the conference on the best approach to allowance
distribution. However, a significant number of panelists
emphasized that not all allowances need be distributed for
free at the point of regulation. For example, several
panelists endorsed the concept of using cost burden as a
principle for allocation. In other words, even if a sector is
not at the point of regulation, it still might receive some
allowances to mitigate the cost impacts of a mandatory
program. In addition, some panelists argued for the benefits
of allowance auctions. According to this view, auctions can
level the playing field for new facilities, and can create an
incentive for lower-carbon technology. Auctions may also
avoid the need for complex allocation rules that might result
in unintended competitive advantages, including windfall
profits, for certain market participants. On the other hand,
some panelists noted the political difficulties of an auction
approach and suggested a gradual transition to an auction.
Finally, the discussion on allowance distribution highlighted
the diverse economic, regulatory, social, and political
considerations associated with this issue. There were a
number of creative suggestions at the conference on how to
accommodate these different considerations.
Based on the discussion at the conference, we believe the
following principles for allocation are emerging;
Allowances should be allocated in a manner that recognizes
and roughly addresses the disparate costs imposed by the
program.
Allowances should not be allocated solely to regulated
entities because such entities do not solely bear the costs
of the emissions trading program.
A portion of the allowances should be auctioned (or used
for ``set-aside'' programs), with revenues used to advance
climate-related policy goals and other public purposes.
Over time, an allowance distribution approach should
transition from approaches that attempt to fairly compensate
sectors for past investments in carbon intensive technologies
to approaches that create incentives for energy efficiency
and lower carbon technologies. In practice, this means a
gradual transition over an extended period of time from a
largely free allocation of allowances to the use of an
auction as the predominant method for distribution of
allowances.

Next Steps

The Committee intends to continue soliciting comments on
the major points that have been summarized from the
conference and on the emerging allowance allocation
principles that have been described. The Committee recognizes
that any proposals for a mandatory GHG program will deserve
further input from affected stakeholders and Members of
Congress. We encourage stakeholders and congressional offices
to provide the Committee with ideas and suggestions for
expanding general findings to the next level of specificity.
Please contact John Peschke or Jonathan Black if you have
further thoughts or input.

[[Page S811]]

____
Exhibit 4

S. __

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``__________ Act of ____''.

SEC. 2. ACTIONS TO ADDRESS GLOBAL CLIMATE.

Title XVI of the Energy Policy Act of 1992 (42 U.S.C. 13381
et seq.) is amended--
(1) by inserting after the title designation and heading
the following:

``Subtitle A--General Provisions'';

and
(2) by adding at the end the following:

``Subtitle B--Actions to Address Global Climate Change

``SEC. 1611. PURPOSE.

``The purpose of this subtitle is to reduce greenhouse gas
emissions intensity in the United States, beginning in
calendar year 2012, through an emissions trading system
designed to achieve emissions reductions at the lowest
practicable cost to the United States.

``SEC. 1612. DEFINITIONS.

``In this subtitle:
``(1) Carbon dioxide equivalent.--The term `carbon dioxide
equivalent' means--
``(A) for each covered fuel, the quantity of carbon dioxide
that would be emitted into the atmosphere as a result of
complete combustion of a unit of the covered fuel, to be
determined for the type of covered fuel by the Secretary; and
``(B) for each greenhouse gas (other than carbon dioxide)
the quantity of carbon dioxide that would have an effect on
global warming equal to the effect of a unit of the
greenhouse gas, as determined by the Secretary, taking into
consideration global warming potentials.
``(2) Covered fuel.--The term `covered fuel' means--
``(A) coal;
``(B) petroleum products;
``(C) natural gas;
``(D) natural gas liquids; and
``(E) any other fuel derived from fossil hydrocarbons
(including bitumen and kerogen).
``(3) Covered greenhouse gas emissions.--
``(A) In general.--The term `covered greenhouse gas
emissions' means--
``(i) the carbon dioxide emissions from combustion of
covered fuel carried out in the United States; and
``(ii) nonfuel-related greenhouse gas emissions in the
United States, determined in accordance with section
1615(b)(2).
``(B) Units.--Quantities of covered greenhouse gas
emissions shall be measured and expressed in units of metric
tons of carbon dioxide equivalent.
``(4) Emissions intensity.--The term `emissions intensity'
means, for any calendar year, the quotient obtained by
dividing--
``(A) covered greenhouse gas emissions; by
``(B) the forecasted GDP for that calendar year.
``(5) Forecasted gdp.--The term `forecasted GDP' means the
predicted amount of the gross domestic product of the United
States, based on the most current projection used by the
Energy Information Administration of the Department of Energy
on the date on which the prediction is made.
``(6) Forecasted gdp implicit price deflator.--The term
`forecasted GDP implicit price deflator' means [TO BE
SUPPLIED].
``(7) Greenhouse gas.--The term `greenhouse gas' means--
``(A) carbon dioxide;
``(B) methane;
``(C) nitrous oxide;
``(D) hydrofluorocarbons;
``(E) perfluorocarbons; and
``(F) sulfur hexafluoride.
``(8) Initial allocation period.--The term `initial
allocation period' means the period beginning January 1,
2012, and ending December 31, 2021.
[``(9) Natural gas processing plant.--The term `natural gas
processing plant' means a facility designed to separate
natural gas liquids from natural gas.]
``(10) Nonfuel regulated entity.--The term `nonfuel
regulated entity' means--
``(A) the owner or operator of a facility that manufactures
hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, or
nitrous oxide;
``(B) an importer of hydrofluorocarbons, perfluorocarbons,
sulfur hexafluoride, or nitrous oxide;
``(C) the owner or operator of a facility that emits
nitrous oxide associated with the manufacture of adipic acid
or nitric acid;
``(D) the owner or operator of an aluminum smelter;
``(E) the owner or operator of an underground coal mine
that emitted more than 35,000,000 cubic feet of methane
during 2004 or any subsequent calendar year; and
``(F) the owner or operator of facility that emits
hydrofluorocarbon-23 as a byproduct of
hydrochlorofluorocarbon-22 production.
``(11) Offset project.--The term `offset project' means any
project to--
``(A) reduce greenhouse gas emissions; or
``(B) sequester a greenhouse gas.
``(12) Petroleum product.--The term `petroleum product'
means--
``(A) a refined petroleum product;
``(B) residual fuel oil;
``(C) petroleum coke; or
``(D) a liquefied petroleum gas.
``(13) Regulated entity.--The term `regulated entity'
means--
``(A) a regulated fuel distributor; or
``(B) a nonfuel regulated entity.
``(14) Regulated fuel distributor.--The term `regulated
fuel distributor' means--
``(A) the owner or operator of--
``(i) a petroleum refinery;
``(ii) a coal mine that produces more than 10,000 short
tons during 2004 or any subsequent calendar year; or
``(iii) a natural gas processing plant [size threshold];
``(B) an importer of--
``(i) petroleum products;
``(ii) coal;
``(iii) coke; or
``(iv) natural gas liquids; or
``(C) any other entity the Secretary determines under
section 1615(b)(3)(A)(ii) to be subject to section 1615.
``(15) Safety valve price.--The term `safety valve price'
means--
``(A) for 2012, $7 per metric ton of carbon dioxide
equivalent; and
``(B) for each subsequent calendar year, an amount equal to
the product obtained by multiplying--
``(i) the safety valve price established for the preceding
calendar year increased by 5 percent, unless a different rate
of increase is established for the calendar year under
section 1622; and
``(ii) the ratio that--
``(I) the forecasted GDP implicit price deflator for the
calendar year; bears to
``(II) the forecasted GDP implicit price deflator for the
preceding calendar year.
``(16) Secretary.--The term `Secretary' means the Secretary
of Energy, unless the President designates another officer of
the Executive Branch to carry out a function under this
subtitle.
``(17) Subsequent allocation period.--The term `subsequent
allocation period' means--
``(A) the 5-year period beginning January 1, 2022, and
ending December 31, 2026; and
``(B) each subsequent 5-year period.

``SEC. 1613. QUANTITY OF ANNUAL GREENHOUSE GAS ALLOWANCES.

``(a) Initial Allocation Period.--
``(1) In general.--Not later than December 31, 2008, the
Secretary shall--
``(A) make a projection with respect to emissions intensity
for 2011, using--
``(i) the Energy Information Administration's most current
projections of covered greenhouse gas emissions for 2011; and
``(ii) the forecasted GDP for 2011;
``(B) determine the emissions intensity target for 2012 by
calculating a 2.6 percent reduction from the projected
emissions intensity for 2011;
``(C) in accordance with paragraph (2), determine the
emissions intensity target for each calendar year of the
initial allocation period after 2012; and
``(D) in accordance with paragraph (3), determine the total
number of allowances to be allocated for each calendar year
during the initial allocation period.
``(2) Emissions intensity targets after 2012.--For each
calendar year during the initial allocation period after
2012, the emissions intensity target shall be the emissions
intensity target established for the preceding calendar year
reduced by 2.6 percent.
``(3) Total allowances.--For each calendar year during the
initial allocation period, the quantity of allowances to be
issued shall be equal to the product obtained by
multiplying--
``(A) the emissions intensity target established for the
calendar year; and
``(B) the forecasted GDP for the calendar year.
``(b) Subsequent Allocation Periods.--
``(1) In general.--Not later than the date that is 4 years
before the beginning of each subsequent allocation period,
the Secretary shall--
``(A) except as directed under section 1622, determine the
emissions intensity target for each calendar year during that
subsequent allocation period, in accordance with paragraph
(2); and
``(B) issue the total number of allowances for each
calendar year of the subsequent allocation period, in
accordance with paragraph (3).
``(2) Emissions intensity targets.--For each calendar year
during a subsequent allocation period, the emissions
intensity target shall be the emissions intensity target
established for the preceding calendar year reduced by 3.0
percent.
``(3) Total allowances.--For each calendar year during a
subsequent allocation period, the quantity of allowances to
be issued shall be equal to the product obtained by
multiplying--
``(A) the emissions intensity target established for the
calendar year; and
``(B) the forecasted GDP for the calendar year.
``(c) Administrative Requirements.--
``(1) Denomination.--Allowances issued by the Secretary
under this section shall be denominated in units of metric
tons of carbon dioxide equivalent.
``(2) Period of use.--An allowance issued by the Secretary
under this section may be used during--
``(A) the calendar year for which the allowance is issued;
or
``(B) any subsequent calendar year.
``(3) Serial numbers.--The Secretary shall--
``(A) assign a unique serial number to each allowance
issued under this subtitle; and
``(B) retire the serial number of an allowance on the date
on which the allowance is submitted under section 1615.

