a senator: mr. president? the presiding officer: the senator from idaho. mr. crapo: i ask that the quorum call be lifted. officer without objection. mr. crapo: mr. president, i yield back all time. the presiding officer: without objection. the question is on the nomination. mr. crapo: mr. president, i ask for the yeas and nays. the presiding officer: is there a sufficient second? there appears to be. there is.

the clerk will call the roll. vote: vote:

vote:

vote:

the presiding officer: any senator wish to vote? any senator wish to change his or her vote? if not, the yeas being 71, the nays being 28, the nomination is confirmed. under the previous order, the motion to reconsider is laid on the table. the president will be immediately notified of the senate's actions.

the senate will resume legislative session and stands in recess until 2:15 p.m. recess: >> the senate has approved the nomination of susan carney to the second circuit court of appeals voting 71-28 this afternoon. after this break for party caucus meetings snorting will debate a measure repealing oil and gas company tax breaks. a vote on moving the bill forward is second. that one on expanding domestic production. with a test vote in the afternoon. live coverage when the senate returns here at 2:15 eastern on c-span2.

>> the obama administration faced its first federal appeals court challenge to the new health care law last

week. a three-judge panel at the fourth circuit court of appeal in richmond, virginia heard oral argument in liberty versus treasury secretary timothy geithner. liberty university is a religious college in lynchburg, virginia. they argue mandating individuals to buy health insurance is a violation of the commerce clause. last fall the federal judge dismissed the suit finding the mandate is permissible exercise of congressional power under the commerce clause which allows congress to regulate economic activity. this is just under 90 minutes. >> having here argument in the first case. 1023-47, liberty versus geithner. >> good morning, your honors. may it please the court. i'm mathew staver on behalf of the plaintiffs. we respectfully request the court to find the mandates are unconstitutional for two reasons. first the commerce clause

does not give authority to pass either mandate. secondly the mandate violates the plaintiff's constitutional rights. this health insurance law redistribute wealth among private parties to promote an ideal that is humanitarian in nature. however the act goes far beyond the outer limits of the constitution for seeking to regulate first time in history. non-economic inactivity. congress lacks the authority to pass these mandates for three reasons. >> first time in history. noneconomic activity. >> noneconomic inactivity. inactivity. not activity. that is the first time in history to regulate inactivity under the commerce clause. congress lacks the authority to pass the mandate under the commerce clause, necessary and properly clause. first the commerce clause. >> mr. staver, like your brief, even in the first couple of minutes here, you have said what i perceive to be two different things and i want to make sure we're

with you. is it your contention that congress lacks the authority to enact the statute which is one way you put it? or is it your contention that congress lacks the authority to enact the mandates as you refer to them? >> our challenge is to the mandates and that's what we say congress lacks the authority. >> okay. so you don't question in any way, shape, or form the authority of congress to address the challenge of health care delivery and costs facing the country? >> no. we don't concede that this entire act even aside from the mandates are constitutional or within the purview of the commerce clause. for example the guaranteed issue or the community rating system. that is a pervasive regulation that has never been before enacted. >> you don't challenge that? >> we don't challenge that. that is individual mandate. not entire other areas of

this -- >> protects that claim. you don't even make it. >> in fact our challenge always been and is today the individual and employer mandate. that is what our focus is. this act as it relates to the mandate forces inactive bystanders into the stream of commerce and compels employers to contract with private insurance companies to provide a benefit never been bargained for. never regulated channels of instrumentality of congress or activities that substantially affect commerce. >> how do you define -- [inaudible] >> well in every single case, your honor, that has dealt with the commerce clause and even the outer edges including the wikert case, and the race case with regard to growing of marijuana, there is always some kind of active participation on behalf of the individual that is under the regulation. in the wikert, for example he could have avoided

regulation if he had not planted, cultivated and grown and harvested and consumed wheat. >> i thank you for that transition. what is your definition of activity, for example. some courts suggested that mental activity meets the bill. there is some question since you have to report it to the internal revenue code, filing a tax return would be sufficient activity. what is your definition of activity? >> my definition would be a standard definition that you have to be doing something, you have to be producing -- >> filing a tax return, are you not? >> as it relates to commerce you have to be doing some kind of production, trade, exchange. >> federal income tax return is not acting in commerce? >> i think that is -- clause. i'm talking about relating to the activity -- >> an act, is it not. is it an activity. >> it's an act, that is

correct required under -- >> i'm trying to get you to differentiate. >> i think what we have here are individuals who want to remain out of the stream of commerce. they don't want to act at all. >> that's not what your complaint says or your pleading says. says made a personal choice she does in fact use health care but she just made a personal choice she doesn't want to be insured. sounds like, i have a lot of activity about it. >> well, mental choices however, particularly the being idle is not activity. >> that is not what she says in her complaint. she didn't say she is idle. >> she certainly -- >> she does in fact partake in the mental health. >> i don't think it says necessarily, certainly not in the insurance market and doesn't -- >> you're quite right. says she doesn't want to do it through insurance but she does want to and has used health care. >> well managing your own physical being by eating

properly is not an activity that would be regular youable under the commerce clause. having natural remedies is not activity under the commerce clause. >> what i'm trying to do is find a dividing line because it is crucial to your argument. >> it is critical to the argument but the fact of the matter is when you have someone who is literally outside of the stream of commerce choose not to put themselves into that stream which is what the plaintiffs, waddle and merrill have done in the particular case. they want to be left alone. >> ask about that because that is an interesting point that you make here the choice here is not to put yourself in in the interstate commerce stream. how different is that from the wright case? the wicker case, being the instance which you have wheat that has been grown on a farm. the choice is being made not

to put that wheat into the interstate market but rather to have it at home or the choice has been made in the case of marijuana, not to put that marijuana in the interstate commerce clause but to have it at home. why is it not different here that the choice that is being made is simply not to put your money into insurance premium so that you don't have to be put into the interstate market? >> it is critically different because in wicker as well as in riesch, they could have remained outside of the reach of the commerce clause and congress's activity and regulation had though chosen to do nothing. had though chosen not to grow wheat or consumer even for personal consumption. >> what mr. her neighbor? is the recipient of a gift engaged in activity when she receives the gift? >> it could be, certainly if -- >> if miss rash delivers marijuana to her neighbor,

neighbor sitting there, hasn't even asked for it but is now in knowing possession of it in violation of federal law, has there been activity by that neighbor? >> that neighbor would have made a conscious choice to retain a particular commodity that is regularable and. >> that requires herself to do something. >> but here we're not doing anything n this particular case --. >> question i'm getting at and i think my colleagues are getting to you address, how, there's a demarcation. we have wicker, we have raisch on one side of the divide. we have morrison, we have lopez on the other side of the divide. if i understand your submission here, what identifies that divide is solely activity versus inactivity. and yet, on the wicker, raisch side the divide there

appears to be awful lot what a lot of people regard inactivity but nonetheless subject to congressional regulation. we're inviting you to help us think this through. >> certainly, judge davis. in wicker and raisch there is commonalty. there are individuals although intrastate and having perhaps less commercial nature to it, is still activity. they are engaged in production, growing, and consumption of what they have actually grown. and that -- >> not most raisch's neighbor. she hasn't grown anything. she hasn't produced anything. she hasn't asked for anything. now she is no knowing possession what congress has prohibited. >> she has made a choice, if that's the case, to actually retain something that is otherwise regularable. >> the mental process of making a choice is your submission? >> clearly it is not.

physical retention of something would be, but certainly if you are refusing to release it. >> excuse me, i'm sorry. when this person has insurance and make as decision, you either keep the insurance or not keep the insurance is that activity. >> that may be a choice but certainly not the facts of this case. >> you see what we're trying to get. we're trying to get help from you in defining these requirements that you think is so important on activity that does have a constitutional basis. >> i think it does. >> what in the commerce clause would require an activity? >> the commerce clause is going to require every single case that has ever been decided by the united states supreme court, lopez, morrison, wicker, have have always required some kind of physical activity, some productions some kind of manufacturing, many so kind of trade whether interstate or intrastate .

>> choosing to avoid health insurance or choosing to avoid an economic transaction --. >> isn't that exactly what the farmer would do? >> no, your honor.

>> he was choosing not to go in the market to buy the wheat so he could have more than the secretary of agriculture said he could grow. >> but there's a critical difference, judge davis, and that is he could have avoided regulation if he had simply i don't want to do something. >> i have a question. in your opinion, at least in your perspective, your class maintains they can avoid the interstate commerce market? >> yes, your honor. >> even though on an aggregate perspective, to look at this if there's a substantial or at least a substantial part of a general regulatory scheme and i think you started out by saying -- of course, what you're not challenging in terms of the appeal on the antipoverty act there is this authority in the regulatory scheme, the question becomes is this an essential

part of it, of a scheme that ultimately -- the aggregate population will have to participate in. >> your honor, if you had an otherwise comprehensive regulation which -- the difference is thee actually conceded that the overall statute was constitutional and they wanted to be exempted out of it themselves. even if you had an otherwise regularable constitutional scheme under the commerce clause you still need at least three components. and this is in it yourself. even if you're going to regulate something to the potential of the overall and it's intrastate and it has less noncommercial activity. first, it needs to have an activity. second, it needs to be involved in the producing, the distributing or the consuming of a tangible commodity and third, it needs to have an established intrastate market. in this particular case, it doesn't meet those criteria to regulate something that's on the

edges that would otherwise be essential to comprehensive scheme and again, you don't have an activity -- they're not involved in distributing, producing or consuming a tangible product. in this particular case, it's the insurance market. >> where does the word "tangible" appear in the commerce clause. >> it appears on pages 18 and 19. when you said in the commerce clause is jurisprudence is something you can literally see, touch or understand that there is an activity that's taking place to produce commerce, to have intercourse, to have trade -- >> you're describing a commodity clause rather than a commerce clause. >> no, your honor, no, that's the commerce clause in terms of the fact -- the government cannot point to any single case where idleness, a choice to not engage in an economic transaction has been found reachable under the commerce

clause. wicker and ray represent the outer commerce clause but this case goes beyond wicker and raish our clients cannot choose to be not regulated under this particular act. they are forced -- >> explain this statement to me and justice scalia's current opinion. the regulation of an interstate activity may be essentially to a comprehensive regulation of interstate commerce even though the interstate does not in itself affect commerce. >> that's true. >> so if you have an act here and if you say there's inactivity it does not in your opinion substantially affect interstate commerce. nonetheless, it is essential to the comprehensive regulation, is that not the issue here as to whether this inactivity or act or whatever -- is it essential to a comprehensive regulation?

>> no, your honor. raish as i represents the outer limits and raish is in plaintiff's favor. first of all, you have to have a comprehensive scheme. >> this is a comprehens -- what do you mean by outer limits? >> that's as far as wickard and raish that the supreme court has decided with respect to the commerce clause and that's what i mean by the outer limits. there's no case that's gone beyond them and this particular case would take it way beyond raish and wickard. >> the elements of the comprehensive regulation department deems -- the activities is part of that comprehensive regulation? >> well, i think what we have -- pardon me? >> you don't dispute that there's a comprehensive theme here? >> i don't dispute there's a comprehensive statute in terms of whether -- you know, we're not challenging again the entire statute. we're focusing on challenge on the individual mandates. >> right. >> but i come back to 18 and 19 -- >> it's lacking in lopez and the

fact it was not a comprehensive regulation there. those were totally intrastate activities? >> but morrison lopez required economic activity. they also required a limiting jurisdictional state which i've not been able to find in this statute and they required -- >> as i read the statute, those were factors that the court said should be looked to and i remember one of the things of history was a factor and then lopez and was apparently no longer a very critical factor by the time we came to morrison. so we have masses of hearings. there's all kinds of congressional hearings about this legislation. >> we do. but we also had a lot of history in the morrison case as well. >> that's what i just said. we have the morrison case is important but in lopez it was set out as one of the factors.

>> that's correct and morrison wasn't. >> we can keep asking you questions you can stay up here. >> thank you. this is critical, it says that in the concur in raish but that's nothing new. >> you don't disagree with that statement? >> i don't disagree that's what he said in the other concurrent statement and if you go back to 18 and 19 which is the majority opinion, this is when you go to those and you regulate intrastate activity that has less of a commercial nature, that in and of themselves may not be regularable outside of a comprehensive theme, then that has to have at least a qualifying limiter. and those are the three things that's on 18 and 19. an activity that produces, that distributes or consumes a tangible commodity and also that

there is an established intrastate market for that. >> but raish, absolutely, flatly, without question was noneconomic, noncommercial. do you agree or disagree? >> i agree that it was noncommercial -- yes, yes. >> so you agree? >> yes. >> you agree flatly, noncommercial, noneconomic. >> the difference in raish, your honor, is that raish was on the edge of going into the stream at any time. it would be inconceivable to keep marijuana outside of the regular scheme that the statute wanted to regulate but raish also said it has to be an activity and raish is an active participation by the marijuana growers and if they had not do so they would not be regulatable and what we have here is something different. something that the cbo said in 2004 and 2009. that congress under the commerce

clause could mandate and have the federal extension to require every individual to purchase health care insurance or pay the penalty. that is beyond the outer edges of raich or wickard and we -- >> i'm surprised you haven't brought up the subject once. but the black lily question. the amount of talk in the papers that the congress can do this, it can require people. >> yes. that's been certainly the court in this case and in northern florida said that as well. >> well, i'm going to ask you this, does congress prohibits people from or to make it a little bit more real world prohibit people from buying trans fats? >> according to someone who

testified in the hearings, congress could actually have people join health clubs. >> do you have a problem with that? >> certainly, i would. >> if they were deemed they have no choice -- >> not to prohibit the production of it. >> no, i'm saying -- >> the force the consumption of it is completely different. >> and why is that? >> well, i think if you were to allow congress to force the purchase of health insurance in the private market, then you would, therefore, have to allow congress to regulate the food industry, to force certain kinds of food to be consumed because it would be domestically grown. it would help our economy. >> i was asking you about the -- is there any constitutional problem with prohibiting people from purchasing trans fats and prohibiting it.