[[Page S812]]

``SEC. 1614. ALLOCATION AND AUCTION OF GREENHOUSE GAS
ALLOWANCES.

``(a) Allocation of Allowances.--
``(1) Definition of state.--In this subsection, the term
`State' means--
``(A) each of the several States of the United States;
``(B) the District of Columbia;
``(C) the Commonwealth of Puerto Rico;
``(D) Guam;
``(E) American Samoa;
``(F) the Commonwealth of the Northern Mariana Islands;
``(G) the Federated States of Micronesia;
``(H) the Republic of the Marshall Islands;
``(I) the Republic of Palau; and
``(J) the United States Virgin Islands.
``(2) Allocations.--Not later than the date that is 2 years
before the beginning of the initial allocation period, and
each subsequent allocation period, the Secretary shall
allocate for each calendar year during the allocation period
a quantity of allowances in accordance with this subsection.
``(3) Quantity.--The total quantity of allowances available
to be allocated to industry and States [OR: to industry and
by the President] for each calendar year of an allocation
period shall be the product obtained by multiplying--
``(A) the total quantity of allowances issued for the
calendar year under subsection (a)(3) or (b)(3) of section
1613; and
``(B) the allocation percentage for the calendar year under
subsection (c).
``(4) Allowance allocation rulemaking.--Not later than 18
months after the date of enactment of this subtitle, the
Secretary shall establish, by rule, procedures for allocating
allowances in accordance with the criteria established under
this subsection, including requirements (including forms and
schedules for submission) for the reporting of information
necessary for the allocation of allowances under this
section.
``(5) Distribution of allowances to industry.--The
allowances available for allocation to industry under
paragraph (3) shall be distributed as follows:
``(A) Coal mines.--
``(i) Definition of eligible coal mine.--In this
subparagraph, the term `eligible coal mine' means a coal mine
located in the United States that is a regulated fuel
distributor.
``(ii) Total allocation.--For each year, eligible coal
mines shall be allocated \7/55\ of the total quantity of
allowances available for allocation to industry under
paragraph (3).
``(iii) Individual allocations.--For any year, the quantity
of allowances allocated to an eligible coal mine shall be the
quantity equal to the product obtained by multiplying--
``(I) the total allocation to eligible coal mines under
clause (ii); and
``(II) the ratio that--
``(aa) the carbon content of coal produced at the eligible
coal mine during the 3-year period beginning on January 1,
2004; bears to
``(bb) the carbon content of coal produced at all eligible
coal mines in the United States during that period.
``(B) Petroleum refiners.--
``(i) Total allocation.--For each year, the petroleum
refining sector shall be allocated \4/55\ of the total
quantity of allowances available for allocation to industry
under paragraph (3).
``(ii) Individual allocations.--For any year, the quantity
of allowances allocated to a petroleum refinery located in
the United States shall be the quantity equal to the product
obtained by multiplying--
``(I) the total allocation to the petroleum refining sector
under clause (i); and
``(II) the ratio that--
``(aa) the carbon content of petroleum products produced at
the refinery during the 3-year period beginning on January 1,
2004; bears to
``(bb) the carbon content of petroleum products produced at
all refineries in the United States during that period.
``(C) Natural gas processors.--
``(i) Definition of eligible natural gas processor.--In
this subparagraph, the term `eligible natural gas processor'
means a natural gas processor located in the United States
that is a regulated fuel distributor.
``(ii) Total allocation.--For each year, eligible natural
gas processors shall be allocated \2/55\ of the total
quantity of allowances available for allocation to industry
under paragraph (3).
``(iii) Individual allocations.--For any year, the quantity
of allowances allocated to an eligible natural gas processor
shall be the quantity equal to the product obtained by
multiplying--
``(I) the total allocation to eligible natural gas
processors under clause (ii); and
``(II) the ratio that--
``(aa) the sum of, for the 3-year period beginning on
January 1, 2004--
``(AA) the carbon content of natural gas liquids produced
by the eligible natural gas processor; and
``(BB) the carbon content of the natural gas delivered into
commerce by the eligible natural gas processor; bears to
``(bb) the sum of, for that period--
``(AA) the carbon content of natural gas liquids produced
by all eligible natural gas processors; and
``(BB) the carbon content of the natural gas delivered into
commerce by all eligible natural gas processors.
``(D) Electricity generators.--
``(i) Definition of eligible electricity generator.--In
this subparagraph, the term `eligible electricity generator'
means an electricity generator located in the United States
that is a fossil fuel-fired electricity generator.
``(ii) Total allocation.--For each year, eligible
electricity generators shall be allocated \30/55\ of the
total quantity of allowances available for allocation to
industry under paragraph (3).
``(iii) Individual allocations.--For any year, the quantity
of allowances allocated to an eligible electricity generator
shall be the quantity equal to the product obtained by
multiplying--
``(I) the total allocation to eligible electricity
generators under clause (ii); and
``(II) the ratio that--
``(aa) the carbon content of the fossil fuel input of the
eligible electricity generator during the 3-year period
beginning on January 1, 2004; bears to
``(bb) the total carbon content of fossil fuel input of
eligible electricity generators in the United States during
that period.
``(E) Carbon-intensive manufacturing sectors.--
``(i) Definition of eligible manufacturer.--In this
subparagraph, the term `eligible manufacturer' means a
carbon-intensive manufacturer located in the United States
that [used more than _____ during ____; need to define/
specify; need to exclude fossil fuel-fired electricity
generation].
``(ii) Total allocation.--For each year, eligible
manufacturers shall be allocated \10/55\ of the total
quantity of allowances available for allocation to industry
under paragraph (3).
``(iii) Individual allocations.--For any year, the quantity
of allowances allocated to an eligible manufacturer shall be
the quantity equal to the product obtained by multiplying--
``(I) the total allocation to eligible manufacturers under
clause (ii); and
``(II) the ratio that--
``(aa) the carbon content of fossil fuel combusted at the
eligible manufacturer during the 3-year period beginning on
January 1, 2004; bears to
``(bb) the total carbon content of fossil fuel combusted at
all eligible manufacturers in the United States during that
period.
``(F) Nonfuel regulated entities.--
``(i) Total allocation.--For each year, nonfuel regulated
entities shall be allocated \2/55\ of the total quantity of
allowances available for allocation to industry under
paragraph (3).
``(ii) Individual allocations.--For any year, the quantity
of allowances allocated to a nonfuel regulated entity shall
be the quantity equal to the product obtained by
multiplying--
``(I) the total allocation to nonfuel regulated entities
under clause (i); and
``(II) the ratio that--
``(aa) the carbon dioxide equivalent of the nonfuel-related
greenhouse gas produced or emitted by the nonfuel regulated
entity at facilities in the United States during the 3-year
period beginning on January 1, 2004; bears to
``(bb) the carbon dioxide equivalent of the nonfuel-related
greenhouse gases produced or emitted by all nonfuel regulated
entities at facilities in the United States during that
period.
``(6) Allowances to states.--
``(A) Distribution.--The allowances available for
allocation to States under paragraph (3) shall be distributed
as follows:
``(i) For each year, \1/2\ of the quantity of allowances
available for allocation to States under paragraph (3) shall
be allocated among the States based on the ratio that--
``(I) the greenhouse gas emissions of the State during the
3-year period beginning on January 1, 2004; bears to
``(II) the greenhouse gas emissions of all States for that
period.
``(ii) For each year, \1/2\ of the quantity of allowances
available for allocation to States under paragraph (3) shall
be allocated among the States based on the ratio that--
``(I) the population of the State, as determined by the
2000 decennial census; bears to
``(II) the population of all States as determined by that
census.
``(B) Use.--
``(i) In general.--During any year, a State shall use not
less than 90 percent of the allowances allocated to the State
for that year--
``(I) to mitigate impacts on low-income energy consumers;
``(II) to promote energy efficiency;
``(III) to promote investment in nonemitting electricity
generation technology;
``(IV) to encourage advances in energy technology that
reduce or sequester greenhouse gas emissions;
``(V) to avoid distortions in competitive electricity
markets;
``(VI) to mitigate obstacles to investment by new entrants
in electricity generation markets;
``(VII) to address local or regional impacts of climate
change policy, including providing assistance to displaced
workers;
``(VIII) to mitigate impacts on energy-intensive industries
in internationally-competitive markets; or
``(IX) to enhance energy security.
``(ii) Deadline.--A State shall allocate allowances for use
in accordance with clause (i) by not later than 1 year before
the beginning of each allowance allocation period.
[``(6) [POSSIBLE substitute for (6)] distribution of
allowances by president.--]
[``(A) In general.--The President shall distribute the
allowances available for allocation by the President under
paragraph (3) in a manner designed to mitigate the undue
impacts of the program under this subtitle.]

[[Page S813]]

[``(B) Use.--During any year, the President shall use not
less than 90 percent of the allowances available for
allocation by the President for that year--]
[``(i) to mitigate impacts on low-income energy consumers;]
[``(ii) to promote energy efficiency;]
[``(iii) to promote investment in nonemitting electricity
generation technology;]
[``(iv) to support advances in energy technology that
reduce or sequester greenhouse gas emissions;]
[``(v) to avoid distortions in competitive electricity
markets;]
[``(vi) to mitigate obstacles to investment by new entrants
in electricity generation markets;]
[``(vii) to address local or regional impacts of climate
change policy, including providing assistance to displaced
workers;]
[``(viii) to mitigate impacts on energy-intensive
industries in internationally-competitive markets; and]
[``(ix) to enhance energy security.]
[``(C) Deadline.--The President shall allocate allowances
for use in accordance with subparagraph (B) by not later than
1 year before the beginning of each allowance allocation
period. [Corresponding changes needed elsewhere if this
paragraph is selected.]]
``(7) Cost of allowances.--The Secretary shall distribute
allowances under this subsection at no cost to the recipient
of the allowance.
``(b) Auction of Allowances.--
``(1) In general.--The Secretary shall establish, by rule,
a procedure for the auction of a quantity of allowances
during each calendar year in accordance with paragraph (2).
``(2) Base quantity.--The base quantity of allowances to be
auctioned during a calendar year shall be the product
obtained by multiplying--
``(A) the total number of allowances for the calendar year
under subsection (a)(3) or (b)(3) of section 1613; and
``(B) the auction percentage for the calendar year under
subsection (c).
``(3) Schedule.--The auction of allowances shall be held on
the following schedule:
``(A) In 2009, the Secretary shall auction--
``(i) \1/2\ of the allowances available for auction for
2012; and
``(ii) \1/2\ of the allowances available for auction for
2013.
``(B) In 2010, the Secretary shall auction \1/2\ of the
allowances available for auction for 2014.
``(C) In 2011, the Secretary shall auction \1/2\ of the
allowances available for auction for 2015.
``(D) In 2012 and each subsequent calendar year, the
Secretary shall auction--
``(i) \1/2\ of the allowances available for auction for
that calendar year; and
``(ii) \1/2\ of the allowances available for auction for
the calendar year that is 4 years after that calendar year.
``(4) Undistributed allowances.--In an auction held during
any calendar year, the Secretary shall auction any allowance
that was--
``(A) available for allocation by the Secretary under
subsection (a) for the calendar year, but not distributed;
``(B) available during the preceding calendar year for an
agricultural sequestration or early reduction activity under
section 1620 or 1621, but not distributed during that
calendar year; or
``(C) available for distribution by a State under
subsection (a)(6), but not distributed by the date that is 1
year before the beginning of the applicable allocation
period.
``(c) Available Percentages.--Except as directed under
section 1622, the percentage of the total quantity of
allowances for each calendar year to be available for
allocation, agricultural sequestration and early reduction
projects, and auction shall be determined in accordance with
the following table:

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Percentage Allocated to Percentage Allocated to Percentage Available for Percentage Available for
Year Industry States Agricultural Sequestration Early Reduction Allowances Percentage Auctioned
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2012...................................... 55 29 5 1 10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2013...................................... 55 29 5 1 10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2014...................................... 55 29 5 1 10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2015...................................... 55 29 5 1 10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2016...................................... 55 29 5 1 10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2017...................................... 53 29 5 1 12
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2018...................................... 51 29 5 1 14
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2019...................................... 49 29 5 1 16
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2020...................................... 47 29 5 1 18
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2021...................................... 45 29 5 1 20
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2022 and thereafter....................... 2 less than allocated to 30 5 0 2 more than available for
industry in the prior year, auction in the prior year,
but not less than 0 but not more than 65
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

``SEC. 1615. SUBMISSION OF ALLOWANCES.

``(a) Requirements.--
``(1) Regulated fuel distributors.--For calendar year 2012
and each calendar year thereafter, each regulated fuel
distributor shall submit to the Secretary a number of
allowances equal to the carbon dioxide equivalent of the
quantity of covered fuel, determined in accordance with
subsection (b)(1), for the regulated fuel distributor.
``(2) Nonfuel regulated entities.--For 2012 and each
calendar year thereafter, each nonfuel regulated entity shall
submit to the Secretary a number of allowances equal to the
carbon dioxide equivalent of the quantity of nonfuel-related
greenhouse gas, determined in accordance with subsection
(b)(2), for the nonfuel regulated entity.
``(b) Regulated Quantities.--
``(1) Covered fuels.--For purposes of subsection (a)(1),
the quantity of covered fuel shall be equal to--
``(A) for a petroleum refinery located in the United
States, the quantity of petroleum products refined, produced,
or consumed at the refinery;
``(B) for a natural gas processing plant located in the
United States, a quantity equal to the sum of--
``(i) the quantity of natural gas liquids produced or
consumed at the plant; and
``(ii) the quantity of natural gas delivered into commerce
from, or consumed at, the plant;
``(C) for a coal mine located in the United States, the
quantity of coal produced or consumed at the mine; and
``(D) for an importer of coal, petroleum products, or
natural gas liquids into the United States, the quantity of
coal, petroleum products, or natural gas liquids imported
into the United States.
``(2) Nonfuel-related greenhouse gases.--For purposes of
subsection (a)(2), the quantity of nonfuel-related greenhouse
gas shall be equal to--
``(A) for a manufacturer or importer of hydrofluorocarbons,
perfluorocarbons, sulfur hexafluoride, or nitrous oxide, the
quantity of hydrofluorocarbons, perfluorocarbons, sulfur
hexafluoride, or nitrous oxide produced or imported by the
manufacturer or importer;
``(B) for an underground coal mine, the quantity of methane
emitted by the coal mine;
``(C) for a facility that manufactures adipic acid or
nitric acid, the quantity of nitrous oxide emitted by the
facility;
``(D) for an aluminum smelter, the quantity of
perfluorocarbons emitted by the smelter; and
``(E) for a facility that produces hydrochlorofluorocarbon-
22, the quantity of hydrofluorocarbon-23 emitted by the
facility.
``(3) Adjustments.--
``(A) Regulated fuel distributors.--
``(i) Modification.--The Secretary may modify, by rule, a
quantity of covered fuels under paragraph (1) if the
Secretary determines that the modification is necessary to
ensure that--
``(I) allowances are submitted for all units of covered
fuel; and

[[Page S814]]

``(II) allowances are not submitted for the same quantity
of covered fuel by more than 1 regulated fuel distributor.
``(ii) Extension.--The Secretary may extend, by rule, the
requirement to submit allowances under subsection (a)(1) to
an entity that is not a regulated fuel distributor if the
Secretary determines that the extension is necessary to
ensure that allowances are submitted for all covered fuels.
``(B) Nonfuel regulated entities.--The Secretary may
modify, by rule, a quantity of nonfuel-related greenhouse
gases under paragraph (2) if the Secretary determines the
modification is necessary to ensure that allowances are not
submitted for the same volume of nonfuel-related greenhouse
gas by more than 1 regulated entity.
``(c) Deadline for Submission.--Any entity required to
submit an allowance to the Secretary under this section shall
submit the allowance not later than March 31 of the calendar
year following the calendar year for which the allowance is
required to be submitted.
``(d) Regulations.--The Secretary shall promulgate such
regulations as the Secretary determines to be necessary or
appropriate to--
``(1) identify and register each regulated entity that is
required to submit an allowance under this section; and
``(2) require the submission of reports and otherwise
obtain any information the Secretary determines to be
necessary to calculate or verify the compliance of a
regulated entity with any requirement under this section.
``(e) Exemption Authority for Non-Fuel Regulated
Entities.--
``(1) In general.--Except as provided in paragraph (2), the
Secretary may exempt from the requirements of this subtitle
an entity that emits, manufactures, or imports nonfuel-
related greenhouse gases for any period during which the
Secretary determines, after providing an opportunity for
public comment, that measuring or estimating the quantity of
greenhouse gases emitted, manufactured, or imported by the
entity is not feasible.
``(2) Exclusion.--The Secretary may not exempt a regulated
fuel distributor from the requirements of this subtitle under
paragraph (1).
``(f) Retirement of Allowances.--
``(1) In general.--Any person or entity that is not subject
to this subtitle may submit to the Secretary an allowance for
retirement at any time.
``(2) Action by secretary.--On receipt of an allowance
under paragraph (1), the Secretary--
``(A) shall accept the allowance; and
``(B) shall not allocate, auction, or otherwise reissue the
allowance.
``(g) Submission of Credits.--A regulated entity may submit
a credit distributed by the Secretary pursuant to section
1618, 1619, or 1622(e) in lieu of an allowance.
``(h) Clean Development Mechanism Certified Emission
Reductions.--
``(1) In general.--The Secretary shall establish, by
regulation, procedures under which a regulated entity may
submit a clean development mechanism certified emission
reduction in lieu of an allowance under this section.
``(2) Clear title and prevention of double-counting.--
Procedures established by the Secretary under this subsection
shall include such provisions as the Secretary considers to
be appropriate to ensure that--
``(A) a regulated entity that submits a clean development
mechanism certified emission reduction in lieu of an
allowance has clear title to that certified emission
reduction; and
``(B) a clean development mechanism certified emission
reduction submitted in lieu of an allowance has not been and
cannot be used in the future for compliance purposes under
any foreign greenhouse gas regulatory program.
``(i) Study on Process Emissions.--
``(1) In general.--Not later than [_________], the
Secretary shall--
``(A) carry out a study of the feasibility of requiring the
submission of allowances for process emissions not otherwise
covered by this subtitle; and
``(B) submit to Congress a report that describes the
results of the study (including recommendations of the
Secretary based on those results).

``SEC. 1616. SAFETY VALVE.

``The Secretary shall accept from a regulated entity a
payment of the applicable safety valve price for a calendar
year in lieu of submission of an allowance under section 1615
for that calendar year.

``SEC. 1617. ALLOWANCE TRADING SYSTEM.

``(a) In General.--The Secretary shall--
``(1) establish, by rule, a trading system under which
allowances and credits may be sold, exchanged, purchased, or
transferred by any person or entity, including a registry for
issuing, recording, and tracking allowances and credits; and
``(2) specify all procedures and requirements required for
orderly functioning of the trading system.
``(b) Transparency.--
``(1) In general.--The trading system under subsection (a)
shall include such provisions as the Secretary considers to
be appropriate to--
``(A) facilitate price transparency and participation in
the market for allowances and credits; and
``(B) protect buyers and sellers of allowances and credits,
and the public, from the adverse effects of collusion and
other anticompetitive behaviors.
``(2) Authority to obtain information.--The Secretary may
obtain any information the Secretary considers to be
necessary to carry out this section from any person or entity
that buys, sells, exchanges, or otherwise transfers an
allowance or credit.
``(c) Banking.--Any allowance or credit may be submitted
for compliance during any year following the year for which
the allowance or credit was issued.

``SEC. 1618. CREDITS FOR FEEDSTOCKS AND EXPORTS.

``(a) In General.--The Secretary shall establish, by rule,
a program under which the Secretary distributes credits to
entities in accordance with this section.
``(b) Use of Fuels as Feedstocks.--If the Secretary
determines that an entity has used a covered fuel as a
feedstock so that the carbon dioxide associated with the
covered fuel will not be emitted, the Secretary shall
distribute to that entity, for 2012 and each subsequent
calendar year, a quantity of credits equal to the quantity of
covered fuel used as feedstock by the entity during that
year, measured in carbon dioxide equivalents.
``(c) Exporters of Covered Fuel.--If the Secretary
determines that an entity has exported covered fuel, the
Secretary shall distribute to that entity, for 2012 and each
subsequent calendar year, a quantity of credits equal to the
quantity of covered fuel exported by the entity during that
year, measured in carbon dioxide equivalents.
``(d) Other Exporters.--If the Secretary determines that an
entity has exported hydrofluorocarbons, perfluorocarbons,
sulfur hexafluoride, or nitrous oxide, the Secretary shall
distribute to that entity, for 2012 and each subsequent
calendar year, a quantity of credits equal to the volume of
hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, or
nitrous oxide exported by the entity during that year,
measured in carbon dioxide equivalents.