>> prohibiting and taking it off market i would respectfully suggest and not forcing consumption. >> and that's why i'm asking you -- first of all, is there a constitutional problem with that in your view? >> perhaps -- >> well, then why is that? >> well, because the entities that are involved in regulating or producing that are engaged in activities. the farmer is growing broccoli then -- >> that is the same? >> no, it's not. because what's the difference is someone may choose not to eat broccoli and the government, therefore, would say, you must eat broccoli. it's the same as in wickard where they would say i don't want to grow wheat and i don't want to be regulated. >> you could choose if you wanted to eat broccoli and the government said, no, you can't. the facts are just the same. >> no, it's not, i would submit. >> the justice says in wickard that stimulation and prohibition equally are available to cause

the regulatory authority. isn't that what judge motz is asking you to address? >> no. i would say what that would be is congress forcing wickard to consume wheat. >> really? >> congress forcing anyone to consume the pick of the product because it's good for the market and it props up prices and it's more healthy and would relieve stress on health care. that is an unprecedented reach of the commerce clause will congress would force individuals to actually purchase or consume a particular product as opposed to -- >> you care a lot more about due process than we ever heard anything about commerce clause in a forced-eat case. >> your honor, i would suggest that we haven't heard about that because it's beyond the outer reach of the constitution. it's certainly something -- >> i appreciate -- i want to be sure i understand what you're saying, though. you acknowledge that a prohibition on trans fats would not violate the commerce clause?

or a prohibition -- >> perhaps in a situation where they are regulating the producers and the distributors of it to take it off the market, yes. but to force it into -- >> i'm sorry. if you would just think would it violate the commerce clause or would it not violate the commerce clause. >> perhaps it wouldn't violate the commerce clause, but it would violate the commerce clause if it went the other way and someone is sitting idly in their homes and, therefore, now because of a federal law is required to consume broccoli that they don't want to consume. to consume or grow wheat if they don't want to consume or grow. >> can i ask you a question about your religious arguments. >> yes >> because again this is on my time and my colleagues -- i couldn't understand why you didn't qualify for the religious exemption? >> there's two different -- our arguments are that it violates

the -- >> i'm going to discuss that. >> the reason we don't qualify for that because that particular language is basically focused on the amish. >> well, doesn't it say -- i don't know if i heard you exactly. the tenets they are teaching and if you're christian that means they have a sect they have been teaching since 1950. >> yes. >> that would fit right in. >> it doesn't fit in the history in the way that language has ever been used? it's not in the plain language but it's in the way it fits there and it's in an exemption of social security and nonemployment and i would submit a critical difference between relieve ago burden to a religious person or entity from an otherwise generally neutral tax versus facing a penalty on them because they don't belong to a particular recognized sect or religion.

>> well, the plain language we might be under because of the history of it we aren't -- >> well -- >> is that true? >> i think the way the language is exactly the same language, yes, i would say that's true, your honor. the way this language has been used is all it's been used in a very, very narrow perspective. and never for just religions in general. anyone who has been in that ambit has not been successful except essentially the older amish or perhaps the christian scientist but outside of that, there's very, very limited extension so consequently, we are being penalized simply because we don't belong to a recognized religious sect. >> yes. mr. staver, you specifically talked about inactivity and in the cases where it's been used, inactivity used and i understand

you've gone the right in determination what kind of activity would be necessary and what have to be done and, therefore, come to the conclusion that there's inactivity that you cannot regulate? >> yes. every case that has referred to commerce clause reach uses the word "economic" or certainty or activities. >> but not inactivity. >> the state has interpreted that, the commerce clause has done that. >> to go back to the very early cases, but that clearly -- >> how are we supposed to go back to those cases. those people were around when the constitution was written. >> well, i'm about to explain it because i would say we go back to them when we go back to the article 1. and as the very definition of inherent. >> but you're not explaining those cases -- >> oh, no. but those cases inherent in the

definition that's at issue here is an active voluntary choice that's an activity that affects commerce in some way. now, it may be interstate in the early cases and intrastate in the later cases but it's still inactivity but if you remove those factual situations and then you transferred them to wickard case, someone just sitting there doing nothing, they would not even be at the united states supreme court. in raich, if they were in california not growing, consuming wheat, there would be no supreme court decision. >> is that just going up and down the abstraction ladder? >> no, i think it's critically important. >> the cases wickard and raich and lopez, justice kennedy concurring opinion in lopez, they all emphasize several things. >> yes. >> but the practical -- the very practical character of congress' horror and the requirements that

courts defer, when appropriate, the expanse of congress' power in this context. the justice again emphasizes there's no formula. there's no mathematical precision. so when you -- again, if you could address of -- why isn't it just an extraction to say inactivity is unreachable? >> i think it's critical to having some kind of definable end or of understanding of the reach of the commerce clause. >> so you want a formula? >> i would say at essence there would have to be some kind of activity that would be involved. and, in fact, if you removed activity as a requirement or as a -- as a significant component, then there would be no definable limits on the commerce clause. it would turn the federal government into a police power intruding on individual activities of the states, and

there would literally be no reach or end or limit to what congress could do under article 1. >> let me ask this question 'cause i need for you to connect some dots again. i want to turn back to the activity question again. as i understand it, basically, you were talking about the commerce clause but when you're looking at the third prong of engaging in activity, it's really -- you're talking about things that affect commerce the way we get there, as i understand it, correct me if i'm wrong, is the necessary and proper clause. and through the necessary and proper clause we can again extrapolate that if there is a national problem that congress and given that basis doesn't matter if it's an activity or inactivity when we look at it

from that perspective? >> i think it does matter because if you go to the necessary commerce clause, it doesn't give an independent authority. if the commerce clause does not say it's a necessary and proper clause cannot establish an otherwise constitutional reach between the commerce clause and i think if you look at the necessary and proper clause, it gives congress the authority to regulate anything that's necessary to the underlying otherwise constitutional regulation. comstock is one of the most recent commerce clause cases and it looked at five components. and several of those components failed here. and, in fact, one of those says the federal involvement has been eliminated with regards -- >> i'm glad you brought up commerce clause because that's an interesting application of the necessary and proper clause in the context of here and i'm still having some trouble determining what the enumerated right was there in that case. but that's another question. >> well, but here -- >> i talk about enumerated right

in a comprehensive scheme that exists here. and why it's not in this context not consequential that an activity/inactivity if it's part of this necessary and proper clause and congress has the authority to do this? >> i think if you look at justice kennedy's concurrence. thomas said there's no designated enumerated power in this case. i think comstock and others with regards to this adam walsh act that allows the federal government to retain sexually dangerous prisoners beyond their term of incarceration. congress has been involved in the federal prison industry for a long time. obviously, within the district of columbia. and then there's mental health that congress was involved in. and then, of course, because of the postal service and so forth, they have to be able to prosecute crimes. therefore, they have to have under the necessary and proper clause prisons to be able to houses them. so they've been involved in the federal prison business from the beginning of the founding of this country. now, they already have in their

incarceration a prisoner as they then come to the end, he's still sexually dangerous or she. they then have a choice to make. and first of all, they defer to the states. they don't override -- >> that's not true. >> well, they gave the states a right of first refusal. >> no, they are in prison first and then they go to the state. >> well, once they are coming to the end of their term and they're now ready to be released -- >> there's not a requirement -- [inaudible] >> well, that they would actually -- the state -- they did not -- one of the factors in that particular case was that they didn't override the power or the involvement of the states and they did give some notice to the states. they gave some notice to the states to see if they would want to take that prison. if they didn't take it, they would retain it. >> i think we're getting a little far afield. >> let me look at the five factors of comstock, several of which would rule are right here. one of the factors is that they had a long history of federal

involvement in the prisons. here there is no such thing. >> but there's certainly an enormous amount of federal activity in health care, is there not? >> well, we have a 1944 supreme court case followed by the 1945 the ferguson act -- >> i issued that -- >> well, health insurance would even be later than insurance in general. >> no, not if you have health insurance -- [inaudible] >> there is an enormous amount of involvement in the federal government health insurance industry, is there not? >> there's certainly involvement in the health care industry and so forth and other kinds of laws. but ferguson says that congress will primarily allow states to regulate insurance concerns and defer essentially to the states and that's what we've done since 1945. [inaudible] >> the preexisting supreme court case that congress under the commerce clause has the

authority to regulate insurance. you don't challenge that, do you? >> i don't challenge -- >> congress doesn't have the authority under the commerce clause to be regulating -- >> not interstate or other kind of commerce-related insurance. certainly not. i don't challenge that. but going back to the points in comstock. >> so congress does have the authority to regulate health insurance, does he not? >> he has the right those who voluntarily participate in health insurance. comstock has a couple of other matters, however, i think that are different. there you had a reasonable extension of an otherwise preexisting factors. you keep the prisoner longer than their term is. here this is not a reasonable preexisting practice. but operates, i think, contrary to comstock what the police found and you have states across the country by making that claim. the power is broad also with no limits. and in comstock it was a very narrow extension of a

preexisting power that was very narrow, whereas here this is a very broad application and expansion even if there is federal involvement it goes beyond anything conceivable before. it's not just -- >> if we move past the commerce clause for the necessary and proper clause, this case clearly is a slam dunk for the government, isn't it? there's no question that the individual mandate is necessary in the achievement of professional aims here? >> i would say it's not necessary. >> okay. that's the answer and i accept the answer. assuming -- assuming that the court would conclude that necessary is easily satisfied here, that it really comes down, doesn't it, to whether the individual mandate is proper

under justice scalia's under the necessary and proper cause. would you agree with that with me subject to your earlier disagreement. [laughter] >> under the congress' ambit of authority and would be legitimate -- >> that's exactly tells us in wickard that the end the commerce clause enactment is to permit congress to exercise that authority unfettered by anything other than provision of the constitution might limit. it's right there in wickard. it's right there in wickard. i know you know that. so do you agree that we come down to is this court authorized to conclude that congress had a rational basis for concluding in

the exercise of its authority under the commerce clause and the necessary and proper clause that the individual mandate was a proper element of its comprehensive regulation of the health insurance and health care market? >> i would say we don't get there, but if we get there, then certainly this court could look at whether there's a rational fit and i think it looks more towards kennedy's concurrence that says rational basis as it relates to commerce clause or necessary and proper clause is a more rigorous review than a typical rational basis test. >> so four 20-somethings working here in virginia and graduated from college and earning some money decide to take a weekend in ocean city, maryland. and they're trolling down route

50 going to the beach and the unthinkable happens. and maryland state police bring in four medevac. they're all taken back to shock trauma with the health care professionals in baltimore do this wonderful, miraculous job bringing them not just back to life but to a full and complete life. a bill that's hundreds and hundreds of thousands of dollars. is it your submission that congress has no power to address an aggaregate in the way i described? >> your honor, that's a compelling, emotional story of something that happens in a tragedy on a regular basis. congress, to reach of case, other cases, cannot do so by the individual mandate.

and, in fact, if you look at the individual mandate, looking at it from either this rational review, it doesn't accomplish what congress even says it will accomplish. the idea is they're going to have the guaranteed issue and the community rating. now, in order to which, that will the university, seven states have tried it and seven states have realized the catastrophe and you bring in the forced mandates to increase the pool. >> so your argument is not wise. >> it's not even wise it's not even related to the overall goal. because, for example, under this particular act, you can pay the penalty and not have insurance, and you can go and be in the hospital and buy insurance while you're there on the operating table. >> but won't those additional revenues, whether they're tax revenues or penalties -- i understand that's an issue, but

won't those additional revenues go into the federal treasury help to offset the baseline costs? >> i think it does. >> the federal government pays 35% of the cost for health care in this nation. >> $95 in 2014 is not going to help offset that kind of health costs that you're talking about. >> $95 are paid to the u.s. treasury? >> well, when you have a is you have this mandate that's been in place -- >> mr. staver, you can talk all you want, you know the other side will have the same amount of time. if you require many-page answers to be expressed in that case. >> i'll wrap this up. >> i'm sure you'll understand -- >> i'll wrap up one other thing because you talked about the tax and spending clause and i'll say one thing on this. the government does not appeal an adverse reading in the mead case up in the district of columbia regarding the tax and spending clause. they had 60 days to appeal that.

they have allowed the tax and spending clause to come to final order in the district of columbia. now they're raising it here. they realize have no taxing and spending authority and they also dropped their antijunction law as their defense. >> why is it -- how? are all the tax returns or -- [inaudible] >> because with regards to the individual mandates, the mandates are penalties. and if you look at the -- >> what if the congress called it a tax -- it's in -- [inaudible] >> the legislation is exactly the same? no other difference? >> if it was a revenue-generating -- >> it generates revenue. there's, what, $4 billion. >> even in penalties generate revenue. the fact is here when you have a is legislation officially if you look at the house and senate

version. >> i'm asking you a different question. if we had legislative history and we had exactly this provision, and not a penalty would you concede that it wasn't. >> no, your honor, i wouldn't. >> why is it all the penalties? >> because if you look at that time consistent with what it does. it's not primary to raise money for the government. it's -- >> how doesn't it matter? we don't weigh that heavily? >> you would weigh it that heavily. certainly you would. but there's something that has been called a tax and been called a penalty. you would give it a deference and called it a tax. they called it a penalty. >> thank you. on my clock you have 45 minutes. >> but you're not required to

take it all. [laughter] >> i'm sorry. you have 40 minutes. >> thank you very much, judge motz and to please the court arhearing debate and hearing tragic stories after judge davis talks about and the sad road trip and after hearing evidence about the act. congress made first that the minimum coverage provision, quote, regulates activity that is commercial and economic in nature, economic and financial -- >> what is inactivity? >> this is how congress said it was. it was about how and when health care is paid for. and our contention here is the activity is participation in the health care market. and that is what's going on in an unprecedented. you the sut virtually universal.

>> what we want to do is not part of the health care mark. and health care inactivity does not reach that? >> and i am saying and congress is saying that there's an universal feature, judge most, of our existence. we do use health care regardless whether we think we might not want to or try in our minds to decide not to, one cannot get out of it on an individual basis because we don't know the chance of us getting hit by a bus or get struck by cancer. >> that gives you a basis of saying there's a proper incident regulation out there. but what we want to get to is the issue here -- he says this is an inactivity. a decision of a person not to get into the market. not to buy insurance and that that in and of itself does not meet that burden of being

substantially affecting commerce. and perhaps it would even be more careful than ordinarily one would in the cost industry. >> right. >> judge wynn, i think you hit it exactly right. i think there's different sources of authority that the involvement is invoking. >> you give us is choice -- i want to know -- where are the two of you differing on this? as i continued, it is inactivity and the characterization of this inactivity comes from the wright case where the state says there are conditions have to be met for it to be an activity and do you agree or disagree with that characterization? >> i generally disagree but let me first set out what the three basis of authority that congress is invoking here and then get to the specific question you're having about activity versus inactivity. so the first is, does it substantially affect commerce? and that's the congressional

finding and whether or not the decision to self-insure. even if it doesn't constitute inactivity, is it incidental to an overall scheme that it's justified by the congress power and then justice scalia's opinion in darby and the like and then the third is the tax powers. those are the three independent basis congress made specific findings on them. now, you have asked whether or not we had a different definition of activity or inactivity. and i guess what we're saying here is, judge wynn, congress is regulating activity. the activity is participation in the health care market. as i was saying to judge motz that is a universal feature of everyone's existence. everyone is going to seek health care. nobody can know precisely when. providers cannot opt out of providing it. that is if you show up, destitute, there's still a duty

treat and those costs are sporatic and untreatable -- >> you've gone beyond the initial step and that is first before we get to the participation health care, i guess you don't need at this point, you can make a choice as to whether or not you're going to get health insurance and the characterization there that is an inactivity to require someone to do something they don't have to do, that is to get insurance, is a characterization. as opposed to the choice for whether you can participate in this system. >> well, i think maybe the best way in oral arguments is to say we're not focusing as much on activity and inactivity on those words can eventually break down semantically. we're asking what the commerce clause is about. the regulation -- the conduct is