``SEC. 1619. CREDITS FOR OFFSET PROJECTS.

``(a) Establishment.--The Secretary shall establish, by
regulation, a program under which the Secretary shall
distribute credits to entities that carry out offset projects
in the United States that--
``(1)(A) reduce any greenhouse gas emissions that are not
covered greenhouse gas emissions; or
``(B) sequester a greenhouse gas;
``(2) meet the requirements of section 1623(c); and
``(3) are consistent with maintaining the environmental
integrity of the program under this subtitle.
``(b) Categories of Offset Projects Eligible for
Streamlined Procedures.--
``(1) In general.--The program established under this
section shall include the use of streamlined procedures for
distributing credits to categories of projects for which the
Secretary determines there are broadly-accepted standards or
methodologies for quantifying and verifying the greenhouse
gas emission mitigation benefits of the projects.
``(2) Categories of projects.--The streamlined procedures
described in paragraph (1) shall apply to--
``(A) geologic sequestration projects not involving
enhanced oil recovery;
``(B) landfill methane use projects;
``(C) animal waste or municipal wastewater methane use
projects;
``(D) projects to reduce sulfur hexafluoride emissions from
transformers;
``(E) projects to destroy hydrofluorocarbons; and
``(F) such other categories of projects as the Secretary
may specify by regulation.
``(c) Other Projects.--With respect to an offset project
that is eligible to be carried out under this section but
that is not classified within any project category described
in subsection (b), the Secretary may distribute credits on a
basis of less than 1-credit-for-1-ton.
``(d) Ineligible Offset Projects.--An offset project shall
not be eligible to receive a credit under this section if the
offset project is eligible to receive credits or allowances
under section 1618, 1620, 1621, or 1622(e).

``SEC. 1620. EARLY REDUCTION ALLOWANCES.

``(a) Establishment.--The Secretary shall establish, by
rule, a program under which the Secretary distributes to any
entity that carries out a project to reduce or sequester
greenhouse gas emissions before the initial allocation period
a quantity of allowances that reflects the actual emissions
reductions or net sequestration of the project, as determined
by the Secretary.
``(b) Available Allowances.--The total quantity of
allowances distributed under subsection (a) may not exceed
the product obtained by multiplying--
``(1) the total number of allowances issued for the
calendar year under subsection (a)(3) of section 1613; and
``(2) the percentage available for early reduction
allowances for the calendar year under section 1614(c).
``(c) Eligibility.--The Secretary may distribute allowances
for early reduction projects only to an entity that has
reported the reduced or sequestered greenhouse gas emissions
under--
``(1) the Voluntary Reporting of Greenhouse Gases Program
of the Energy Information Administration under section
1605(b) of the Energy Policy Act of 1992 (42 U.S.C.
13385(b));
``(2) the Climate Leaders Program of the Environmental
Protection Agency; or

[[Page S815]]

``(3) a State-administered or privately-administered
registry that includes early reduction actions not covered
under the programs described in paragraphs (1) and (2).

``SEC. 1621. AGRICULTURAL SEQUESTRATION PROJECTS.

``(a) Establishment.--The Secretary of Agriculture shall
establish, by rule, a program under which agricultural
sequestration allowances are distributed to entities that
carry out soil carbon sequestration projects [and other
projects?] that--
``(1) meet the requirements of section 1623(c); and
``(2) achieve sequestration results that are--
``(A) greater than sequestration results achieved pursuant
to standard agricultural practices; and
[``(B) long-term.]
``(b) Quantity.--During a calendar year, the Secretary of
Agriculture shall distribute agricultural sequestration
allowances in a quantity not greater than the product
obtained by multiplying--
``(1) the total number of allowances issued for the
calendar year under section 1613; and
``(2) the percentage of allowances available for
agricultural sequestration under section 1614(c).
``(c) Oversubscription.--If, during a calendar year, the
qualifying agricultural sequestration exceeds the quantity of
agricultural sequestration allowances available for
distribution under subsection (b), the Secretary of
Agriculture may distribute allowances on a basis of less than
1-allowance-for-1-ton.

``SEC. 1622. CONGRESSIONAL REVIEW.

``(a) Interagency Review.--
``(1) In general.--Not later than January 15, 2016, and
every 5 years thereafter, the President shall establish an
interagency group to review and make recommendations relating
to--
``(A) each program under this subtitle; and
``(B) any similar program of a foreign country described in
paragraph (2).
``(2) Countries to be reviewed.--An interagency group
established under paragraph (1) shall review actions and
programs relating to greenhouse gas emissions of--
``(A) each member country (other than the United States) of
the Organisation for Economic Co-operation and Development;
``(B) China;
``(C) India;
``(D) Brazil;
``(E) Mexico;
``(F) Russia; and
``(G) Ukraine.
``(3) Inclusions.--A review under paragraph (1) shall--
``(A) for the countries described in paragraph (2), analyze
whether the countries that are the highest emitting countries
and, collectively, contribute at least 75 percent of the
total greenhouse gas emissions of those countries have taken
action that--
``(i) in the case of member countries of the Organisation
for Economic Co-Operation and Development, is comparable to
that of the United States; and
``(ii) in the case of China, India, Brazil, Mexico, Russia,
and Ukraine, is significant, contemporaneous, and equitable
compared to action taken by the United States;
``(B) analyze whether each of the 5 largest trading
partners of the United States, as of the date on which the
review is conducted, has taken action with respect to
greenhouse gas emissions that is comparable to action taken
by the United States;
``(C) analyze whether the programs established under this
subtitle have contributed to an increase in electricity
imports from Canada or Mexico; and
``(D) make recommendations with respect to whether--
``(i) the rate of reduction of emissions intensity under
subsection (a)(2) or (b)(2) of section 1613 should be
modified; and
``(ii) the rate of increase of the safety valve price
should be modified.
``(4) Supplementary review elements.--A review under
paragraph (1) may include an analysis of--
``(A) the feasibility of regulating owners or operators of
entities that--
``(i) emit nonfuel-related greenhouse gases; and
``(ii) that are not subject to this subtitle;
``(B) whether the percentage of allowances for any calendar
year that are auctioned under section 1614(c) should be
modified;
``(C) whether regulated entities should be allowed to
submit credits issued under foreign greenhouse gas regulatory
programs in lieu of allowances under section 1615;
``(D) whether the Secretary should distribute credits for
offset projects carried out outside the United States that do
not receive credit under a foreign greenhouse gas program;
and
``(E) whether and how the value of allowances or credits
banked for use during a future year should be discounted if
an acceleration in the rate of increase of the safety valve
price is recommended under paragraph (3)(D)(ii).
``(5) National research council reports.--The President may
request such reports from the National Research Council as
the President determines to be necessary and appropriate to
support the interagency review process under this subsection.
``(b) Report.--
``(1) In general.--Not later than January 15, 2017, and
every 5 years thereafter, the President shall submit to the
House of Representatives and the Senate a report describing
any recommendation of the President with respect to changes
in the programs under this subtitle.
``(2) Recommendations.--A recommendation under paragraph
(1) shall take into consideration the results of the most
recent interagency review under subsection (a).
``(c) Congressional Action.--
``(1) Consideration.--Not later than September 30 of any
calendar year during which a report is to be submitted under
subsection (b), the House of Representatives and the Senate
may consider a joint resolution, in accordance with paragraph
(2), that--
``(A) amends subsection (a)(2) or (b)(2) of section 1613;
``(B) modifies the safety valve price; or
``(C) modifies the percentage of allowances to be allocated
under section 1614(c).
``(2) Requirements.--A joint resolution considered under
paragraph (1) shall--
``(A) be introduced during the 45-day period beginning on
the date on which a report is required to be submitted under
subsection (b); and
``(B) after the resolving clause and `That', contain only 1
or more of the following:
``(i) `, effective beginning January 1, 2017, section
1613(a)(2) of the Energy Policy Act of 1992 is amended by
striking ``2.6'' and inserting ``_____''.'.
``(ii) `, effective beginning _____, section 1613(b)(2) of
the Energy Policy Act of 1992 is amended by striking ``3.0''
and inserting ``_____''.'.
``(iii) `, effective beginning _____, section 1612(13)(B)
of the Energy Policy Act of 1992 is amended by striking ``5
percent'' and inserting ``___ percent''.'.
``(iv) `the table under section 1614(c) of the Energy
Policy Act of 1992 is amended by striking the line relating
to calendar year 2022 and thereafter and inserting the
following:

``(3) Applicable law.--Subsections (b) through (g) of
section 802 of title 5, United States Code, shall apply to
any joint resolution under this subsection.
``(d) Foreign Credits.--
``(1) Regulations.--After taking into consideration the
initial interagency review under section (a), the Secretary
may promulgate regulations that authorize regulated entities
to submit credits issued under foreign greenhouse gas
regulatory programs in lieu of allowances under section 1615.
``(2) Comparable programs and prevention of double-
counting.--Regulations promulgated by the Secretary under
paragraph (1) shall ensure that foreign credits submitted in
lieu of allowances are--
``(A) from foreign greenhouse gas regulatory programs that
the Secretary determines to have a level of environmental
integrity that is not less than the level of environmental
integrity of the programs under this subtitle; and
``(B) not also submitted for use in achieving compliance
under any foreign greenhouse gas regulatory program.
``(e) International Offsets Projects.--
``(1) Action by the secretary.--After taking into
consideration the results of the initial interagency review
under section (a), the Secretary may promulgate regulations
establishing a program under which the Secretary distributes
credits to entities that--
``(A) carry out offset projects outside the United States
that meet the requirements of section 1623(c);
``(B) maintain the environment integrity of the program
under this subtitle; and
``(C) do not receive credits issued under a foreign
greenhouse gas regulatory program.
``(2) Streamlined procedures and prevention of double-
counting.--Regulations promulgated by the Secretary under the
paragraph (1) shall--
``(A) have streamlined procedures for distributing credits
to projects for which the Secretary determines there are
broadly-accepted standards or methodologies for quantifying
and verifying the greenhouse gas emission mitigation benefits
of the projects; and
``(B) ensure that offset project reductions credited under
the program are not also credited under foreign programs.