being regulated have a substantial affect on congress and here congress made specific findings that when people self-finance their health care, it raises the costs to you and me. it increases the total for uncompensated costs is $43 billion according to congress and a specific finding and that raises the average family premium by $1,000 a year. priced untold numbers of people out of the insurance markets all together and so what congress was doing was essentially regulating the means of payment, the method of payment by which health care is something that everyone seeks is going to be paid for. >> so it's about the payment? >> exactly. >> when we go back to the broccoli example, it wasn't about consumption, it was about the payment. is that where you want this? >> i'm saying that the broccoli example leads, depending on the way it's served up, excuse the phrase, is that if -- if it is -- if the question is, you

know, can congress force someone to buy broccoli, well, that's not the question you are already dealing with. that may be an interesting question but we're not -- the congress is not asking people to buy something they wouldn't otherwise buy. >> well, even though we're not eating with it, there is always that concern that if we make a ruling here, does this then mean that's why it comes up, not dealing with broccoli but the question is, are we dealing with it by a ruling that would go in your direction that would end up making that -- >> i quite agree, judge wynn, that it's absolutely important to test the logic of the government's position. and what i'm saying is that the logic here is not as my friend mr. staver says, which is the government is forcing people to buy something that they wouldn't otherwise buy, broccoli, health care, and the like. health care is something people use. >> we're not talking about health care and health insurance and the government wants to you to own all those things if you

want. and you are, in fact -- the statute does, in fact, require people to buy health insurance or to pay a premium act penalty, whatever -- that's another question. to pay something, right? >> absolutely. >> so it does force -- is there another time in which congress is invoking its power under the commerce clause for people to take some answer. >> i think the answer to that is yes. and let me answer the predicate of your question, is congress acting on the insurance market as opposed to the health care market because i think that is an artificial -- congress saw these two related markets which is why i started my argument with you -- >> that might be true, but isn't it a fact that health insurance

as opposed to other kinds of insurance is mostly regulated in this country by state? >> it's in part with state and parts of erisa. >> we know insurance can be regulated under the commerce clause, commerce clause by congress by the supreme court but that hasn't been much of a tradition except for the relatively new statutes and we have this long tradition of congressional regulation -- >> you -- >> and what -- [talking simultaneously] >> absolutely, because did health care market and i think we're at a crucial point and the health care market really does boom really in the second half of the 20th century. in the 1930s -- [talking simultaneously] >> there are no 1800 cases? >> with respect to health care insurance, of course -- i think -- >> or with respect to commerce clause regulation of health care or health insurance?

>> well, the government has been involved in health care in a variety of ways from the start. >> started what? >> from the founding -- the quarantine statutes, or shift masters and there were all sorts of rules that were in play about the government's rule but here my fundamental point to you, judge motz, congress isn't regulating the health insurance as a end. it's regulating it as a means. the end is more affordable health care for everyone for the reasons that judge davis was speaking of. and congress i don't think under the supreme court's precedence whether he viewed them under the strict commerce clause precedence like lopez or morrison were under the necessary and proper ones like comstock is limited to simply one means of trying to solve a problem. congress has a variety of ways. there's a flexibility or what judge davis called it an economic practicality as to what congress is able to do when responding to a massive problem, 15 million uninsured right now.

and millions of americans who are priced out of the insurance market and are excluded all together. >> with regard to the findings, i'm curious what morrison has done to congressional findings in commerce clause cases. would you just address it? it's important that i'm not sure how important it remains after morrison. >> absolutely. both of them talk about their role of congressional findings and i think our position is raich said congressional findings are helpful but not necessary and it is, of course, the province of this court to be able to review those findings, you know, applying federal principles of law to them. and here and judge motz asked before the precedence and i think the real question about unprecedented is about them.

there's a real question of constitutional that adheres in statutes regardless of the congressional finding and here they are coming in and saying -- that congress is unable to deal with a mavs interstate economic problem. that it's powerless to deal with it because it violates the commerce clause. >> the cbo says -- and we'll talk about congress and its findings. cbo said congress is the first time it relied on the third prong to have a affirmative promulgation on people. do you agree on that? >> on people relying on the commerce clause? >> uh-huh. >> yes. >> do you think it's the predicate. >> it depends how you interpret it as judge wynn said and some of the commerce cases could be characterized as forcing people into the market, forcing people to buy wheat in wickard and

forcing people to serve. and in this landmark and in some ways unprecedented legislation. i think the answer is yes. i mean, this is dealing with a massive social problem on a big scale. >> what about -- >> and get it resolved by social principle. >> what about your militia example? was that raising an army or a commerce -- >> i think president washington didn't specify which power he invoked with the militia act. but i do think that the militia act does provide some -- an example for the court to use in seeing the government, requiring the purchase. and as mccullic said the test is not which specific clause was invoked, whether it was militia or commerce. it's rather in deciding whether it's necessary and proper. the court can look to all sorts of other power -- other enumerated powers and what the means were that were used to enforce those. if you were only talking about

the means, you were only talking about the end everyone agrees is legitimate, the removal of the barriers to health insurance in the market, i don't disagree. and on the means question, the supreme court has been absolutely clear from mccullic to raich that that is a question which this court must give substantial deference to congress. now, as i said there were three different arguments. one we've been talking about thus far which is whether or not the decision to self-insure affects commerce and judge wynn the first in the opening hour which was the necessary and proper clause arguments. >> when i read the government's brief it seemed to me that the government regarded the necessary and proper clauses as sort of congruent with one portion of the commerce clause.

and is that the government's position or do you think something could be unconstitutional or not pass commerce clause analysis and could still be saved by the necessary and proper clause? you're coming into this problem because of raich, obviously. >> right. >> i think the supreme court now regards the necessary and proper clause as just sort of the agenda of to the commerce clause. maybe you can give me the government's view. >> i think we are at the latter. what darby said and what justice scalia said in raich -- >> you would go with that formulation? >> that the necessary and proper clause allows extra room for congress to act in order to fill in the gaps in an otherwise comprehensive and otherwise constitutional scheme. so here, just to make this very

concrete, nobody disagrees that the thousands of pages are generally constitutional. it's the regulation of its health care markets and realize it's a direct regulation on insurance and i took my stand on the end of the 1944 case and would not disagree so congress can regulate those markets and could regulate guaranteed issue and community ratings to make sure that millions of americans have access to health care. now -- >> if i understand your characterization of the two issues and the second one dealing with necessary and proper. in light of -- in light of justice scalia's view of how those two interact, it seems to me -- it says congress' regulating authority over interstate activities that are not part of the interstate commerce including activities that have a substantial threat on interstate commerce derives from the necessary and proper clause. is he saying there to get to

these substantial activities of the perez, the way you get there -- he says that's not part of the commerce clause? that's a necessary and proper use of it and the commerce clause produces enumerated right >> it's a wonderful and deep question in constitutional law -- >> and i think that the majority has divided them. justice scalia wants to collapse them, judge wynn -- >> but interstate commerce is not commerce; is that correct? >> it doesn't matter for our purposes either way. whether you want to view -- >> but it does matter because you separate them? i wanted to understand it. >> to follow the court's lead. i think this court would write a decision either way with respect to that. it doesn't -- it doesn't particularly matter. the fundamental point which justice scalia makes and i think no one disagrees with since the case you mentioned is the necessary and proper clause did

give the congress broad power to act and where sales aren't directly constitutional will fill in the gap that will remove an obstacle to an otherwise comprehensive regulatory scheme. >> so the real problem with wrapping -- i think, wrapping yourself around wright and gohmert is that those who cases were really at the challenge and this one isn't. >> can you address that case? what is the difference in commerce clause jurisprudence as applied and facing challenges? that would be helpful. >> well, i think this is another area in which the supreme court has been a little bit uncertain after salerno and then morales and so i think -- our view is that it doesn't matter for necessary and proper clause analysis but the question that you're facing with here whether it's a facial or as applied challenges can congress

regulate -- can congress regulate the decision to self-insure as part of an overall comprehensive scheme? and i think the answer has to be yes because of the evidence congress had before it that they couldn't reform the insurance market as a guarantee issue with those with preexisting conditions unless they also adopted a minimum condition. congress had empirical evidence before it -- >> but the credible evidence -- i mean, that just doesn't go there with you. >> your honor, it's not -- >> not with respect to what is necessary and proper to fill in the gaps of a comprehensive scheme. and morrison -- >> the argument has argued the necessary and proper clause with morrison. >> i'm saying that wasn't comprehensive legislation and an obstacle -- if i could explain what congress was doing first and then we can talk about the differences with morrison, if any.

so what congress said here there are eight states that have reformed an insurance market. seven of them did it without the minimum coverage and all of them as you have the evidence in the state's brief before you. it skyrocketed and the market decoratored. the insurance left the states. the only state that worked was massachusetts's and it worked because in massachusetts, they coupled the guaranteed issue provision with the minimum coverage provision precisely so that unlike in those seven states in which basically gave people an option to buy insurance while on their way to the hospital, fire insurance, you could buy it once you know your house is on fire, everyone waited and so premiums went up. the only way to make the insurance reforms work was to have the minimum coverage provision. >> congress had one of those great fundamental experts. >> precisely. and there was direct evidence on this point and this part of the comprehensive scheme and that makes it difference, going back

judge motz, to your question. >> didn't massachusetts have something about preexisting condition that's vastly different from this one? it seems to me to think about states and, of course, i know because the states can do it doesn't mean it doesn't affect the state commerce. if massachusetts can do it, it occurred to me, why can't states do it? >> and what i recall it may have been the distinction on all the preexisting condition. >> but the answer to your question is what massachusetts said for you and california and what our briefs at pages 44 to 48 is that individual states on their own find it very difficult to this because whenever they do, it imposes large costs on them that are bourne often by them and not by other states and so even massachusetts in their brief at page 5 says our system has worked but it would work a lot better and be a much stronger set of reforms and

would help our system work if you had a federal solution. >> and this is just one quick question because these little things help and that is when you talk about states, if you want to move from one state, it may be a residency-type requirement and the united states is dealing with the citizen department which is far more difficult to get. it would seem to me, i just don't know how you can do it in a state, even in massachusetts unless the residence requirements changes so you don't come in with a precondition and swamp the state. >> exactly, judge wynn. that's exactly the argument that the california brief makes for the united states and i think it's subjected by judge davis using the hypothetical of virginia people going to georgia to texas. that is one of the things congress was worried about was interstate -- these repercussions one way or the other and that's the role for the national governments here

and it's different, for example, broccoli or other states may deal with. >> if we go back to wickard and if they're applied challenges and i think wright made it very clearly and the majority made it very clear that it was a challen challenge. you don't make that contention here. it's an applied challenge? >> no. >> okay. then so you think wickard -- if they had required people to buy wheat, the taste would come out the same way? >> again, that's a question the court doesn't have to confront here. >> it's a question, i dare say, you will get in another court at another time. [laughter] >> i really do want to underscore and the tenor and i think some of my friend's remarks earlier is we're forcing

the purchase of a good and just underscore what congress is doing is recollecting the means of payments for a product that they would otherwise buy. you know, ultimately, could congress if they were reacting to huge externalities in the wheat market and with economic effects could they require the purchase of wheat during world war ii? i imagine the answer would be yes. but that isn't the power we are asserting here. we don't think the court should get into that set of questions because congress is reacting to something that is really different and that's the first finding that i opened my remarks with. >> it seems now when you talk about means of payment as opposed to trying to buy it from your perspective -- the word keeps going through my mind is responsibility. that ultimately in the aggregate, citizens use health care. and somebody has to pay for it, being regular citizens or being the government and the question

is, may the government allow or require citizens to be responsible or can you simply do nothing and wait until you get sick and everybody else takes care of you? i mean, it seems to be a formulation but again, it seems back to how do you form the issue? as someone once said if you allow me to form the issue i'll give you one answer at a time and that's the difficulty i'm having is forming this issue because when i listen, steve makes a very good argument activity so you've coming into this other angle which given us this judicial argument which makes our job more difficult. >> i want to give the answer exactly to the first half of your question. and say that, you know, i would reject a characterization that what congress was doing is regulating inactivity. i know that's my friend's argument is somewhat rhetorical

and also some legal course. but what congress is doing here is dealing with the situation in which everyone is participating in the health care markets. many are doing it but to use your words in an inresponsible way and that's -- >> it's the responsibility -- i guess in a broad sense i'm thinking in terms of -- when i think of social welfare and sufficient, people can choose to not do things. and somebody also to take care of them. you don't choose to work, we're going to need all kinds of social-type help and this is an instance where it's kind of the opposite. basically, you're saying if you choose not to get, hence, and you can be responsible for paying the payment but we as a nation is not going to allow them to go to emergency rooms well, you didn't pay so we're not going to treat you. so somebody is going to ultimately treat them in the process. so from my perspective -- i'm trying to get away from the word

responsible. it seems to be -- congress said we're going to make you responsible as citizens and you cannot put yourself in a position of not being responsible and i hope -- and i want mr. staver to address this, if you will, when you come back because i'm just trying to get the understanding that am i wrong on that? >> you could wrap yourself around that. but doesn't that leave you with the whole argument that we now have a federal government as big brother? >> oh, i don't think so, judge motz. >> so they're forcing us to be -- >> no, no, no. this is a situation in which people are invariably going to seek health care, okay? and they're active participants in that market and the only question is about financing. unlike other markets, the gm car was another hypothetical. you can't show up at the gm lot and drive off with a car and

stick the bill with your neighbor. it's different because it's health care and what's different is federal law, state law, professional warrants, doctors and all that provide duties to treat on a broader scale and so someone is going to pay and that's what congress found up to the tune of $43 billion a year. >> and the only way government addresses this is by taxing everybody, they build the bridges and they put up the street and that's how it's taken care of. >> exactly. >> the challenge is do they choose to do it that way? >> well -- >> it's explicitly not to do that way. >> if we could talk about that in 13 minutes because congress essentially did invoke the tax power and that's what congress did it justice by the tax power. >> and you didn't appeal that the dc case -- [inaudible] >> yeah, no.

no. we won the case in dc and so it's up on appeal and we can defend the judgment on any grounds that we would like. >> you didn't appeal that part of it? >> we wouldn't appeal it because we won the case. i don't believe we filed a brief in the dc. we'll get the answer to you to that but i'm not sure. certainly we are prepping in this case the tax to your and i think we intend to in all cases. >> is there any legal significant that we are to attach with all the penalties? >> no more so in the supreme court case with the word penalty or found it was under word and lucky which was under the word premium and found it to be a tax. >> what if congress said this is not a tax? >> even if congress said it is not a tax, i think the supreme court has been clear and this court in the csx case has said that the test is not kind of a

magic words what congress says or doesn't say. it's really a functional thing. what is congress doing at a given time? and the supreme court in 1948 in the woods case, i think, was very explicit on this point saying really the court is supposed to figure out practically what is the congress doing? not what they said at the time. not what words they used but really what is going on? and here what is going on is that this is the tax. >> does the absence of a robust enforcement mechanism and statute change what you said? >> i don't believe so. when this court has looked with enforcement and asking the case who is doing the enforcing is it the criminal apparatus or the secretary of the treasury. here it is the secretary of the treasury who does that enforing. >> if i understand the brief if the only potential mechanism out there is withholding of a tax

refund? is that right? >> i think two different reports of the mechanisms. one is that if someone overpays their taxes, then it's returned to the -- they can't get it returned in the future. the other is that the irs may be able to file a lawsuit to the secretary of the treasury and obtain the information but the central point of it -- >> the taxes are -- >> excuse me >> what is the taxpayers cost with respect to this filing that they're supposed to make? would the internal revenue service have other provisions under the internal revenue code? >> my sense is they would but it's not something that's obviously come up and won't come up until 2014 so i just wouldn't want to give you an answer to that at this point. but here's are the things that the court has looked to determine if something has a tax or a penalty as mr. staver said. whether it's punitive.