``SEC. 1623. MONITORING AND REPORTING.

``(a) In General.--The Secretary shall require, by rule,
that a regulated entity shall

[[Page S816]]

perform such monitoring and submit such reports as the
Secretary determines to be necessary to carry out this
subtitle.
``(b) Submission of Information.--The Secretary shall
establish, by rule, any procedure the Secretary determines to
be necessary to ensure the completeness, consistency,
transparency, and accuracy of reports under subsection (a),
including--
``(1) accounting and reporting standards for covered
greenhouse gas emissions;
``(2) standardized methods of calculating covered
greenhouse gas emissions in specific industries from other
information the Secretary determines to be available and
reliable, such as energy consumption data, materials
consumption data, production data, or other relevant activity
data;
``(3) if the Secretary determines that a method described
in paragraph (2) is not feasible for a regulated entity, a
standardized method of estimating covered greenhouse gas
emissions of the regulated entity;
``(4) a method of avoiding double counting of covered
greenhouse gas emissions;
``(5) a procedure to prevent a regulated entity from
avoiding the requirements of this subtitle by--
``(A) reorganization into multiple entities; or
``(B) outsourcing the operations or activities of the
regulated entity with respect to covered greenhouse gas
emissions; and
``(6) a procedure for the verification of data relating to
covered greenhouse gas emissions by--
``(A) regulated entities; and
``(B) independent verification organizations.
``(c) Determining Eligibility for Credits, Agricultural
Sequestration Allowances, and Early Reduction Allowances.--
``(1) In general.--An entity shall provide the Secretary
with the information described in paragraph (2) in connection
with any application to receive--
``(A) a credit under section 1618, 1619, or 1622(e);
``(B) an early reduction allowance under section 1620
(unless, and to the extent that, the Secretary determines
that providing the information would not be feasible for the
entity); or
``(C) an agricultural sequestration allowance under section
1621.
``(2) Required information.--
``(A) Greenhouse gas emissions reduction.--In the case of a
greenhouse gas emissions reduction, the entity shall provide
the Secretary with information verifying that, as determined
by the Secretary--
``(i) the entity has achieved an actual reduction in
greenhouse gas emissions--
``(I) relative to historic emissions levels of the entity;
and
``(II) taking into consideration any increase in other
greenhouse gas emissions of the entity; and
``(ii) if the reduction exceeds the net reduction of direct
greenhouse gas emissions of the entity, the entity reported a
reduction that was adjusted so as not to exceed the net
reduction.
``(B) Greenhouse gas sequestration.--In the case of a
greenhouse gas sequestration, the entity shall provide the
Secretary with information verifying that, as determined by
the Secretary, the entity has achieved actual increases in
net sequestration, taking into account the total use of
materials and energy by the entity in carrying out the
sequestration.

``SEC. 1624. ENFORCEMENT.

``(a) Failure to Submit Allowances.--
``(1) Payment to secretary.--A regulated entity that fails
to submit an allowance (or the safety valve price in lieu of
an allowance) for a calendar year not later than March 31 of
the following calendar year shall pay to the Secretary, for
each allowance the regulated entity failed to submit, an
amount equal to the product obtained by multiplying--
``(A) the safety valve price for that calendar year; and
``(B) 3.
``(2) Failure to pay.--A regulated entity that fails to
make a payment to the Secretary under paragraph (1) by
December 31 of the calendar year following the calendar year
for which the payment is due shall be subject to subsection
(b) or (c), or both.
``(b) Civil Enforcement.--
``(1) Penalty.--A person that the Secretary determines to
be in violation of this subtitle shall be subject to a civil
penalty of not more than $25,000 for each day during which
the entity is in violation, in addition to any amount
required under subsection (a)(1).
``(2) Injunction.--The Secretary may bring a civil action
for a temporary or permanent injunction against any person
described in paragraph (1).
``(c) Criminal Penalties.--A person that willfully fails to
comply with this subtitle shall be subject to a fine under
title 18, United States Code, or imprisonment for not to
exceed 5 years, or both.

``SEC. 1625. JUDICIAL REVIEW.

``(a) In General.--Except as provided in subsection (b),
section 336(b) of the Energy Policy and Conservation Act (42
U.S.C. 6306(b)) shall apply to a review of any rule issued
under this subtitle in the same manner, and to the same
extent, that section applies to a rule issued under sections
323, 324, and 325 of that Act (42 U.S.C. 6293, 6294, 6295).
``(b) Exception.--A petition for review of a rule under
this subtitle shall be filed in the United States Court of
Appeals for the District of Columbia.

``SEC. 1626. ADMINISTRATIVE PROVISIONS.

``(a) Rules and Orders.--The Secretary may issue such rules
and orders as the Secretary determines to be necessary or
appropriate to carry out this subtitle.
``(b) Data.--
``(1) In general.--In carrying out this subtitle, the
Secretary may use any authority provided under section 11 of
the Energy Supply and Environmental Coordination Act of 1974
(15 U.S.C. 796).
``(2) Definition of energy information.--For the purposes
of carrying out this subtitle, the definition of the term
`energy information' under section 11 of the Energy Supply
and Environmental Coordination Act of 1974 (15 U.S.C. 796)
shall be considered to include any information the Secretary
determines to be necessary or appropriate to carry out this
subtitle.

``SEC. 1627. EARLY TECHNOLOGY DEPLOYMENT.

``(a) Trust Fund.--
``(1) Establishment.--There is established in the Treasury
a trust fund, to be known as the `Climate Change Trust Fund'
(referred to in this section as the `Trust Fund').
``(2) Deposits.--The Secretary shall deposit into the Trust
Fund any funds received by the Secretary under section
1614(b) or 1616.
``(3) Maximum cumulative amount.--Not more than
$50,000,000,000 may be deposited into the Trust Fund.
``(b) Distribution.--Beginning in fiscal year 2010, the
Secretary shall transfer any funds deposited into the Trust
Fund during the previous fiscal year as follows:
``(1) Zero- or low-carbon energy technologies.--50 percent
of the funds shall be transferred to the Secretary to carry
out the zero- or low-carbon energy technologies program under
subsection (c).
``(2) Advanced energy technologies incentive program.--35
percent of the funds shall be transferred as follows:
``(A) Advanced coal technologies.--28 percent shall be
transferred to the Secretary to carry out the advanced coal
and sequestration technologies program under subsection (d).
``(B) Cellulosic biomass.--7 percent shall be transferred
to the Secretary to carry out--
``(i) the cellulosic biomass ethanol and municipal solid
waste loan guarantee program under section 212(b) of the
Clean Air Act (42 U.S.C. 7546(b));
``(ii) the cellulosic biomass ethanol conversion assistance
program under section 212(e) of that Act (42 U.S.C. 7546(e));
and
``(iii) the fuel from cellulosic biomass program under
subsection (e).
``(3) Advanced technology vehicles.--15 percent shall be
transferred to the Secretary to carry out the advanced
technology vehicles manufacturing incentive program under
subsection (f).
``(c) Zero- or Low-Carbon Energy Technologies Deployment.--
``(1) Definitions.--In this subsection:
``(A) Energy savings.--The term `energy savings' means
megawatt-hours of electricity or million British thermal
units of natural gas saved by a product, in comparison to
projected energy consumption under the energy efficiency
standard applicable to the product.
``(B) High-efficiency consumer product.--The term `high-
efficiency consumer product' means a covered product to which
an energy conservation standard applies under section 325 of
the Energy Policy and Conservation Act (42 U.S.C. 6295), if
the energy efficiency of the product exceeds the energy
efficiency required under the standard.
``(C) Zero- or low-carbon generation.--The term `zero- or
low-carbon generation' means generation of electricity by an
electric generation unit that--
``(i) emits no carbon dioxide into the atmosphere, or is
fossil-fuel fired and emits into the atmosphere not more than
250 pounds of carbon dioxide per megawatt-hour (after
adjustment for any carbon dioxide from the unit that is
geologically sequestered); and
``(ii) was placed into commercial service after the date of
enactment of this Act.
``(2) Financial incentives program.--During each fiscal
year beginning on or after October 1, 2008, the Secretary
shall competitively award financial incentives under this
subsection in the following technology categories:
``(A) Production of electricity from new zero- or low-
carbon generation.
``(B) Manufacture of high-efficiency consumer products.
``(3) Requirements.--
``(A) In general.--The Secretary shall make awards under
this subsection to producers of new zero- or low-carbon
generation and to manufacturers of high-efficiency consumer
products--
``(i) in the case of producers of new zero- or low-carbon
generation, based on the bid of each producer in terms of
dollars per megawatt-hour of electricity generated; and
``(ii) in the case of manufacturers of high-efficiency
consumer products, based on the bid of each manufacturer in
terms of dollars per megawatt-hour or million British thermal
units saved.
``(B) Acceptance of bids.--
``(i) In general.--In making awards under this subsection,
the Secretary shall--
``(I) solicit bids for reverse auction from appropriate
producers and manufacturers, as determined by the Secretary;
and
``(II) award financial incentives to the producers and
manufacturers that submit the