one is, is it revenue-raising and as judge motz said congress will raise 4 billion a year. will it go for the general welfare. congress found it was. it's a very differential standard of review and then finally i think the hardest question for us is mr. staver's point. well, it looks something like a criminal punishment and, therefore, it isn't justified by the tax power. and that, i think, has several problems. unlike criminal statutes, and the child labor cases i think is a good example. the answer doesn't exist here. so if there's no requirements here or mens rea requirements here as it would be in the ordinary punitive context. the penalties themselves are not exorbitant. they are tied directly to the problem and unlike any other criminal penalty that i'm familiar with, when you pay the penalty here, you are excused all together from the underlying thing that the government is asking you to do, which is to

have insurance. and so i don't think it looks like a penalty. i think it looks very much like a tax. i think it functions like a tax. >> well, one of the things we talked about in the child labor cases was the taxation be a commodity or not a commodity. that was the first thing they talked about. it was a commodity being, quote, taxed here. >> i think that's true. but i don't think that itself is relevant. congress can tax any number of things that aren't commodities from insurance to legal services. >> and with the labor laws. the court says taxation is not a commodity. it's a disbursement. >> i think congress has a large -- i think it's a stretch to say the tax policy would extend only to commodities. >> is it an application tax? >> no, i don't think so because it functions like a classic

computation tax and head tax equally everyone pays the same amount of money. this isn't everyone pays the same amount of money. the other two individuals conduct and i should say one interesting thing about this is that it is, you know, undoubtedly a tax in the mind of the people. because every april 15th they are going to know because of this law that they have to either pay a certain amount of money or don't have to pay it because of their -- because of their -- because they met the minimum required -- >> if they were told by our congress or their president that there's two different kinds of acted. at the time it was enacted it was not a tax. at which point of time are they to look at. >> i disagree, judge motz, in the fact that i think congress was very clear in many different places that they call this a tax. i think there's a constitutional points of order in the senate that was defeated on this ground.

on the ground that it was a legitimate exercise. >> on my first series of questions that it really didn't matter what congress calls it. it doesn't matter in the regulation what congress calls it. it doesn't matter what congress says about it going up to the legislation. so all of this fight about what was said in the government's view -- >> absolutely. >> and even how -- i just -- in the commerce clause cases the supreme court has obviously are very concerned about limits. and what -- aren't we just opening this up on the limited congressional power here -- [inaudible] >> not at all. >> what limits would we have? >> first of all, what we're seeking, i think, is about regulating the financing the transactions and so it falls within a -- >> a portion of your argument giving us all of these

incredible statistics about how huge this industry is, if you talk -- whether you're calling it health care, or health insurance. so it's not a narrow -- all of a sudden this huge industry is regulating it with this huge amount of legislation becomes this narrow position? >> well, it's a huge industry and it is huge regulation but it is settled by clear legal principles that i don't think expands the limit of a commerce clause is. and morrison established two fundamental limits and this is the language on page 491, quote, lopez and morrison rests on the principle that where a federal statute has only tenuous connection to commerce and in terms of the traditional state concern the statute exceeds an enumerated federal power. and our point is that we completely agree with lopez, morrison and the court here. there are two rock solid limits on the ability of the federal

government to act using its commerce power. one is court can't act in aten ated and there's a traditional state responsibility. there's a contention what is truly local and what is truly national and for the reasons i was suggesting to judge wynn earlier this is a market that is truly national in scope. >> thank you very much. >> thank you. >> judge, in answer to your question regarding whether or not this is forced responsibility, i think that's, in fact, what this is. this would essentially say because there's homelessness everyone needs to have some kind of purchase of a home. because there's obesity,

everyone needs to consume vegetables as opposed to having red meat and potatoes. people are responsible because they overeat and they don't exercise and, therefore, you need to join a health facility, in fact, there was testimony by a harvard law professor in the record that said perhaps congress under the commerce clause could force people to join a health club. i think what we have here is the concern as, judge motz, as you have raised -- >> i want to make sure i understand your distinction and i'm thinking about your examples of obesity of a health club thus this one going on here. from i understand from the government's perspective, they are saying it's not going to be a choice whether you're going to use health care services. in the aggregate you're going to using health care services and whether you're going to get obese, i don't think you could make that argument in the aggregate people would want to be obese or they've been in the

aggregate and they want to be fit and i'm trying to make that connection. i see where you're going with it but i want to make sure that distinction -- and i don't want to leave with that in my head to make that distinction. because if the argument is you will in the aggregate use health care services and this is a necessary or an essential component to make this act by congress work to deal with what you will in an aggregate to deal with obesity. >> first of all, if you're looking to the health care market as opposed to the health insurance market. not everyone will participate in the health care markets. >> that's what i know to know from you. you're dealing with the other premise and that is in the aggregate individuals will

require health care services at some point, it an emergency care situation and somebody is going to have to take care of it but you dispute that premise as being a comprehensive regulatory scheme -- >> i would dispute that everyone is going to have to participate in the health care market. >> and when you're dealing with aggregation -- >> certainly -- >> some people, my father who's 88 years old didn't go to the doctor much in his life now he does. >> as my mom as well. that's why most people are not necessarily -- it's not a proper premise to say everybody is going to be there. the aggregate perhaps but if you look in the food industry there's universal participation in that. and there's universal consequences if consuming wrong feud and consequences to consuming correct food. people are irresponsible in the way they take care of their bodies. if congress can do this here in health insurance, congress can force others to consume certain kinds of food.

wickard and raich as judge motz or as applied challenges and are otherwise seen that people want to be exempted out of it. >> sorry. could you help me understand the difference as applied versus facial in the commerce clause context? >> yes. in wickard, there was no challenge to the law. they just wanted to be exempted out. and raich is the same. they did not congress' authority. they wanted to be exempted out. they as individuals wanted the statute to continue on, but they as individuals wanted to be exempted out of the application. whereas here, the challenge is to -- a facial challenge to the component of this law, the mandate. and not only would it not apply if it were struck down here. it would not apply to anyone else. whereas raich and wickard they would apply to those individuals and apply to the contrast.

>> so it's a facial challenge to them going back to actually my original question to you, mr. staver. it's a facial challenge to the individual mandate? >> correct. >> okay. >> yes. >> your time has expired. thank you very much. >> thank you. >> later that day the second circuit heard oral argument in another case testing the constitutionality of the 2010 health care act. commonwealth of virginia versus health and human services secretary kathleen sebelius. you can watch that anytime online at c-span.org/videolibrary. two other circuits the sixth and eleventh have oral arguments scheduled on the constitutionality of the affordable health care act. >> u.s. senate is about to gavel in after their weekly party lunches. senators approved the nomination of susan carney to be a u.s. appeals court judge by a vote of 71-28. this afternoon, senators will

debate a measure repealing oil and gas company tax breaks and will move that vote forward on a bill that's set for 6:15 today. a republican bill expanding domestic oil and gas production comes up tomorrow with a vote set for tomorrow afternoon. and now to live coverage of the u.s. senate here on c-span2. the presiding officer: the senator from new jersey. mr. menendez: mr. president, i rise to move to the legislation. really to speak out for taxpayers and against continuing

to provide subsidies to multibillion-dollar big oil companies. and we're talking about the big five. we're not talking about any other entity, just the big five. a vote on my bill presents a positive vote on my -- a positive vote on my bill presents a simple choice for everyone in this chamber: are you on the side of working-class families or are you on the side of big oil? there are lots of ways to cut the deficit. many of our colleagues, particularly in the other body, they want to end medicare and cut student loan programs. what i and my cosponsors want to do is end wasteful oil tax breaks for a wealthy industry that does not need them. now, mr. president, clearly we all need to tighten our belts to help address the deficit. all of us, even the oil

companies. we all know that oil companies are among the largest, most profitable companies in the world, but sometimes it's hard to understand the true scale of their wealth. so this chart is an attempt -- just a simple attempt -- to give some perspective. the medium -- median income in the united states is about $50,000. exxonmobil, just one of these big five, is projected to earn in profits -- profits -- $42.6 billion this year. $42.6 billion. now, it's impossible to show this disparity son a chart, but if this chart were to scale and each bundle of money equaled $50,000, then we would need more than 850,000 stasks bills to

equal exxon mobile's profits over the next year. 850,000 stacks of bills on this poster would be about 170,000 feet high, or about 32.2 miles straight up through the ceiling of this chamber and beyond the stratosphere. now, the printing and graphics department is very good here at the senate, but 32 miles of postage was -- 32 miles of poster of probably a bit much, so i decided not to do that. i appreciate the parliamentarian acknowledging that i shouldn't have done that. mr. president, my bill would close several loopholes for big oil, loob holes that given the current budget climate would let big oil get away without making any is beingifie is sacrifices e that we're asking middle-class

families, the disabled and elderly to tighten their belts to help reduce the deficit. there simply is no commonsense explanation for balancing the budget on the backs of working families and letting multibillion-dollar oil companies keep billions in taxpayer dollars. now, i know that at the same time that the median income is $50,000 for americans, here's what it is, if you are a c.e.o. of one of the big oil companies. in last year alone, the c.e.o. of exxonmobil got paid $29 million. the conocophillips c.e.o. got paid last year about $18 million. chevron, about $16 million. most americans will never see that in their lifetime of work. and so to have these executives come last week before the finance committee and say, as some of them -- one of them, the

suggestion about taking away some -- not all, but some of their tax subsidies was un-american is pretty outrageous. let me explain two provisions of my proposal. the first provision has to do with foreign tax credits. u.s. taxpayers are taxed on their income worldwide, but they're entitled to a dollar for dollar tax credit for any income taxes that are paid to a foreign government. they get that taken off here. makes sense, because you don't want to tax the same activity twice. but u.s. oil and gas companies have pretty smart lawyers and clever accountants. they have figured out that if you can convince a foreign government, like indonesia, to charge you taxes instead of a royalty, which is in essence a

fee that you pay for the purposes of drawing that oil out of that country, that they can get a big break on their u.s. taxes. but what this amounts to is that the united states taxpayer is subsidizing foreign oil production. this bill would close that loophole and return $6.5 billion to the treasury. another one: in 2004, congress created the domestic manufacturing tax deduction. it was designed to help u.s. manufacturers, who export a product to a foreign market -- so cars, you know, iphones, ipads, you know, all of that -- well, few would really see the extraction of oil from the ground as manufacturing. but again big oil's lobbyists earn their money. they saw an opportunity. some made phone calls and lo and

behold, according to the tax code, oil companies are in the manufacturing business. this legislation closes that loophole and saves taxpayers almost $13 billion. that would be $13 billion more towards deficit reduction. now, the american people understand this bill. they understand that big oil makes enormous profits. there's nothing with making profits, by the way. but they don't need to have our tax dollars in order for them to make those profits. they understand that big oil does not need taxpayer subsidi subsidies, and they understand that if big oil wants to lower gasoline prices, they could put a lot less money in stock buybacks and a lot more in lowering prices or producing more oil. but in order to combat this straightforward, commonsense bill that even the cato institute supports, big oil and its supporters have come up with some pretty strange rhetoric.

the strangest by far, as i alluded to before, is suggesting that those who support cutting these wasteful subsidies are un-american. it seems to me bh a company stoops -- it seems to me when a company stoops so low as to question the patriotism of those that would suggest that you know what, maybe you can do without $21 billion in taxpayer subsidies when you're going to make anywhere between $125 billion in profits -- not proceeds, profits -- to $140-some-odd billion, to question the patriot i am of those who suggest you zoo need a further taxpayer subsidy is to suggest you don't have very good arguments on your side. the charge of "un-american" is outrageous and i think the 74% of americans who support ending oil subsidies know they are more american than that point of view. another argument i keep hearing is that oil companies are entitled to these breaks.

this argument seems to suggest that the wealthy and powerful deserve what they get and that working-class families should know their place and know better than to ask oil companies to do their fair share as well. you know, warren buffet, one of the richest men in america, said "there's class warfare all right, but it's my class, the rich clarks that's make the war -- the rich class, that's making the war, and we're wing." this bill says that even the most rich and powerful among us must do their fair share to help us reduce the deficit. their high-priced lobbyists cannot stop us from doing what is fair and what is right. now, some in the industry have also claimed that cutting $2 billion in annual oil subsidies to the big five oil companies will somehow make oil and gas more expensive. that argument is absolutely false.

this bill would save taxpayers $21 billion over ten years, roughly a little over $2 billion per year. compare $2 billion in taxpayer subsidies to the projected anywhere between $125 billion and $144 billion in profits, the big five oil crps expected to make this yeemplet so if the big five oil companies could just live -- just live -- with $142 billion in profits in 2011, they could pay their fair share in taxes, help lower the deficit, and not raise the price of gasoline. let's put it in a different way. the finance committee recently went to the corporate -- went through the corporate filings of the big five oil companies and towndz $found that their cost of extracting oil is about $11 per barrel. when oil is trading at nearly $100 per barrel, it is simply absurd to suggest that the costs

oil companies are facing is what is determining the price of oil, that cutting $2 billion per year of the subsidies will somehow force oil companies to raise prices. in addition, the nonpartisan congressional research service just came out with a definitive report echoing the sentiments of countless economists and other disinterested observers concluding that my legislation would not increase gas prices at all. so, mr. president, it's time for the big five to do the right thing for a change and pay their fair share. this should not be hard since in 2005 the c.e.o.'s of some of the big five oil companies testified that they agreed with former president bush, that they do not need subsidies to drill for oil when it's selling at $55 per barrel. well, it's selling at nearly $100 per barrel right now, sthoa so it's quite strange that

anyone thinks they need government handouts to drill when the marketplace is driving them that way. we simply cannot expect the average working family to shoulder the burden of lowering the deficit alone, and i hope some of the favorable comments i've been hearing from my republican colleagues in recent weeks means they're ready to join in this effort and lower the deficit because all of the savings goes directly to deficit reduction under the legislation and do so in an equitable and effective manner. what's fair is faimplet nothing about continuing the subsidies is fair. those on the other side would end medicare as we know it in the name of deficit reduction. while continuing to pump billions of dollars in corporate welfare into a $100 billion profit industry. that's the height of hypocrisy. it's not wear to working families. it is not a wise use of limited federal resources. and if this body does the right thing today, it is not going to continue. there's nothing fair about the

suggestion of ending medicare in favor of big oil subsidies. big oil has to do the right thing by america. they can be part and should be part of the solution to our deficit challenge. that is the opportunity that we have today. with that, mr. president, i yield the floor. ms. murkowski: mr. president? the presiding officer: the senator from eafnlgt. ms. murkowski: thank you, mr. president. mr. president, i ask consent that i be recognized for up to 15 minutes and that the following list of republican speakers be recognized for up 10 minutes eerchtion not necessarily in this order, but the senators to be recognized would be mccain, chambliss, cornyn, barrasso, paul, hatch, hutchison, and vitter. the presiding officer: is there objection? without objection, so ordered. ms. murkowski: thank you, mr. president. i have also come to the floor today to speak about the proposal to raise taxes on the five largest domestic energy

producers, and i think it is important that we remember that we are speaking about five energy producers, five oil companies. we're not talking about a tax proposal that is broad and wide and encompassing. we're talking about a proposal to raise taxes on the five largest domestic energy producers. and i have to admit that i have some hesitation about even engaging in this floor debate at all because i think we recognize that the words in the statements that we're delivering here are just that. they're just talk. they're just words. this proposal is designed to fail, but in failing it is designed to score some political points, and it seems like that's where we are today. but as a senator who represents a state like alaska, an oil and gas-producing state, a state that would clearly be hurt by this proposal, i am obliged,

obligated to outline why i feel this is so deeply flawed. so i want to start by really stating the obvious here. this legislation will not reduce energy prices. but if anything, it will increase our energy prices. it will not substantially reduce our deficit or our debt. but if anything, it will add to those burdens by shutting off production and forcing the government to forego production revenues. i think it's important that we put this in context, because people around the country, as they're looking at the price at the pump go up day after day, they're saying what are you doing in congress to lower the prices? what are you doing to deal with the higher price of gasoline in this country? and i think it's important that we recognize that this legislation that we have in front of us does nothing to reduce our energy prices. and it's not just me that says that. the chairman of the finance

committee has indicated that. we've heard several members on both republican side of the aisle, democratic side of the aisle say this is not going to reduce our prices. so what exactly is it that we are seeking to do with this other than send a message? this proposal, i think it's important to recognize, will hurt poor and working families across our country. we all know what the price of gas is in our respective states. i will remind my colleagues that as much as alaska benefits from high prices of oil as we are a producer, it is a fact that it kills us in our local -- in our local communities in, our economies because we are the state with the highest gas prices across the country right now. there was an -- there was a story, news story last week back home in consabu, they're paying

$7.58, $8.95 in andler. i was in for the yukon a couple weeks ago. they are a $5, $6, $7 gas figure. the spring barge which will be coming in four, five weeks now will be delivering fuel at prices that were set some weeks ago, and people have been alerted that on the day that the barge delivers the fuel, the price will go up at the pump one additional dollar. we're not talking cents here. we're talking an additional dollar to the people in fort yukon. we know very well what high prices mean to us. our constituents are asking us to do something about it. what can you do to lower those prices, to develop a coherent energy policy that starts to work now and then yields progress over time. our constituents are not asking us to make this problem worse,

and yet that is precisely what these proposed tax increases will do. now, i heard my colleague here say that, no, this is not designed to increase the prices that are out there. it might not be designed to do that, but that's what we can expect if in fact these tax increases do go into play. it's been a few years since i got my degree in economics, but even though it was more than a few years ago, i do remember some of these very early entry-level classes that i took. and i remember learning that raising taxes on something is going to tend to make it more expensive. and i remember learning that when you tax something, you tend to wind up with less of it. that's just basic economics. and i think that there's at least some understanding of these concepts around here, because i don't see anyone that is proposing to raise taxes on

solar panels or raise taxes on wind turbines to bring down their costs. the reality, mr. president, is that this proposal -- and i believe the point is conceded even by supporters -- this proposal will not cause gasoline prices to drop. instead it could very well cause them to rise. and i understand the memo from the congressional research service suggests that no significant impact on prices will be seen in the short run. but that is the key phrase here: in the short run. because what we need to be doing is looking at the longer term than next week or next month. whenever corporations face increased costs, they've got a responsibility to their investors to recover those costs wherever possible. and usually what happens is they pass them on to the consumers. and to the extent the costs of this proposal cannot be passed on, these companies will simply have less to invest in new

projects. now, that's kind of talking about what happens or what doesn't happen with the price of gas. but this proposal is also not about reducing the debt either, and i think it's important to put that in context here. at best it may be a drop in the bucket. krorgt the c.b.o. -- according to c.b.o., the president's fiscal budget in 2012 through 2021 would result in $9 trillion in new debt. this proposal would raise $21 billion or about .2% of that debt. we'd still need something like 450 times more revenue just to break even, never mind the $14 trillion debt we've already incurred. we all know we hit that debt ceiling yesterday, so it really does cause you to wonder is this the best that we can do when we're talking about balancing

the federal budget. now, i understand that this proposal is not all that it will take, and no one is proposing that it do so. but i think it is important that we be honest with the american people when we talk about what this would mean in terms of a reduction to the deficit. and if we're being honest with each other, we're going to see this proposal for what it is. essentially a "yes" vote tonight to raise taxes on oil and gas companies is simply a vote to try and take a pound of flesh from these five major companies that, yes, in fact are making money; yes, in fact, are making a profit. a "no" vote on this proposal tonight is a vote to try -- try -- to keep our prices under control, and it's a vote to help preserve america's competitiveness within the global economy. now i also want to take just a moment here to kind of set the

record straight on subsidies. there are no payments from the federal government to the major energy producers as some have implied. past congresses have decided that those companies, and most other companies in america, i might add, deserve certain tax reductions. and this is a critical distinction here because we haven't decided that the federal government should take -- should actually give more to these companies. what we've decided is that the federal government should take less from them. now, if that's the same as a subsidy, then new homeowners are direct recipients of subsidies because we deduct mortgage interest payments. and that means that almost every company in our country, whether it's a hollywood studio, "the new york times," or whoever it is, that almost every company then is somehow or other subsidized. if we're talking about leveling the playing field by eliminating

all of the incentives within our tax code, especially in the context of broader reform that makes our tax code simpler and more fair, i welcome that discussion and i think many in this chamber tkofplt it would be a -- chamber do. it would be a different conversation if we were considering a reduction in the corporate tax rate. instead, we're here debating whether or not to give different tax treatment to essentially punish a handful of companies in just one sector of our economy. and really there's no policy justification for it other than that they can afford it. they're making money. they can afford it. so i would ask my colleagues: is this the kind of business climate that we want for the united states? and i really have to wonder then, if the answer to that is "yes," who the next target will

be? if making large profits signals to congress that you should be taxed at a higher rate. in reality, domestic energy producers are already among the most heavily tax companies here in this country, while the effective tax rates for all corporations average 26.5% last kwraoerbgs the oil and gas -- year, the oil and gas industry's tax rate was at a much higher 41%. instead of being subsidized by the federal government, the industry is actually a very large taxpayer. the federal government taxes gasoline at a rate of 18.4 cents a gallon. it also receives billions of dollars each year in nontax revenues from the industry. producers must pay the government for the rights of each of their leases. they've got to pay the annual rents to hang on to those leases. they pay the royalties on any production that ultimately results from them. so, in terms of what is paid out, according to one estimate,

the oil and gas industry's total payments to the government amounted to $86 million per day -- per day -- in 2010. now, i would also remind my colleagues that the president has established a goal of cutting oil imports by 3 million barrels a day by 2025. if we intend to achieve that goal -- which is a good goal -- raising taxes on domestic oil production just defies the logic here. to reduce imports, we will need to increase our domestic production. and that won't happen if we impose a hostile tax environment for the companies that operate here, companies that are already challenged to produce the oil and gas resources that we know we have but we haven't been allowed to explore. before i conclude, mr. president, i want to mention an article that recently appeared in "the financial times." it noted that in 2011 -- this

year -- opec nations stand to take in more than $1 trillion from exporting oil. our nation -- the united states -- will provide a pretty good share of that money, likely tens of billions of dollars. and what do we hear about it? nothing from the people who are proposing these tax increases. nothing about the tremendous sums of money that we send overseas each year for foreign oil. just the far smaller sums that could be collected from domestic companies through higher taxes. that's missing the forest here, mr. president, to cut down the one tree that just happens to be growing in our line of sight. so here we are, instead of doing everything that we can to halt the hemorrhage of american dollars to foreign countries, the senate is now focused on an effort to raise taxes on five companies who actually operate here. the day after we hit the debt ceiling, we're debating a measure that would hardly make a dent in our debt.

we're on pace to spend trillions of dollars outside of our economy in the years ahead. and we're on pace to incur trillions in federal debt. about so long as a few companies pay higher taxes, somehow or other it makes us all feel better. no wonder the american people have lost so much faith in the legislative process here. no wonder so much blame for high energy prices is placed on the federal government. the proposal before us today is not an answer for high gas prices or the federal debt. it is more likely to raise our energy prices, reduce our nation's oil production, and deepen our annual deficits. i had hoped that we would have a good, a substantive, a reasoned debate and discussion about how we're going to solve all of these problems, but instead we're left to debate a measure that is all but certain to fail. i think that the senate can do better than that. we will have debate tomorrow

about the republican alternative, a bill that while it's not perfect, will increase production, generate revenues for the government, create new jobs, improve the safety of our offshore operations. if we're looking for good policy, mr. president, i think that's where we need to start. we've got a long ways to go, but what we have before us today, i think, is unfortunate. with that, mr. president, i yield the floor. a senator: mr. president? the presiding officer: the senator from california. mrs. boxer: thank you very much, mr. president. what is the order? what is the order? the presiding officer: there are 4 hours of debate equally divided on the question of s. 940. mrs. boxer: is there a specific time limit? on each individual senator. the presiding officer: the majority leader has 107 minutes

remaining. mrs. boxer: i would ask for as much time as i might consume; probably less than 15 minutes. the presiding officer: without objection, so ordered. the senator is recognized. mrs. boxer: i want to say the senator from alaska does an excellent job of representing the oil companies. she puts forward the oil companies' arguments magnificently. she's real good at it. she was an economics major, and so was i. and she said what she learned in her time, and let me tell you what i learned. i learned that corporate welfare is wrong, that corporate welfare to companies that are on the fortune 500 list particularly wrong. exxonmobil number 2 on the fortune 500. excuse me if i don't cry for exxon. forgive me if i shed no tears for chevron. they're number three. and forgive me, conocophillips, you're number five, but you're working on it. i'll tell you who i shed tears

for -- my people at home who are having to pay ridiculous prices and who also have to face a federal deficit and are looking to us for leadership here. and leadership requires us to say, how long do you have to give corporate welfare to oil companies who've been getting it for 40 years? count them, 40 years. and they're so huge, they're multinational, they're multi billion, and i'll get into what their people earn, what their c.e.o.'s earn in a minute. so i learned that corporate welfare is bad, it distorts the market. and to compare the tax deductions big oil has with home mortgage deduction gets right under my skin. because the people who benefit from the home mortgage deducti deduction, primarily the middle

class of this country. so don't come here and compare home mortgage deduction with corporate welfare for the biggest companies in our country. so when are the defenders of big oil going to decide how much corporate welfare is enough? and when are the defenders of big oil going to answer this question: how how does the deficit have to go before you're willing to step up to the place and end corporate welfare for the biggest corporations that are cleaning our clocks all the way to the bank? i -- i would hope the time is now, and i'm going to try to lay out a series of charts why i believe that. so let's go with the first one. first of all, we see the first quarter profits, exxonmobil,

$10.7 billion. a percent increase from last year,69%, mr. president. and i'm supposed to cry for them? i don't think so. b.p., with all their troubles, corporate profits, $7.1 billion. this is just in the first quarter, mr. president, up 17%. shell, up 30%. conocophillips up 44%. chevron up 74%. and yet big oil has the defenders on this floor saying, wah-wah. we cannot allow them to pay their fair share. well, i've got to tell you, we've got a deficit problem, and if we can't ask the wealthy few in this country to do their share, i don't know where we're headed. let's do the next chart. mrs. boxer: let's cry for big oil, or let's not. $14.5 million, the average compensation for the big five

oil company c.e.o.'s. that's 307 times the average salary of a firefighter. it's 273 times the average salary of a teacher. it's 263 times the average salary of a public officer. and it's 218 times the average salary of a nurse. so we actually have people in this united states senate coming here not only to defend these corporations but the c.e.o.'s who are crying to us that their companies can't pay a few dollars more to help us solve our deficit problem. and you know what? we could lose this vote. they're filibustering it. we need 60. let the american people see who's on their side or who's on the side of these corporations. the effective tax rate for exxon, 18% on their $7.7 billion

in income. a family of two teachers have an effective tax rate of 19%. can you believe this? and we've got people coming to this floor crying for the oil companies. when they pay an effective tax rate less than a family of two teachers. exxonmobil, 18% on their billions. a family of a truck driver and a dental hygienist, 19%. so the effective tax rate of these humongous multibillion-dollar, multinational corporations is less than our middle-class families. and people are coming here to cry tears for these oil companies. and they were whining in front of that committee. i mean, they may be really nice people but they're out of touch,

i agree with that. i think that was senator rockefeller who made that statement. what we could do with the $21 billion over the next ten years. we could continue these handouts, this corporate welfare to big oil, or we could fund the entire "cops" program for all those ten years and we could also provide after-school care for 2 million kids. so i'm asking people, would you rather have a cop on the beat at home and know that our police are out there and they're protecting our families, would you rather make sure that 2 million kids are kept off the street and have quality after-school programs? or would you rather continue corporate welfare for these five corporations in the fortune 500? three of them -- of the american companies are in the fortune 500, is that right?

yeah. now, we could also provide ten years of federal emergency management administration disaster relief. and we're looking across this great nation of ours and we're seeing flooding, evacuations, sandbagging, all the problems, typhoons, hurricanes. and we know in california about earthquakes. fema, they're running out of money. would you rather make sure that they're ready for the next disaster? or would you rather continue corporate welfare for these five corporations? you've got to answer that question, america, because it doesn't look like we're going to win this one. and these are issues you have to decide when you vote. that's the beauty of this country. people make a decision when they vote. if they agree with the senator from alaska that these five big oil companies still need corporate welfare, they know who to vote for. what we could do with $21 billion over the next ten years. we could fund the ryan white

program, which handles the aids epidemic, at the level the president requested and get rid of that dreadful disease. now, you heard sort of veiled threats from my colleague who is from alaska, an oil state, and i fully respect her, just disagree with her entirely, but she has an absolute right to say what she says and believes what she says. i think it's parroting what the oil companies say. that's fine. that's her option. but the joint economic committee said "repealing oil subsidies would have no effect on consumer energy prices in the immediate future." so all those threats about they're going to raise prices -- i ask you rhetorically, mr. president, for all these years they've been getting these subsidies, did they ever lower their prices? no. they haven't.