[[Page S817]]

lowest bids that meet the requirements established by the
Secretary.
``(ii) Factors for conversion.--
``(I) In general.--For the purpose of assessing bids under
clause (i), the Secretary shall specify a factor for
converting megawatt-hours of electricity and million British
thermal units of natural gas to common units.
``(II) Requirement.--The conversion factor shall be based
on the relative greenhouse gas emission benefits of
electricity and natural gas conservation.
``(C) Ineligible units.--A new unit for the generation of
electricity that uses renewable energy resources shall not be
eligible to receive an award under this subsection if the
unit receives renewable energy credits under a Federal
renewable portfolio standard.
``(4) Forms of awards.--
``(A) Zero- and low-carbon generators.--An award for zero-
or low-carbon generation under this subsection shall be in
the form of a contract to provide a production payment for
each year during the first 10 years of commercial service of
the generation unit in an amount equal to the product
obtained by multiplying--
``(i) the amount bid by the producer of the zero- or low-
carbon generation; and
``(ii) the megawatt-hours estimated to be generated by the
zero- or low-carbon generation unit each year.
``(B) High-efficiency consumer products.--An award for a
high-efficiency consumer product under this subsection shall
be in the form of a lump sum payment in an amount equal to
the product obtained by multiplying--
``(i) the amount bid by the manufacturer of the high-
efficiency consumer product; and
``(ii) the energy savings during the projected useful life
of the high-efficiency consumer product, not to exceed 10
years, as determined under rules issued by the Secretary.
``(d) Advanced Coal and Sequestration Technologies
Program.--
``(1) Advanced coal technologies.--
``(A) Definition of advanced coal generation technology.--
In this paragraph, the term `advanced coal generation
technology' means integrated gasification combined cycle or
other advanced coal-fueled power plant technologies that--
``(i) have a minimum of 50 percent coal heat input on an
annual basis;
``(ii) provide a technical pathway for carbon capture and
storage; and
``(iii) provide a technical pathway for co-production of a
hydrogen slip-stream.
``(B) Deployment incentives.--
``(i) In general.--The Secretary shall use \1/2\ of the
funds provided to carry out this subsection during each
fiscal year to provide Federal financial incentives to
facilitate the deployment of not more than 20 gigawatts of
advanced coal generation technologies.
``(ii) Administration.--In providing incentives under
clause (i), the Secretary shall--
``(I) provide appropriate incentives for regulated
investor-owned utilities, municipal utilities, electric
cooperatives, and independent power producers, as determined
by the Secretary; and
``(II) ensure that a range of the domestic coal types is
employed in the facilities that receive incentives under this
subparagraph.
``(C) Funding priorities.--
``(i) Projects using certain coals.--In providing
incentives under this paragraph, the Secretary shall set
aside not less than 25 percent of any funds made available to
carry out this paragraph for projects using lower rank coals,
such as subbituminous coal and lignite.
``(ii) Sequestration activities.--After the Secretary has
made awards for 2000 megawatts of capacity under this
paragraph, the Secretary shall give priority to projects that
will capture and sequester emissions of carbon dioxide, as
determined by the Secretary.
``(D) Distribution of funds.--A project that receives an
award under this paragraph may elect 1 of the following
Federal financial incentives:
``(i) A loan guarantee under section 1403(b).
``(ii) A cost-sharing grant for not more than 50 percent of
the cost of the project.
``(iii) Production payments of not more than 1.5 cents per
kilowatt-hour of electric output during the first 10 years of
commercial service of the project.
``(E) Limitation.--A project may not receive an award under
this subsection if the project receives an award under
subsection (c).
``(2) Sequestration.--
``(A) In general.--The Secretary shall use \1/2\ of the
funds provided to carry out this subsection during each
fiscal year for large-scale geologic carbon storage
demonstration projects that use carbon dioxide captured from
facilities for the generation of electricity using coal
gasification or other advanced coal combustion processes,
including facilities that receive assistance under paragraph
(1).
``(B) Project capital and operating costs.--The Secretary
shall provide assistance under this paragraph to reimburse
the project owner for a percentage of the incremental project
capital and operating costs of the project that are
attributable to carbon capture and sequestration, as the
Secretary determines to be appropriate.
``(e) Fuel From Cellulosic Biomass.--
``(1) In general.--The Secretary shall provide deployment
incentives under this subsection to encourage a variety of
projects to produce transportation fuels from cellulosic
biomass, relying on different feedstocks in different regions
of the United States.
``(2) Project eligibility.--Incentives under this paragraph
shall be provided on a competitive basis to projects that
produce fuels that--
``(A) meet United States fuel and emissions specifications;
``(B) help diversify domestic transportation energy
supplies; and
``(C) improve or maintain air, water, soil, and habitat
quality.
``(3) Incentives.--Incentives under this subsection may
consist of--
``(A) additional loan guarantees under section 1403(b) for
the construction of production facilities and supporting
infrastructure; or
``(B) production payments through a reverse auction in
accordance with paragraph (4).
``(4) Reverse auction.--
``(A) In general.--In providing incentives under this
subsection, the Secretary shall--
``(i) prescribe rules under which producers of fuel from
cellulosic biomass may bid for production payments under
paragraph (3)(B); and
``(ii) solicit bids from producers of different classes of
transportation fuel, as the Secretary determines to be
appropriate.
``(B) Requirement.--The rules under subparagraph (A) shall
require that incentives shall be provided to the producers
that submit the lowest bid (in terms of cents per gallon) for
each class of transportation fuel from which the Secretary
solicits a bid.
``(f) Advanced Technology Vehicles Manufacturing Incentive
Program.--
``(1) Definitions.--In this subsection:
``(A) Advanced lean burn technology motor vehicle.--The
term `advanced lean burn technology motor vehicle' means a
passenger automobile or a light truck with an internal
combustion engine that--
``(i) is designed to operate primarily using more air than
is necessary for complete combustion of the fuel;
``(ii) incorporates direct injection; and
``(iii) achieves at least 125 percent of the 2002 model
year city fuel economy of vehicles in the same size class as
the vehicle.
``(B) Advanced technology vehicle.--The term `advanced
technology vehicle' means a light duty motor vehicle that--
``(i) is a hybrid motor vehicle or an advanced lean burn
technology motor vehicle; and
``(ii) meets the following performance criteria:
``(I) Except as provided in paragraph (3)(A)(ii), the Tier
II Bin 5 emission standard established in regulations
prescribed by the Administrator of the Environmental
Protection Agency under section 202(i) of the Clean Air Act
(42 U.S.C. 7521(i)), or a lower numbered bin.
``(II) At least 125 percent of the base year city fuel
economy for the weight class of the vehicle.
``(C) Engineering integration costs.--The term `engineering
integration costs' includes the cost of engineering tasks
relating to--
``(i) incorporating qualifying components into the design
of advanced technology vehicles; and
``(ii) designing new tooling and equipment for production
facilities that produce qualifying components or advanced
technology vehicles.
``(D) Hybrid motor vehicle.--The term `hybrid motor
vehicle' means a motor vehicle that draws propulsion energy
from onboard sources of stored energy that are--
``(i) an internal combustion or heat engine using
combustible fuel; and
``(ii) a rechargeable energy storage system.
``(E) Qualifying components.--The term `qualifying
components' means components that the Secretary determines to
be--
``(i) specially designed for advanced technology vehicles;
and
``(ii) installed for the purpose of meeting the performance
requirements of advanced technology vehicles.
``(2) Manufacturer facility conversion awards.--The
Secretary shall provide facility conversion funding awards
under this subsection to automobile manufacturers and
component suppliers to pay 30 percent of the cost of--
``(A) re-equipping or expanding an existing manufacturing
facility to produce--
``(i) qualifying advanced technology vehicles; or
``(ii) qualifying components; and
``(B) engineering integration of qualifying vehicles and
qualifying components.
``(3) Period of availability.--
``(A) Phase i.--
``(i) In general.--An award under paragraph (2) shall apply
to--
``(I) facilities and equipment placed in service before
January 1, 2016; and
``(II) engineering integration costs incurred during the
period beginning on the date of enactment of this Act and
ending on December 31, 2015.
``(ii) Transition standard for light duty diesel-powered
vehicles.--For purposes of making an award under clause (i),
the term `advanced technology vehicle' includes a diesel-
powered or diesel-hybrid light duty vehicle that--
``(I) has a weight greater than 6,000 pounds; and
``(II) meets the Tier II Bin 8 emission standard
established in regulations prescribed by the Administrator of
the Environmental Protection Agency under section 202(i) of
the Clean Air Act (42 U.S.C. 7521(i)), or a lower numbered
bin.
``(B) Phase ii.--If the Secretary determines under
paragraph (4) that the program under

[[Page S818]]

this subsection has resulted in a substantial improvement in
the ability of automobile manufacturers to produce light duty
vehicles with improved fuel economy, the Secretary shall
continue to make awards under paragraph (2) that shall apply
to--
``(i) facilities and equipment placed in service before
January 1, 2021; and
``(ii) engineering integration costs incurred during the
period beginning on January 1, 2016, and ending on December
31, 2020.
``(4) Determination of improvement.--
``(A) In general.--Not later than January 1, 2015, the
Secretary shall determine, after providing notice and an
opportunity for public comment, whether the program under
this subsection has resulted in a substantial improvement in
the ability of automobile manufacturers to produce light duty
vehicles with improved fuel economy.
``(B) Effect on manufacturers.--In preparing the
determination under subparagraph (A), the Secretary shall
enter into an agreement with the National Academy of Sciences
to analyze the effect of the program under this subsection on
automobile manufacturers.

``SEC. 1628. EFFECT OF SUBTITLE.

``Nothing in this subtitle affects the authority of
Congress to limit, terminate, or change the value of an
allowance or credit issued under this subtitle.''.

Mr. BINGAMAN. Madam President, I yield the floor.
The PRESIDING OFFICER. The Senator from Alabama is recognized.

Amendments Nos. 106, 107, and 108 En Bloc

Mr. SESSIONS. Madam President, I would like to share a few thoughts
in the form of an overview of our wage situation in the United States
and to discuss some things that I think we can do to improve that
situation. I would agree that wages are too low for middle-class and
lower income workers. They have not kept pace with business profits or
with CEO salaries, for example. They have fallen behind. They have
fallen behind the profits and bonuses and things of that nature. I
believe it is a serious problem. I know the experts tell us--and there
is some truth to the fact--that salary increases tend to lag behind
business growth and profits. As the profits go up, the first year the
bonuses and the salaries don't keep up with it, but they argue that as
time goes by, they do make a rise, and we should, therefore, remember
that.
There is some historical truth to that argument, there is no doubt
about it. But, frankly, it doesn't satisfy me at this point of the
issue. It is particularly so to me because the unemployment in our
country has been falling and is still so low. I think it is 4.5 percent
nationally. It was recently 3.2 percent in my home State of Alabama--
the lowest we have ever had. I am excited about that. Why aren't wages,
then, for our lower skilled people, our poorer people, our young
people, our minority workers--why aren't those wages beginning to
increase in a noticeable way? Why aren't they keeping pace, and what
can we do about it?
Senator Kennedy's theory and his argument is pretty clear and simple,
as his normally are--and direct. He argues that we should have the
Government fix it. Just have the Government set the wage. That is an
easy answer. Have wage and price controls. Well, at least wage
controls. Set it. Just have the Government order this, dictate it, and
we will just make it go that way.
I will admit that we have had minimum wage laws for quite some time,
and although in pure theory they are outside the free market agenda
that I usually follow, I have voted for minimum wage increases a number
of times. That is just a part of the way we do things here, and the way
we have done them for quite a number of years. I would hope maybe to
vote for this bill.
But let's talk about it more seriously. What we want is higher wages
for all Americans. I think a better approach to achieving that in the
long run is to examine our policies to see why market forces are not
driving up wages. What is the problem? Are there some political,
governmental structures at work that are causing wages not to increase
sufficiently? There is one issue that is suppressing wages that I am
absolutely confident is unfair, and I believe undisputed and
undeniable. No, it is not that some free market purists don't want
wages to go up. That is not my problem. I think the problem is this:
The problem is an excessive flow of low-skilled immigrant workers into
our country in such large numbers that it has stultified and eliminated
the growth that would have occurred for low-skilled American workers. I
wish that weren't so, but I believe the numbers are quite clear on it.
In any number of different ways we can see that this has occurred.
So I will be offering an amendment as part of this bill, one that
deals with workplace enforcement and what we can do to make the
workplace such that American workers are not competing with low-
skilled, illegal immigrants in the workforce. We are receiving 1
million immigrants legally in our country today and more than half that
many coming in illegally every year. So the competition American
workers face from illegal laborers is a serious problem that affects
their wages.
If you bring in a huge amount of wheat, you bring a huge amount of
cotton, you bring in a huge amount of corn, you can expect those prices
to fall. If you bring in exceedingly large amounts of low-skilled
labor, you can expect the wages of low-skilled Americans to follow. I
don't know where our free marketeers are on that, but I can tell you
that is a fact. It is working against the interests of American
workers.

Professor Borjas at Harvard, who has written perhaps the most
authoritative book on immigration--himself an immigrant--has concluded
that he believes the wages of the lowest-skilled American workers, high
school dropouts, have been impacted negatively by 8 percent as a result
of our current immigration policies.
I will share with our colleagues an article from the Wall Street
Journal, this journal of free market economics, which I venerate and
respect so much. I will not go into the detail today, but I will share
briefly the gist of that front-page article from the last week or 10
days.
The article featured a chicken plant in Georgia. A large number of
those workers were found to be illegal. They lost their jobs. According
to the Wall Street Journal, the businesses got together and started
running ads in the paper offering better than a $1-an-hour increase
over the wages they had been paid. They offered transportation from
nearby towns for people who would take the jobs. They said people could
live onsite in dormitories and work there. What does that say? That was
$1 an hour-plus per worker wage increase without governmental
intervention. In fact, it was governmental action to enforce the
established laws of our country with regard to immigration.
I suggest ending illegal immigration, creating workplace enforcement
that actually works, limiting the number of people who come to our
country illegally, emphasizing higher skilled workers. Frankly, if it
is impacting adversely our low-skilled workers' salaries, maybe we are
bringing in too many low-skilled workers.
Education is a factor for immigration, whether a person would speak
English and basically follow the Canadian model of a system which
focuses on what is in Canada's best interests. Likewise, we should do
that in the United States. We should also consider what the Labor
Department says is needed in our country.
I have another proposal that I will shock my colleagues with. We
could give the average low-to-middle income worker, a family man or
woman, almost a $1-an-hour raise without any increase in taxes. How
would we do that? In the way we administer the earned-income tax
credit. The earned-income tax credit was passed many years ago.
President Nixon was involved in it, Milton Friedman supported it. It
was supposed to be an incentive to Americans to work and not be on
welfare; to go out and work and to give benefits to people who were
working as opposed to people who were not working. It made a lot of
sense. It was supposed to incentivize work.
I am not sure how well it works. It has been criticized. But it has
no possibility of achieving its primary goal, which was to incentivize
work, the way it is presently being administered. The way it is
administered now, a worker who falls in the category of earned-income
tax credit, files his income tax return next April, May or March,
whenever he gets his papers together, and gets an average of a $1,700
tax credit from the U.S. Treasury. I submit that worker does not
understand or have any real comprehension of the fact that the tax
credit incentivizes work. It is not connected to his work.
We ought to reconnect the earned-income tax credit to the workplace.
The

[[Page S819]]

way we do that is the way it is now authorized under law--it can be
done this way, but it is not being done this way--and that is to put it
on the paycheck. And $1,700 per year is a $1-an-hour increase in the
take-home pay of low-wage workers in America. They could take that
money home every week with their paycheck, they could appreciate their
jobs much better and they could be more prideful of that paycheck they
take home and have more incentive to continue to work.
To me, that is something we should have done a long time ago. I have
talked about it for quite a number years. We have not made a serious
advancement toward accomplishing it. Some think it could cause more
fraud, but I don't think it would. Some think it would cause more
people to take advantage of the earned income tax credit because some
people probably don't ask for it on the tax returns, but I don't think
that is particularly a noble thing to say, that a person who is
entitled to it, you hope they don't apply and get it because it would
cost the Treasury some dollars. We would be better off to put that in
the paycheck. I would like to see us do that. We need to move in that
direction.
Finally, one of the great tragedies we are facing as a nation is that
we are not saving enough. We need to do a better job of increasing
savings in America. I prepared legislation, creating Plus Accounts,
that would be a lifetime universal savings plan for every American
worker, similar to the Federal Thrift Savings Plan for Federal
employees.
On top of Social Security--not taking money from Social Security but
on top of it as an individual plan--an account that individual
Americans would own. It would be within their grasp.
Half of the American workers work at a company that does not have a
savings plan. Of the half that do, 17 million choose not to
participate. One more startling statistic, very startling in light of
today's volatile labor market. By the age of 35, the average American
worker has held nine jobs.
I sat by a gentleman on the plane yesterday. He was 37. He now has a
job with the U.S. Civil Service. He is so happy about signing up for
the Thrift Plan. I asked him about his previous savings. He had two
children, 37 years old. He said, I didn't save much. He had had nine
jobs himself. A lot of companies do not have a savings plan. For those
that do, maybe you have to work 2 years or a year before you can
participate. If you did participate and you change jobs, maybe it is
only $500; maybe it is $1,000 or $1,500. And when you change jobs, they
cash it in and pay the penalty, figuring it will not amount to much.

But if every American at every paycheck could know that a small
percentage of that money was going into an account with their name on
it, they would be subject to the magical powers of compound interest
and that at age 65 they could have a very substantial nest egg to
supplement their Social Security, they would feel better about their
work. My plan would say you are given a number at birth. The Government
would open the account with a deposit at birth for every child. And
every job a person takes, the employee would put in 1 percent, the
employer would put in 1 percent at a low-fee managed fund that would
allow for conservative investments. If you put in $1,000 at birth, if
you went to work and your employer put in 1 percent and you put in 3
percent at median income in America, $46,000 a year for a family, that
person would retire with half a million in the bank. We have to create
a system so it is easy for working Americans, low-income people who are
changing jobs regularly, who find themselves with two or three kids at
age 35 with nothing saved. That is an American tragedy when they could,
literally, easily retire with half a million in their own name, in
their own account.
These are some things we ought to talk about. Yes, I look forward to
a bill that Senator Enzi approves--if he approves it, I probably will.
If he approves this bill, I will vote for it. But fundamentally we have
more to do for low-income workers in America who are not keeping pace,
in my view, at the rate we would like to see.
We should create an immigration system that does not subject them to
floods of imports. Let's create a savings system they can be proud of
and adjust our earned-income tax credit so they can get a $1-an-hour
pay raise. If we do some of those things, we will be touching a lot of
people in a very special way.
I ask unanimous consent for the purposes of offering my amendments,
the pending amendment be set aside and I be allowed to offer three
amendments, en bloc.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report.
The legislative clerk read as follows:

The Senator from Alabama [Mr. Sessions] proposes amendments
numbered 106, 107 and 108 en bloc.

The amendments (No. 106, 107 and 108) are as follows:

amendment no. 106

(Purpose: To express the sense of the Senate that increasing personal
savings is a necessary step toward ensuring the economic security of
all the people of the United States upon retirement)

At the appropriate place, insert the following:

SEC. __. SENSE OF THE SENATE CONCERNING PERSONAL SAVINGS.

(a) Findings.--The Senate finds that--
(1) the personal saving rate in the United States is at its
lowest point since the Great Depression, with the rate having
fallen into negative territory;
(2) the United States ranks at the bottom of the Group of
Twenty (G-20) nations in terms of net national saving rate;
(3) approximately half of all the working people of the
United States work for an employer that does not offer any
kind of retirement plan;
(4) existing savings policies enacted by Congress provide
limited incentives to save for low- and moderate-income
families; and
(5) the critically-important Social Security program was
never intended by Congress to be the sole source of
retirement income.
(b) Sense of the Senate.--It is the sense of the Senate
that--
(1) there is a need for simple, easily-accessible and
productive savings vehicles for all the people of the United
States;
(2) it is important to begin retirement saving as early as
possible to take full advantage of the power of compound
interest;
(3) regularly contributing money to a financially-sound
investment account is effective in achieving one's retirement
goals; and
(4) Congress should actively develop policies to enhance
personal savings for retirement.

amendment no. 107

(Purpose: To impose additional requirements to ensure greater use of
the advance payment of the earned income credit and to extend such
advance payment to all taxpayers eligible for the credit)

At the appropriate place insert the following:

SEC. __. ADDITIONAL REQUIREMENTS TO ENSURE GREATER USE OF
ADVANCE PAYMENT OF EARNED INCOME CREDIT.

Not later than January 1, 2010, the Secretary of the
Treasury by regulation shall require--
(1) each employer of an employee who the employer
determines receives wages in an amount which indicates that
such employee would be eligible for the earned income credit
under section 32 of the Internal Revenue Code of 1986 to
provide such employee with a simplified application for an
earned income eligibility certificate, and
(2) require each employee wishing to receive the earned
income tax credit to complete and return the application to
the employer within 30 days of receipt.

Such regulations shall require an employer to provide such an
application within 30 days of the hiring date of an employee
and at least annually thereafter. Such regulations shall
further provide that, upon receipt of a completed form, an
employer shall provide for the advance payment of the earned
income credit as provided under section 3507 of the Internal
Revenue Code of 1986.

SEC. __. EXTENSION OF ADVANCE PAYMENT OF EARNED INCOME CREDIT
TO ALL ELIGIBLE TAXPAYERS.