the congressional research service said "a small increase in taxes would be unlikely to reduce oil output, and hence increase petroleum prices." so the experts are saying nothing in this bill to make them pay their fair share is going to adversely impact gasoline prices. the former c.e.o. of shell oil said, "with high oil prices such subsidies are not necessary." he said that in february. their own people. their own people. and yet when they come to the committee, they're all whining about it. now, then you hear from those from the oil producing states, well, we don't have enough rigs in operation. this administration is not drilling. excuse me, there is such a thing called the facts. let's look at them in this cha

chart. we see more drilling than ever before. this administration is moving forward. the oil companies have over 40 -- how many acres? 40 million, is that right? 50 million acres of leases -- leased land and offshore that they could drill on today. and they -- all they want is more and more and more. they want to come to california, drill off our pristine coast and threaten tens of thousands of jobs that we have in our fishing industry, our tourist industry. they don't have to do that. they are sitting on these leases. they are drilling many more. so let's just have the facts be part of the debate and that's what i'm trying to do today with these charts, to lay out the facts. now, how do we reduce gas pric prices? i had a press conference in -- actually in an independent gas station, and the independent gas

station owner was wonderful and said, i agree with you, senator. there i was coming out with this plan. here's how we can reduce gas prices. end big oil subsidies and take that money, some of it, reduce the deficit and take the rest and invest in alternatives so we have alternatives, clean fuels. batteries that can run our vehicles so we don't have to have these automobiles that are gas guzzlers. crack down on fraud and speculation. a lot of this increase is due to that. use it or lose it, say to the oil companies. you own all these leases. drill on those leases. release oil from the spro. we know the strategic petroleum reserve has a tremendous amount of oil. this is the time to tap it. the last time we did it, mr. president, prices went down 30%. 30%. invest in clean energy and efficiency. reduce exports. can you believe that the producers right here in america

are exporting their oil, some of their oil. keep it home. keep it home. we need it here. so that's a plan that we can take. but let me just conclude my remarks this way. in the land of the free and the home of the brave, we need to have some fairness in our lives. it's crucial. and all the talk about competition and we want competition. you don't have competition when you are looking at these huge companies. and my colleague from alaska talks about comparing them to these little bitty solar companies that are just getting started. when companies are just getting started with a new technology, that's one set of circumstances. but when you give these tax subsidies like this to big oil, you distort the price of the commodity. you distort the price of the commodity. and you bring it down.

and, therefore, it's anticompetitive with other sources of energy. and, mr. president, this is the moment. we are looking to cut the deficit. we are looking for ways to bring billions of dollars home so that we can get out of the red. and what could be more perfect than this opportunity in the name of fairness, in the name of competition, in the name of deficit reduction, frankly, in the name of the consumer? let's have some fairness, and let's not come down to the floor and compare these corporate giveaways to the mortgage deduction that our middle class so needs. and i thank you very much for this opportunity, and i hope that we will have the courage to vote to end this corporate welfare. thank you, very much. i yield the floor, and i note the absence of a quorum. the presiding officer: the clerk will call the roll.

quorum call: call be dispensed with for just a moment. the presiding officer: without objection, so ordered. mrs. boxer: and we ask that all the time not used be charged equally to both sides. the presiding officer: wortthe t objection, so ordered. mrs. boxer: i thank you. and i note again the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

the presiding officer: the senator from louisiana. mr. vitter: thank you, mr. president. mr. president, i ask unanimous consent to end the quorum call. the presiding officer: without objection, so ordered. mr. vitter: and, mr. president, i ask unanimous consent to speak for up to 15 minutes. the presiding officer: without objection, so ordered. mr. vitter: thank you, mr. president. mr. president, american families all around the country certain, certainly including lieu loose, are suffering at the -- including louisiana, are suffering at the pump as the price goes up and up and up. it does as we're just getting ready to enjoy a little vacation time with our families, use a little more gasoline maybe driving places. that's always tough. but it's not just a typical summer experience. this i this is worse than ever, and i have the sinking feeling more permanent than ever. mr. president, i'm afraid this isn't a blip. this is a long-term trend and it's really hitting american families in the pocketbook hard. it's hitting louisianans in the

pocketbook hard. at the same time, we see historic turmoil in the middle east. we see so many signs that we need to get hold of our energy picture, so energy and the need for, among other things, increase domestic energy production is absolutely crucial. mr. president, that's why it's so darned disappointing what we're going to do or perhaps more appropriately not do on this crucial subject in the senate this week. first of all, it's disappointing because we're going to end up doing nothing. we're going to have some votes, we're going to have some debate that are more or less messaging votes, and nothing is going to come of it, and that's deeply disappointing because america needs leadership in action, not just posturing. but secondly, mr. president, it's disappointing, in my opinion, when you look at the two proposals before us, and

because i'm deeply disappointed in them, i'm going to vote against both of these proposals, the menendez bill and the mcconnell bill, although for very different reasons. mr. president, the first vote, of course, will be later today on the menendez bill, and i'm afraid this bill is just pure political demagoguery. attacking big oil because, i suppose, the author and some members think that's an easy target, and meanwhile doing nothing, nothing substantive about the real problem, providing no relief to americans who are paying more and more at the pump. now, mr. president, the bill purports to do away with taxpayer subsidies to big oil -- quote -- unquote. let me give you a factual translation of that. the factual translation is to increase taxes on certain energy companies by disallowing them

from claiming the same sort of deductions and credits that thousands of other american businesses and manufacturers can claim, some of which go back and are almost as old as the income tax itself. that's the factual translation. let me also give you the translation of what it would do. according to nonpartisan sources like the congressional research service, it would decrease gasoline supply and increase price at the pump. what a great result. you know, american families are suffering as it is going into the summer with historic high prices, and so it's being proposed on the floor measures that would actually decrease supply and increase price. exactly the opposite of what we need. now, mr. president, i am completely open to doing away with all sorts of deductions and exemptions and the like in the

tax code, but we should do that overall across all industries, across all groups in america as part of fundamental tax reform. we shouldn't just demagogue the issue and target one industry and a few companies. the president's own deficit commission suggested that brand of fundamental tax reform. i agree with that general approach. unfortunately, so far the president hasn't led on that issue. perhaps because it would mean not just impacts on quote, unquote, big oil. it may be favored companies of his like g.e. might actually have to pay some taxes, or maybe gold mining companies in the majority leader reid's state of nevada would also have to sacrifice very, very attractive special tax benefits. so let's get serious about two serious issues -- fundamental tax reform, and let's look at

that and lead on that, and let's get serious about energy. now, mr. president, i also have to say i'm deeply disappointed with the mcconnell bill. it does some positive things at the margin in terms of opening up access, but meanwhile, the very first section of the bill, the very first substantive section, which is section 2, actually increases the regulatory burden in the permitting process. now, i can tell you, living in the gulf, we have been trying to slog through that overly burdensome regulatory process to let energy companies get permits to begin with. that process is already too burdensome, too cumbersome, too long. it's virtually shut down the gulf, produced less energy and thrown a lot of louisianans and americans out of work. we need to streamline that

process, we need to accelerate that process and not add any new burdens or any new hurdles in it. and unfortunately, section 2 of the mcconnell bill does exactly that. it increases the burdens and requirements and hurdles of even the new obama regulations that have been put in place since the b.p. disaster. specifically, since the b.p. disaster, the obama administration has required containment plans to be presented and approved by the interior department before exploration plans and drilling permits are issued. this bill would go further than that and add a new layer and a new level and a new requirement that even before submission to interior, these containment plans would have to be third-party review. again, i think this is a completely unnecessary extra

burden, extra hurdle, extra layer of requirement. we need to make the permitting process smoother, more streamlined, more accelerated, not move in the opposite direction. secondly, mr. president, while the mcconnell bill opens up a little bit more access, it's very modest. it doesn't touch the eastern gulf. it hardly touches the atlantic. it doesn't touch the pacific coast. it does nothing on shore, including in our western shale areas where there are enormous oil resources trapped in that western shale which we can access because of new and safe technology. so i'm also disappointed that the bill is so modest in terms of the increased access. mr. president, so again, to summarize, this week is pretty darned frustrating for me. it's frustrating because we're not going to do anything. there's going to be a whole

bunch of sound and fury in the end signifying nothing, all too common an experience here in the u.s. senate. and secondly, when you look at the two specific proposals, they are darned frustrating. the first pure demagoguery, the second moving in the wrong direction in terms of the permitting process and not being big and bold enough in terms of opening up access. the united states, mr. president, is the single most energy rich country in the world, bar none. only russia even comes close. no marino country -- no middle eastern country, saudi arabia, anyone else, comes close to our overall energy richness, our resources. but we're the only country in the world, mr. president, that cuts 95% of all of those resources off-limits under law, says no, you can't touch the eastern gulf, can't touch the

atlantic, can't touch the pacific, can't touch alaska offshore, can't touch anwar. going to make it difficult in the western shale. over and over and over we make it difficult to impossible to produce good, reliable american energy right here at home. and most recently, we have done that by virtually shutting down the only productive part of the united states in terms of energy, the western gulf of mexico. that's what we need to change, mr. president. we need to change that in a big way. now, in closing, mr. president, let me say i'm a proponent of all of the above. it's not either/or. it's not just oil and gas. but it's also not just new, undeveloped, advancing forms of technology and energy. we need all of the above in a big way. and so let's come together around that commonsense wisdom of the american people who favor all of the above and let's start doing all of the above

aggressively. but that surely has to include much more domestic production of energy. open access to all of these vast resources we have. we can do it, we can do it safely, we need to do it to provide some relief to american families. thank you, mr. president. with that, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

ms. landrieu: mr. president? the presiding officer: the senator from louisiana. ms. landrieu: i ask unanimous consent to dispense with the reading of the roll. the presiding officer: without objection. ms. landrieu: thank you, mr. president. i ask consent to speak for up to 15 minutes from time reserved on the majority side on this issue. the presiding officer: without objection. ms. landrieu: thank you, mr. president. this is a very important issue that we are debating today, and there are very different views about how we should proceed, and i rise to object to the menendez amendment or bill that's on the floor and urge my colleagues to vote "no," and i'd like to give at least five reasons why i don't think this bill is the right approach. it will not solve the problem of high prices at the pump, and why

i think in many ways it's actually a waste of time to be taking a whole day on an issue that is not going to result in lower prices at the gas pump or in more domestic supply, which are two things that we really need to attempt to do sometime in the next short period. i have a great deal of respect for my colleague from new jersey, as my colleague from california who spoke in favor of this direction. but i do want to give just a couple of thoughts about why i'm going to be voting "no" and urge my colleagues to do the saivme . according to economic analysis, the bill that senator menendez presents to us today to remove tax credits and subsidies from the five major oil companies will do nothing to lower prices at the pump. so, as everyone goes to fill up their cars today, their trucks, their automobiles, their mini

vanns, even if this bill -- their mini vans, even if this bill passed, it will not get near the 60 votes knows move it forward. it will not lower prices at the pump by one penny. i'm going to submit to the record information from independent economic analysis. it might make us feel better to beat up on big oil. it might, you know, present a scapegoat in some quarters, but it will not lower prices at the pump, and that's what we need to be about, mr. president, because this economy or economic recovery that we're in -- slow and spotty in places, but under way -- with be stalled out by prices as high as $4.37 a gallon. i saw it at a station right here in the washington, d.c., area. that's frightening to consumers, to families, to small businesses, and to large industries that are seeing their cost of business go up because

of these prices. we should be working on real solutions. this is not one of them. according to the joint economic committee report on this bill published last week, repealing these tax incentives -- quote -- "would have little or no impact on consumer energy prices in the immediate future an" and the imt in the long-term will also be negligible. so why are we doing it? why are we harming an industry -- five large oil and gas companies that work internationally, that employ 9.2 million people in the united states directly, that are good, hardworking americans, working in and for these companies -- why are we doing it? that is a good question. number two: the industry pays its taxes and then some. i think there is some real misunderstanding that these

large oil and gas companies pay either little or no taxes. maybe people have been told and believe that they have so many tax subsidies that they don't pay taxes, and i want to put that issue to rest. first of all, three companies -- conocophillips, chevron, and exxonmobil -- i don't have this blown up, and i'm sorry, because i'd like to -- i don't know if the camera can pick up this small 8x10 or 8x11 sheet here. but you'll see the rode lines here. conco, chevron and exxonmobil paid approximately 49% -- this is their tax rate -- 43% and 42%. i think that's pretty high. now they're making billions of dollars. that is true. because prices are high and supplies -- there's an increase for demand. that's, you know, the american way. that's the profit incentive. i know people are angry that they're making these profits.

but they're paying significant amount in taxes. in fact, these companies pay more than $86 million to the federal government in income tax and production fees every day. $86 million today, $86 million tomorrow and the next day -- every day. so the fact or the thought that they're not paying their tax, that they're hiding behind some extraordinary loophole and that -- loopholes in the tax code, it just doesn't measure up. mr. president, people might say, well, senator, what are these blues lines on your sheet. this is walmart. walmart is a big company. they make a lot of money. they're in all of our states. you know what their tax rate is? 33%. you know what berkshire hath away, one of the most successful investment companies -- make tons of money, have profits for shareholders.

they've made thousands of millionaires, and congratulations to them, people who invested in berkshire hat hathaway. warren buff let is one of the most respected investors -- i personally have a great deal of respect for them. their tax rate is 31%. what sin tell? intel is one. largest companies in the world. 27%. philip morris, a tobacco company, 27 pmplet i.b.m., 27%. all the way down to telecommunications companies -- verizon, coca-cola, 21%. all the way down to g.e., one of the largest companies in the wompletd you know what they paid last year? 9%. in fact, people were shocked -- i being one of them -- that g.e. paid zero tax to the federal government last year when these five big companies are paying $68 million a day. okay, g.e. paid nothing any way,

all year, zero, and these five oil crps paying $68 million a -- and these five oil companies are paying $68 million a day. and we have to have this discussion? now, should some of these subsidies be looked at? absolutely. when should they be looked at? in the finance dmeet when these other industries -- both oil and gas, an nonoil and garks retail-based and others and retail, telecommunications, microsoft ands, et cetera, let's look at all the subsidies. i will be the first to stand up and say, many of these subsidies, or some of them, need to be eliminated, particularly when the taxpayers are looking to close the deficit and reduce our debt. most certainly we need revenues. should this be on the table when that serious, thoughtful, deliberate debate happens? yes. but today? this is entertainment, a and

it's really not funny and laughable. it is very certificate united states. i am going to submit this to the record. these are all the large companies, these five large oil companies that everybody enjoys beating up on. and as i understand that they are making a lot of money today. but this is no reason to go after them single #-g them out, telecommunicationly because of the 9.2 million americans that are working in and around and for them and the thousands of independent companies and suppliers that work in partnership with them. let me give you the third reason. this approach undermines domestic production. according to the e.i.a. study published in 2008, oil and gas industry received about 13% of the u.s. subsidy. if you throned this debate on the other side -- if you listened to this debate on the other side of the aisle -- on this side of the aisle -- you would think that they get all

the energy subsidies and they just don't need them, prices are high, and they can make a the love money drilling. the facts are that of all the u.s. energy subsidy, the oil and gas companies, the big ones, get only 13%. but they provide over 60% of the energy. so 13% of the subsidy, they get 60% -- they produce 60% of the energy. now, unfortunately, while the u.s. was at an all-time high of oil production, the e.i.a., which is the energy estimate agency, now estimates that u.s. energy production will decline to 1.14 million barrels of oil day by the year 2012. the last time this country produced less than 1.2 million barrels of oil was in 1997, more than ten years ago. now, mr. president, everybody says, including the president, secretary of the interior was

before our committee today, and they tout oil production is at an all-time high. they are correct. but it's only half the truth, because if you just flip the page or look to the next chapter, what you're going to see is this production is declining precipitously, for two reasons: we have almost shut down drilling in the gulf. there's been virtually no new exploration and production because of bureaucracy and delay. and a tax lik attacks like thist help. we need to be increasing production, not decreasing it. so the truth is we are at an all-time high but we won't be for long. we're going in the wrong direction, which is why i want to commend the president for saying that he wants to step up domestic production. we couldn't step lively enough for me. so i'm hoping that that's what we can do and move on. and i see my colleague on the floorks so i'll try to finish up in just two minutes. the fourth reason is, this bill

does -- does hurt independent producers. while i'm happy to see that this main attack is not directed at independents, which would be a terrible thing; it's pretty bad at the big companies, it would be just devastate if it was to independents -- but it does affect independent producers, because many of the independent producers of which i represent many of them, some of them are in west virginia, some of them are in texas, some of them are in oklahoma, you know, some of them are in pennsylvania, some of them are in new york, so i'm not the only senator here that represents lots of independents in oil and gas -- wildcatters -- it is a very proud tradition where we come from -- many of them have partnerships with the big oiled and gas companies. and the money and the resources they have go into supporting those -- go into supporting those partnerships with those independents. so indirectly this does affect independent producers. this bill gets our energy and job priorities backwards. one more provision of the bill

i'd like to speak to says the economy of the u.s. suffers huge net losses in jobs and productivity from growing annual trade deficits in energy due mainly to the $250 million or more we pay foreign oil. i i understand that we have a trade deficit for foreign oil. so why aren't we doing something to diminish production right here at home? that's what this bill does. these are five reasons that i'm going to vote against the bill. i urge my completion to do the same. -- i urge my colleagues to do the same. this industry contributes a lot to our economy. if this country would reduce our foreign consumption, we would reduce the annual trade deficit and do right by our peevment so there are many other things that i would like to say but we are restrict on time. but, mr. president, i can only say that we need to be producing more at home, producing it safely, producing it equitably. and finally, when we want to

review tax subsidies across the board for all big companies, i'll be at the table. until then, i'm going to sit at this seat and vote "no." thank you. a senator: mr. president? the presiding officer: the senator from oregon. wired wide mr. president, before she leaves the floor, i just want to say to my seatmate on the energy committee that i'm looking forward to working very closely with her on a host of these issues. i think you are spot on with respect to the concern of the independents. mr. wyden: this morning we talked some about natural gas, where there's enormous potential. i just want to assure my friend and colleague, i will be working very closely with her. mr. president, let me start by discussing briefly what happened in 2005. then-president george w. bush went and spoke to the american society of newspaper editors. it was at their convention in 2005. mr. president, then, as now,

energy was a very important issue, obviously central to our economy, and president george w. bush made some very important remarks, in my view, at that convention. i'd like to just read briefly what president bush said to the convention that he spoke at, because on energy he said -- and i quote -- "one of the initiatives that i will push again is to get an energy bill out. i will tell you with $55 oil, we don't need incentives to oil and gas companies to explore. there are plenty of incentives. what we need is to put a strategy in place that will help this country over time become less dependent. it's really important. it's an important part of our economic security and it's an important part of our national

security." now, mr. president, george w. bush was right then and he is just as accurate today. his comments with respect to the importance of an energy bill to our economic security and national security, in my view, is indisputably accurate. and because the president who, of course, comes from oil country -- been an oil man himself -- took this position, i thought it was important to look at that in the context of where we're headed in terms of our country's energy policy. so we had a hearing back then in 2005, and we had all the major oil companies with us that day. the executives, in fact, one of them who was before the finance committee last week, mr. mulva, also was there in 2005.

and i asked each of the executives of the five major oil companies, mr. president, whether or not they agreed with the statement that george w. bush had given to the american newspapers convention. and all of the major oil companies testified at this joint hearing that they agreed with president george w. bush. they said they did not need any incentives. mr. president, there were no qualifiers, there were no caveats, there was no this, there was no that. the five major oil companies, through their c.e.o.'s, said that they didn't need any incentives to explore for oil. period, end of discussion. so, i thought it was important to get that on the record to compare it to their views now.

and of course last week in the senate finance committee, on which i'm honored to serve, we got a very different story. in effect, the c.e.o.'s did an about-face, and, frankly, mr. president, they did it with a pretty straight face. each of them defended the $2 billion a year in tax breaks that they specifically get for exploration and drilling. these are industry-specific tax breaks. i know there's been a lot of confusion in this discussion. is this effort somehow about something that other people get as well? why don't we move on to tax reform? i don't take a back seat to anybody on this tax reform issue, mr. president. been involved in the first and only bipartisan tax reform efforts in the last quarter century with our former

colleague, senator gregg, and now senator coats. so tax reform is certainly crucial. but now we are talking about industry-specific tax breaks, and the five major oil companies who said they didn't need them in 2005 -- and in fact basically said they didn't even get them -- now say somehow if they don't continue to get them, we are going to have enormous economic problems. now, these are not just plain old tax breaks. tax credits like expensing of intangible drilling costs under section 263 of the tax code, an amortization of geological and gee physical costs, mr. president -- geophysical costs, mr. president under section 167 of the code are in fact not available to every american business.

so we're talking again about specific sections of the tax code. i mentioned section 263, section 167, these oil and gas provisions which president bush in 2005 said that weren't needed, the executives said in 2005 they weren't needed; they are not, mr. president, like every other tax business provision. how many businesses do we know have expenses for oil drilling that aren't in the oil business? at the finance committee last week, the c.e.o. of chevron said that intangible -- the intangible drilling tax break was like the research and development tax credit that all other american companies get. mr. president, that's not accurate. first of all, as i reminded that c.e.o., oil companies also get the r&d tax credit.

when they have legitimate r&d expenses, they can claim the credit. if intangible drilling costs were just like research costs for the oil industry, they would be getting two tax breaks for the same thing. that would be double dipping at taxpayer expense. in reality, as the major oil companies know, building access roads to bring in drilling rigs, which is the kind of thing that's covered by the intangible drilling provision, is nothing like the research and development tax incentive. in their major business, drilling for oil. these kinds of expenses are usually spread out over a number of years, but with expensing, mr. president, of drilling costs, the oil companies get to write off these costs in the first year. they not only get extra tax breaks that other companies don't get, they also get to claim these breaks sooner than would other types of businesses.

mr. president, it simply defies old-fashioned common sense to claim that the tax incentives that oil companies get for exploration and drilling costs, which they didn't need when oil was $55 a barrel, somehow today become essential when oil is at $100 a barrel. even if you adjust for inflation, today's oil price of $30 to $40 more than it was in 2005. not a couple of dollars more, but substantially more no matter which of the inflation indices you use. just so there was no confusion about what was said in 2005, i thought it was important to actually look at that video. and as i indicated, mr. president, each of the c.e.o.'s of the major oil companies reverse their position

from 2005 and said those billions of dollars in tax breaks were essential if they were to continue to drill for oil. now, in 2005, the price of gasoline at the pump had soared to what was then a record high. today the price of gasoline is just below the all-time high price set in 2008. then, as now, the oil companies are reporting record-high profits. so, mr. president, both in 2005 and today the oil companies have high prices and certainly record profits to incentivize them to drill for oil. so the question then is: what's changed from 2005 to now to continue justifying providing these major companies with taxpayer subsidies? i want to spend a couple of minutes attacking a couple of arguments we heard at the senate finance committee,

mr. president. last week at the finance committee, we heard from the c.e.o.'s that oil was getting harder and harder to find and that they faced increased global competition. now, if anything, u.s. oil supplies and prices are less tied to the global market now and new oil sphraoeurz easier to -- oil supplies are easier to find than 2005. after declining steadily since the mid-1980's u.s. oil and natural gas production has begun to climb since 2008 due to new onshore discoveries and shale formations and development in the gulf of mexico. as the distinguished president of the senate knows, we have a great interest in this question of natural gas and discussed it this morning in the senate energy committee. the location and technologies for getting oil and gas, especially from these onshore shale formations, is not only dramatically increase u.s. oil and gas reserves, but the technology is now sufficiently

well established that u.s. oil and gas production is rising and rising rapidly as a result. according to a recent analysis by the u.s. energy information agency, oil production from the barnett shale formation in texas literally in the backyards of the headquarters of some of the companies we heard from last week in the finance committee, oil production from that barnett shale formation in texas has tripled since 2005. in north dakota oil production in shale has gone from zero in 2005 to 240,000 barrels per day and is expected to continue to grow. in 2010, production in the woodford shale in oklahoma increased 42% between 2009 and 2010. i could go on with this, but in one area after another significant increase in production. in fact, the total u.s. oil production has increased over

10% since hitting its low point in 2008, and the energy information agency projects that because of increased production in oil shale and in the gulf of mexico and other sources, it's going to continue to grow. u.s. oil prices are also less tied to global markets and competition now than they were in 2005 because of increased u.s. production and increased canadian tar sands production, that is pouring into the u.s. market. this ought to be of no surprise to major companies who testified last week, because each of them has also made significant investments in the canadian tar sands project. according to the "wall street journal," in 2009 exxon announced that it acquired more reserves than it had produced for the 15th straight year and that half of those new reserves, 1.1 billion barrels of crude, were from a single canadian tar sands project which it was developing. that's topic certainly for

another day. i see my friend from oklahoma on the floor. the canadian tar sands developers were so concerned about the oversupply of tar sands oil to the north american market that they're pushing to build a new pipeline, the keystone pipeline to the gulf of mexico that would allow them to export crude and refined products to other markets. so the argument that it is just too hard to find new sources of oil simply does not hold water. further evidence of just how much the u.s. and north american markets are being disconnected from global competition by these developments is the fact that the benchmark u.s. oil price, west texas intermediate, has been selling for $10 and $20 a billionaire less than the benchmark -- a barrel less than the benchmark for european oil. if it was as tight in the u.s. there wouldn't be such a discrepancy in prices. last point, the senate will be hearing arguments that the loss of these tax breaks is going to

drive up the price at the pump. this is obviously very much on the mind of every senator when our people are struggling to pay the already steep cost of filling their tanks. at the 2005 hearing, i also asked the c.e.o.'s about ending these tax breaks on their companies, and several of them said it wouldn't affect them or it would only affect them minimally. for example, the c.e.o. of exxon said -- quote -- "as for my company, it doesn't make any difference." the chevron c.e.o. said -- and i quote -- "ending these tax breaks would have minimal impact on our company." and the c.e.o. of b.p. said the same thing. it's a minimal impact on us. again, common sense would tell you that major oil companies earning combined profits of close to $32 billion in a single fiscal quarter would not suffer a big economic impact from the loss of those industry-specific tax breaks that i have been

talking about. there's certainly -- they are certificate not going to stop doing businesses with prices at $100 a barrel. in an important moment last thursday, mr. president, our colleague, senator cantwell, asked the head of exxon what the price of oil actually should be today with all other things being equal. and mr. tillerson said, the head of exxon, the price of the, producing the next marginal barrel of oil was probably between $60 and $70 a barrel. that is $30 to $40 a barrel profit at current prices. it's simply not credible to think that these companies would significantly change their investment decisions if they lost these tax breaks and the congressional research service in a report last week concluded exactly the same thing. i began my remarks this afternoon mr. president by quoting george w. bush at the

newspaper publishers convention in 2005. he said that the companies, the major companies did not need incentives to drill for oil at that price. i continue to ask how in the world, given george w. bush's comments in 2005 and the other considerations i've outlined here, that again prices are way in excess of inflation. again profits are a record high. how in the world can you justify getting industry-specific subsidies when george w. bush said that no incentive -- no incentive -- and he said it without a qualifier and with a caveat -- were warranted if you wanted to drill for oil. i hope my colleagues as we move to this vote will keep in mind the words of george w. bush then. in my view, they are even more

accurate today. mr. president, i yield the floor. a senator: mr. president? the presiding officer: the senator from oklahoma. omr. coburn: mr. president, firt i'd ask unanimous consent that the order for republican speakers include myself and senator blunt, and the orders for senators mccain and chambliss be vitiated. the presiding officer: without objection. mr. coburn: i'm pretty amused at one the senate's doing. we sit here with a $1.6 trillion deficit and we're running bills based on political philosophy rather than what the real problems are in front of our nation. oyou know why soil expensive today? it's because the dollar's on its back and oil's priced in dollars. and if you want the price of oil to go down -- like it has this week and the tail end of last week -- is you want the value of the dollar to go up because the world trades oil in dollars.

why is the dollar down? the dollar's down because an incompetent congress continues to spend money that we don't have on things that we don't absolutely need. and if you want the dollar to improve in value, what you'd have to do is hold the congress accountable for doing what they were elected to do, which is live within our means. and we can't come together and solve the very real problems. you realize that if, in fact, our deficit wasn't $1.6 trillion but about $600 billion, the price of the dollar would shoot way up and the price of oil would go down? now, we hear all these stories, i get all these letters from all of my constituents saying you've got to eliminate the commodities speculation. we can do that in this country. we can say, you can't speculate on oil unless you can take delivery. and that will do nothing to the speculative price of oil because oil is an international

commodity and people are always going to speculate on what they think the price of a needed commodity's going to be. so if we controlled all the economics in the world, we could control that speculation, but we can't. but what we do know is price controls don't work. they don't work at all. so if, in fact, we want to fix the price of oil, what we have to do is fix our economic mess here and strengthen the dollar, which will lower the price of oil and lower the price of gasoline. the debate we're going through here is all about politics, creating somebody that's bad. do you realize the five big oil companies make less than 8% return on their sales? they make a lot of money but they're giant companies. but compared to most other of the s&p 500, their return sales is far less. and they're not making record profits. they made record profits when

oil was $142. that's when they made record profits. it's this -- this habit we have of saying -- and let me draw a corollary. if i'm an iowa farmer or from indiana or illinois or oklahoma and i have a great corn crop and the price of corn is $4 and i decide not to sell my corn, right? i decide not to sell it and now all of a sudden corn's $6.80. oh, i'm going to sell it now at $6.80. now, what are we going to do? are we going to penalize that farmer for having a resource that he took a risk on in not selling at a higher price? we're going to say wait a minute, we're going to double or triple tax you? the other thing that i'm amazed at, you know, most people know me as a doctor but i spent ten years as an accountant and business manager. i have a degree in accounting. and the lack of knowledge of my colleagues on standard --

american standard accounting principles is amazing. every benefit they're talking about taking away won't go away because they're all legitimate business expenses and they'll all be expensed. why did the congress back in 1906 give this advantage to our oil companies? why did they do that? because drilling for oil is a capital intensive business and it -- if you want more oil found, what you have to do is be able to generate the internal rate of return to put that capital in. so we offered accelerated write-off for expenses. now, it's interesting that we're not going after all the oil companies or all the gas exploration. we're only going after the big five. why is that? because my colleagues know that

if you did the same thing to the ones that are actually producing most of the gas in this country, all the new technology which the r&d tax credit and the intangible drilling costs allowed to be developed that makes this country with a hundred years worth of natural gas, would go away. and the smaller- and medium-sized oil companies will never be able to have the capital and continue to perform and raise our level of energy resources ourselves. so what we're -- what you're hearing on the floor is a charade. the price of oil is high because the dollar's weak. now, if you want to punish somebody for that, punish the u.s. congress, punish the federal reserve, punish the executive branch, but don't go after somebody who's going to create 90,000 new jobs in our country this next year. we always look for the right political moment to make somebody look bad.