(a) In General.--Section 3507(b) of the Internal Revenue
Code of 1986 (relating to earned income eligibility
certificate) is amended by striking paragraph (2) and by
redesignating paragraphs (3) and (4) as paragraphs (2) and
(3), respectively.
(b) Conforming Amendments.--
(1) Section 3507(c)(2)(B) of the Internal Revenue Code of
1986 is amended by inserting ``has 1 or more qualifying
children and'' before ``is not married,''.
(2) Section 3507(c)(2)(C) of such Code is amended by
striking ``the employee'' and inserting ``an employee with 1
or more qualifying children''.
(3) Section 3507(f) of such Code is amended by striking
``who have 1 or more qualifying children and''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2007.

amendment no. 108

(Purpose: To authorize the Secretary of the Treasury to study the costs
and barriers to businesses if the advance earned income tax credit
program included all EITC recipients)

At the appropriate place insert the following:

[[Page S820]]

SEC. __. STUDY OF UNIVERSAL USE OF ADVANCE PAYMENT OF EARNED
INCOME CREDIT.

Not later than 180 days after the date of the enactment of
this Act, the Secretary of the Treasury shall report to
Congress on a study of the costs and barriers to businesses
(with a special emphasis on small businesses) if the advance
earned income tax credit program (under section 3507 of the
Internal Revenue Code of 1986) included all recipients of the
earned income tax credit (under section 32 of such Code) and
what steps would be necessary to implement such inclusion.

The PRESIDING OFFICER. The Senator from New Jersey.
Mr. MENENDEZ. Madam President, I am proud to join my colleagues in
calling for something that is long overdue for millions of workers
across this Nation, an increase in the minimum wage. Today is not our
first day to make this call, but it is time, finally, to answer the
voices that have cried out for change for too long. Nearly a decade
after the last increase in the Federal minimum wage, this Senate has a
chance to right the injustice that millions of workers and their
families have endured.
America's minimum wage workers are often not in the forefront of our
workforce. They may be in the stockrooms, the kitchens or on the night
cleaning crew. By increasing the Federal minimum wage, we will be
saying that working in the shadows does not mean a life sentence to
poverty.
For far too long, we have allowed a subpar minimum wage to exist that
leaves a minimum wage worker supporting a family of three at $6,000
below the poverty level. You get up every day, you work hard, you work
40 hours a week, some of the toughest jobs in America and, at the end,
you are still below the poverty level. We are supposed to reward work
as a value, not suppress it. We say we want work, not welfare. Yet we
have people who get up every day, work some of the toughest jobs and
still find themselves below the poverty level.
Those earning minimum wage do some of the toughest jobs our Nation
has, and they perform some of the key services we cannot do without,
from food preparers, to health care, support staff, to security
officers, to cashiers. These occupations are the backbone of businesses
and industries that keep our economy running. While we depend on these
services they provide every day, many of these workers are earning a
wage that is now at its lowest point ever, compared to average hourly
wages.
A higher wage is much more than about putting a few more dollars in
your pocket each week. A better wage is about fairness, about providing
a decent standard of living, and giving workers what they deserve, and
ensuring that everyone--everyone--can share in the American dream, not
just the top wage earners.
When a minimum wage earner is more likely to be a woman or a
minority, we cannot deny that increasing the minimum wage is also about
greater equality and justice to nearly 7 million women, who are well
over half of the minimum wage workers, or to the 4 million Hispanics
and African Americans earning less than $7.25 an hour.
So we can look at the chart and see that as the progression goes
down, all of those women's wages lag behind men. And then, when we look
at African-American women, Hispanic women, they lag even lower. This is
about creating equity, equality. It is about justice.
Our Nation has always been a place where people willing to work hard
and play by the rules can earn a better life for themselves and their
families. My parents, who came to this country in search of freedom,
were willing to do whatever work was necessary for a little piece of
the American dream. Whether it was long hours bent over a sewing
machine in a factory or working in a cramped carpentry shop, they did
whatever they could to provide me the opportunities they never had.
That chance to build a better life through one's labor and
determination is something no one in this country should be denied.
Yet, for nearly a decade, workers earning the minimum wage have been
struggling to get by, struggling to provide what their families need,
and struggling to realize the dream our country promises.
It is our duty to ensure everyone in this country can share in that
dream. When we as a nation turn a blind eye, when we ignore the fact
that millions of workers are earning wages that have been frozen for
nearly a decade--how much else of our economy has been frozen for
nearly a decade--we are failing those seeking out this dream. And
because most minimum-wage workers have children and families to
support, it is not just the workers who are struggling to make ends
meet or fulfill their dreams, but behind them are families who cannot
afford health insurance, or children who are growing up in poverty--
children growing up in poverty to parents who are working hard, in the
toughest jobs in America, 40 hours a week, making the minimum wage,
below the poverty level. So lifting up the wages of these workers is as
much about improving the lives of their family members and providing a
brighter future for their children.
This week we have a chance to change the course, not just for the
workers still earning $5.15 an hour and their family members, but for
the country. We will say it is no longer acceptable to leave behind
those who may be at the bottom, that they should be as much a priority
as any other worker who contributes to our Nation's economy.
I am extremely proud that New Jersey has not waited for Congress to
do what is right. Instead, it has taken upon itself to increase the
State minimum wage far above the Federal wage. And New Jersey is not
alone. Twenty-nine other States have raised their minimum wages above
the Federal minimum wage. Now at $7.15 an hour, New Jersey's minimum
wage has given over a quarter million workers the chance to build a
better life.
It is past time for Congress to act and give millions of other
minimum wage workers across the country that chance. It is time to
provide them what they have been waiting almost 10 long years for--the
chance to earn a wage they deserve and to live with greater dignity. It
is time to let them know Washington will no longer turn a deaf ear to
their struggles.
I listen to some of our colleagues sometimes, and it is amazing.
Congress has raised its salary more than $31,000 over the same time
period in which many Members have voted against raising the minimum
wage. It is interesting; we can vote to increase the wages of Members
of Congress and the minimum wage workers get nothing. I am sure there
are Members who would say it was well worth it, of course. But what
about minimum wage workers? Nothing for nearly a decade. Congress
raises its salary $31,000.
Now, interestingly enough, no one said: Well, we need to give a tax
break in order to give the Members of Congress a raise. No one said,
certainly, while they were voting for these increases, they did not
deserve it. Yet families across this country are struggling in some of
the toughest jobs in America. They could not get the same type of
support for their struggles. It is simply wrong.
Now is our chance to correct that injustice, but I hope it is only
the first step. We can never, ever again allow the hardest workers in
our country to see their wages eroded by 10 years of inflation while
those at the top of the pile make more and more but give less and less
back.
I hope the Senate will pass this overdue increase in the minimum
wage. I hope we do not have to give away the store in order to be able
to get some of those who are working at some of the toughest jobs,
finding themselves below the poverty level--struggling to have families
be nurtured to achieve their dreams and hopes and aspirations--I hope
we do not have to give away the store. I hope we do not see another
increase in Congress before we see an increase in the minimum wage.
Therefore, when we pass this overdue increase in the minimum wage, I
hope it will work in the future to make sure this increase stands the
test of time.
Madam President, I yield the floor and suggest the absence of a
quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. NELSON of Nebraska. Madam President, I ask unanimous consent that
the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

Iraq Resolution

Mr. NELSON of Nebraska. Madam President, I am here speaking a little

[[Page S821]]

bit early. Senator Warner will appear on the scene shortly. But as you
know, Madam President, I will be presiding, so this gives me the
opportunity to speak now.
Senators Warner and Collins and I have worked to develop a bipartisan
resolution dealing with Iraq. I thank them for working to forge this
bipartisan resolution. I would clarify that the goal of this resolution
is to broaden the resolution's appeal. It is important to send a strong
message to the White House and Iraq. And the more support the
resolution receives in the Senate, the stronger our message will be.
This may not be an either/or situation. We are bringing forth a new
set of ideas, something more broadly worded for Senators to consider.
Some can vote for this resolution, and the other, without feeling any
contradiction.
The content of this resolution is more inclusive of the Iraq Study
Group's recommendations and steers clear of partisan or Presidential
rhetoric.
I urge our colleagues--some of whom I have spoken with today, and
some of whom I have spoken with over the weekend, and others in recent
days, some tomorrow--to read this resolution carefully. I believe they
will find the resolution to be thoughtful, forceful, and meaningful.
If a Senator is not comfortable with the wording of the previously
announced resolution, if a Senator was concerned that the resolution
did not include the recommendations of the Iraq Study Group, if a
Senator was concerned about the infringement on executive powers, I
think that Senator will find our resolution more appealing.
In the end, we all have a responsibility to lead. We are accountable
to our constituents--the American people, as is the President. When we
see a policy development that we feel is not in the best interests of
the United States and the U.S. military, we must speak out, we must
act, and we must communicate with the President that we disagree with
his plan.
Simply put, that is what we are trying to do--to express our concern,
our opposition, or disagreement with deploying troops in the heart of a
civil war in Iraq.
The goal is maximum bipartisan support to send the strongest message
possible from the Senate to the President, to the American people, and
to Iraq about our concern about this plan.
Thank you, Madam President. I yield the floor and suggest the absence
of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. REID. I ask unanimous consent that the order for the quorum call
be rescinded.
The PRESIDING OFFICER (Mr. Nelson of Nebraska). Without objection, it
is so ordered.

Cloture Motion

Mr. REID. Mr. President, I send a cloture motion to the desk.
The PRESIDING OFFICER. The cloture motion having been presented under
rule XXII, the clerk will read the motion.
The legislative clerk read as follows:

Cloture Motion

We, the undersigned Senators, in accordance with the
provisions of rule XXII of the Standing Rules of the Senate,
do hereby move to bring to a close the debate on Calendar No.
5, H.R. 2, providing for an increase in the Federal minimum
wage.
Ted Kennedy, Barbara A. Mikulski, Daniel Inouye, Byron L.
Dorgan, Jeff Bingaman, Frank R. Lautenberg, Jack Reed,
Barbara Boxer, Daniel K. Akaka, Max Baucus, Patty
Murray, Maria Cantwell, Tom Harkin, Debbie Stabenow,
Robert Menendez, Tom Carper, Harry Reid, Charles
Schumer, Richard Durbin.

Mr. REID. I ask unanimous consent that reading of the names of the
Senators be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.

____________________