well, the people that look bad is the u.s. congress because we don't have the guts to stand up and say we need a cogent energy policy that says we're going to go after our own resources, we're going to use every asset we have to utilize cleanly and friendly the tremendous reserves that we have in this country. we know we have 160 billion barrels of recoverable oil in this country. they're not proven but that's what the estimate is. we're the third largest oil producer in the world. we could become the second largest oil producer in the world if we had a cogent government policy and environmental policy. we have oil out the kazoos. we're going to find more oil as we explore for more natural gas. right now, we're only importing 47%. 47% of our oil needs. it was 65% less than ten years

ago. why is that? a part of it is smaller demand because we've been in a recession, but the vast majority of it is the very technology that they want to deny the past write-off for is what has created gas liquids that have filled the void. it's better than the best crude oil in the world, and that's coming out of north dakota, it's coming out of west virginia, it's coming out of oklahoma and texas, great stuff, easy to refine, cheap gasoline in terms of the costs to get it from a product to a product we can use. so i'm pretty well disgusted with what i'm hearing on both sides of the aisle because the real problem is not the price of oil. the real problem is the price of the dollar. and if we will fix that, we'll fix tons of things that help our economy. but we're recalcitrant to the point we won't do the things that we need to do.

our government's twice the size it was 11 years ago, two times the size. no wonder we're running a $1.6 trillion deficit. no wonder that we don't have the effect -- we have the largest number of regulations to ever come out of the administration in the history of the contract in the first two years of this administration. it is killing job formation. it is causing people not to invest. it is causing a lack of economic growth in our country, because we have people making decisions that have no idea what they're doing or what the ramifications of those decisions are. they're lawyers whose first creed is don't do what's best for the country, do what's safe for the bureaucracy. that's how we're running this government today. we have 45% more regulations issued in the first two years of the obama administration than anybody else has ever done. and we wonder why we're not

getting job creation. we continue to refuse to debate on the senate floor the very real issues that are in front of this country. the very real issues like what part of government do we do without? how do we get a future for our children. fact is, we've lived the last 30 years off the next 30 years of our kids. and that bill is do. it's not due a year from now, it's due now, and we're tied up in knots because wave this false indication that a debt limit means something. if a debt commitment meant something, we wouldn't be raising the debt limit. it would say we would quick borrowing. but instead every time we come up with the debt limit, we're asked to raise the debt limit. we won't make the hard choices of what part of government is not valuable in light of the fact that we're cutting the legs off from under our children and our grandchildren. so this debate, you're going to hear a lot of finger pointing

about what's bad with big oil, what's bad with oil, what's pride with the price of gas. what's bad is congress isn't doing its job, we're not addressing real issues and solving the real problems in this country. with, that i yield the floor. -- with that, i yield the floor. mr. paul: mr. president? the presiding officer: the senator from kentucky. mr. paul: sports teams often have a motto. they want to describe how they're going to win the event. well, the senate democrats have a motto and it goes something like this -- "i'm from the government and i'm here to hel help." well, beware when your government comes to help. they've figured out that there's a problem. the problem is that gas prices are rising and people are being

hurt by the rising prices. actually, if you measure inflation the way we did back in the 1970's, we've got inflation of 10%. senator coburn's exactly right, it has to do with we're losing the value of our dollar. our dollar's going down in value because we spend money we don't have and we're running up these enormous deficits. but it is a problem, nonethele nonetheless. but those who believe that government is always the answer are rushing to rescue you, rushing to rescue you from high prices at the gas pump. but they haven't even diagnosed the problem so they're going to come up with the wrongdoing. their solution is to raise taxes on oil companies. do you know what taxes are? taxes are simply a cost. if you run a business and i raise your cost, you will raise your prices. so let's see, prices are too high so we're going to raise the cost which will raise the prices

further. makes absolutely no sense. but it's because their month the is he is wrong. their motto is i'm here from the government and i'm going to help you. their motto is, it's the government that's going to solve your problems. but they're going to solve your problems by compounding your problems. the price of gasoline is a problem. if you include the price of gasoline in the price of food in the c.p.i., it would be 10% or higher. people are struggling to pay for gas. one are the main things that people pay for who are just getting buy? their gas, their food, their rant. so how are we going to make it better? we're going to make it worse before we make it better. we're going to raise the cost of the oil companies by raising their taxes, which means you'll pay more at the pump. it is economic i will literally and it's what's wrong up here in washington. we still have too many people who don't not the basic economic realities. if you raise costs on a business, if you taxes on a

business, you will raise prices at the pump. now, the interesting thing is, is there are some answers. they say, well, let's go after those greedy oil companies because they're making a profit. out of every dollar you spend at the pump, about 7 scents profit to the oil companies. well, you know what? if you eliminate profit, you i wouldn't have oil companies. everybody works for a profit. we all work harder because we want to maximize our profit. well, who owners the oil companies? is it a bunch of greedy people running their fingers through piles of gold? are they midas in a room full of gold? you own the oil companies. i own the oil companies. you have a 401-k, you have an i.r.a., you have a mutual fund, you own the oil companies. okay? corporations are owned by people. do some people make a lot of money in the corporations? yes. but if we limit that or try to obscure that or try to get rid of profit, you'll get rid of

companies. and then where will they go? they will go overseas. oil companies are international. make it hard for them to do business here, and they will flee our country, and they already do. we have high corporate taxes in our country, and so they keep their profits overseas. lower corporate taxes. don't raise taxes, lower taxes. people will bring their profits home to the united states. this is their profit. the oil companies make about 7 cents on the dollar. how much does the federal government take? the federal government takes 18 cents of every dollar. you want to have lower gas prices this summer? you want to help the people who are struggling? let's have a gas tax holiday. it's only a short-term solution. let's get rid of the 18 cents for the next four months through the summer season. it will cost the treasury, there will be less money coming into the treasury, $10 billion to to $12 billion over four months. let's take it from somewhere else.

we're spending $30 billion a year in foreign aid. this is money we give away to other countries so they can build schools, so they can build bridges, so they can rebuild their infrastructure. we give this away to foreign countries. a lot of times, it winds up in the hands of foreign leaders who simply steal it. mubarak was said to have gotten gotten $60 billion over 30 years and accumulated at least least $10 billion to -- to -- $5 billion to $10 billion that we can count that he stole. many leaders throughout the world have stolen our foreign aid money and used it for their own personal aggrandizement. let's eliminate the gas tax. let's take the money from foreign aid and let's give it back to the american people who have worked hard to earn it. you can't do this forever, but you could do it for four months and pay for it by getting rid of foreign aid. that would help people. that would lower the price of gasoline, and that would be a stimulus to the economy.

so what i'm saying is let's have a gas tax holiday. let's eliminate federal taxes for the next four months on gas, and let's take the money that would be lost, put it into the highway fund, but let's take it from one we're giving away to other countries. that would be a short-term answer. there's also a long-term answer. senator coburn was right that much of the price of gasoline rising is from inflation. basically, we're destroying the value of the dollar. but there is another reason gas prices rise, because demand for oil and gas is outstripping the supply. why don't we have more supply? because the current administration is basically an enemy to production, an enemy to drilling, an enemy to all things related to energy. we now are going back and looking at permits to mine coal that have been approved for ten years. we are taking away drilling permits to drill for oil in

utah, in alaska, off our coast. if we want gasoline prices to be less, if we want to send less money to middle eastern countries that hate us, who we have to buy oil from, let's make more here, let's drill for oil, let's produce more here, let's drill in alaska, let's open up new places to drill. could we do it responsibly? yes. nobody wants to damage the environment. do it responsibly, but let's produce energy here. we have, as senator coburn says, says, 160 million barrels of oil wait be to be extracted. let's go for it, but we have to have a government that's friendly to energy. we have a government now, an administration that is unfriendly to energy, and at every aspect of producing energy places roadblocks. they think for some reason that we can get electric electricityy our country from some windmills that are made in china.

what we need is we need oil and gas production in our country. we need nuclear energy in our country, and we need coal in our country. we have the ability, we have the resources, but we need to get government out of the way. instead, what we're doing is placing new obstacles. there will be a long-term solution that senator mcconnell and our party will introduce. i will support that also. it will encourage domestic production of oil and gas, domestic production of energy. that's what we need, but you're not going to get it until we have new faces here in washington because the current crop of faces are opposing production at every turn. so i'd like to conclude by saying that if you want to help people, even for a short period of time, that there is a short-term solution, let's get rid of the gas tax for four months. let's pay for it by not sending the money overseas to have other countries either steal it or build their own infrastructure. let's keep those u.s. tax dollars here at home.

better yet, let's keep them in the pockets of the consumers by having a gas tax holiday. thank you very much, and i yield back the remainder of my time. and suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

mrs. mccaskill: madam president, i rise to support the legislation that is going to be voted on in just a few hours, and i have listened to the last couple of speakers. the presiding officer: the senate is in a quorum call. mrs. mccaskill: i ask that the quorum call be set aside. the presiding officer: without objection. mrs. mccaskill: i've listened to the last couple of speakers, and while i certainly respect senator coburn's commitment to fiscal responsibility and he and i have worked together on a number of projects in that regard and have the same view of many of the spending habits around here, i've got to say i'm a little confused by the opposition to this legislation by my friends across the aisle. you know, we have two ways to spend money around here. one is through the appropriations process. the other is what i call tax goodies. and what these goodies are, they're called tax expenditures.

what these do is they basically say to whatever group has successfully lobbied for them you're not going to have to pay all your taxes. so there's two ways that we deny the treasury money. one is by spending money. the other is by telling people you don't have to pay the money that the tax code says you owe. and -- and we put into the tax code special deals. now, many of the special deals are done because the case is made that they spur economic development or they spur some kind of activity in our country that we think is desirable. a good example is the interest deduction on people's homes. the notion is that we want to encourage people to buy homes so that we allow them to deduct the interest they pay on those home loans against their income tax. charitable deductions are another good example. we want people to give to charity, so we say you know what?

you don't have to pay as much in taxes if you give to charity. the real estate sector is full of tax goodies for development of real estate and the creation of jobs that goes with the development of real estate. one of the big tax expenditures we have in our tax code are goodies for big oil. and that's really what this is about. now, can we get to where we need to be on our structural debt and our annual deficit without touching the tax code? no way. no way. are we going to have to look at revenues for multimillionaires? i think we are. are we obviously going to have to look at spending? of course we are. and aren't we going to have to look at the tax goodies? well, i would sure hope so because, frankly, as some of my colleagues across the aisle have said -- and i thought they agreed with us -- that cleaning

out some of those goodies could potentially lower taxes for everyone. so where do we start with the goodies that are in the tax code? might we not start with the most profitable companies in the history of the planet? do they really need this extra money that we give them by telling them they don't have to pay the taxes that other companies have to pay? how many quarters will we have where we read the headlines record-breaking profits for big oil? how many times will we read that before we are willing to take the baby step, just the baby step of saying, you know, maybe these tax goodies for big oil are not a good idea in light of our deficit and our debt. maybe this is a good place to start. they made north of $35 billion in the last three months.

now, i know that there are all kinds of things that are being put out there to kind of height behind as we cast this vote, because this is a tough vote, i think, for people who vote no. how do you explain to your constituents that are struggling around their kitchen table to figure out how they can afford to drive their kids to soccer practice, how do you explain to them that we think that instead of $125 billion -- instead of of $123 billion of profit big oil is going to make this year, they need to make $125 billion? that's what this is. instead of making $125 billion, north of $125 billion of profit this year, big oil is going to have to really suffer along with only $123 billion in profit. and that $2 billion that we want to take back from them is going to go towards the deficit. how do you explain that to

people around their kitchen table? now, oh, this means it's going to -- the cost of fuel is going to go up. everyone has debunked that. really? the cost of fuel has gone up just fine and they've got all those subsidies. i remember when oil was $55 a barrel and they had all those subsidies. and by the way, all these subsidies didn't help them go out and do what they needed to do to keep the price of fuel down. and by the way, just today, a letter was sent to the f.t.c. by myself and other members of the senate saying what about this refinery process? you know, talk about economic ill literacy. maybe who -- illiteracy. anybody who believes the oil companies today are making a profit of 7 cents on a gallon has no idea what's going on with refineries now. a year ago at this time, refineries were operating at a capacity of close to 90%. today, they are only operating at 80%. now, why would that be?

their profit per gallon of gas, just the refineries, has gone from less than 40 cents a gallon to 80 cents a gallon in a matter of a few months. 80 cents a gallon of refinery profit. many of these refineries were owned by the big five, the big five big oil. so why is that capacity down? is it because they don't have crude to go through the refining process? no, there's plenty of crude. and how about this? we are giving these big oil companies tax goodies, and what are they doing today? they're exporting a record amount of oil and fuel from the united states, exporting. they're sending it to south america, in mexico. so while my constituents are

suffering mightily at the gas pump week after week after week, these guys are sending the oil they've produced with our tax goodies to another country, instead of putting that additional supply into our supply chain which, in turn, reduces the price. the more supply, the less the price. so, one, they have put back refining capacity. two, they're exporting more, and they want to say it's about drilling, really? we have got more rigs drilling right now in this country than we have in many, many, many years. we have production higher at this point, domestic production higher than it was at the end of the bush administration. we just issued 12 new deepwater permits in the last few months. there are all kinds of leases out there that are not being explored. meanwhile, cha-ching, these big

oil companies are continuing to make profits that just make your jaw drop. so honestly, half seriously, you talk about economic illiteracy. i'll tell you what economic illiteracy is. it is thinking that these companies -- what about the fee market i always hear about from the other side of the aisle? what about that free market? why do they need our tax goodies to help them if this is truly a free market? and maybe they're right. maybe we shouldn't pick on big oil. but what a great place to start. frankly, if we can't take these things away from the most profitable companies in the history of the planet, how are we ever going to take them away from the mohair industry or how are we ever going to do what we need to do with the tax code in the real estate sector or any of the other goodies that we have larded up our tax code with to make it so complicated and so long that frankly the people

that get the most advantages out of it are the families who can't afford to hire accountants and tax lawyers? meanwhile, the real tax rate for most americans is much higher than the real tax rate for most multinational corporations. so, i think economic ill literacy is talking a lot about the debt and deficit and not being willing to take this baby step to take back $2 billion a year that these companies get, that they don't need and they're not using to hold down the price of gas. i mean, when i realized how cynical this whole process had become is when today i got a question from a reporter that said, well, the oil companies say that most of these profits are going to these pension companies. give me a break. you know, really -- really? these guys want to talk about free market and how this is all about the bottom line and then they want to try to hide behind

the fact that some of the pension funds have stock in their companies that somehow that justifies them feeding at the public trough? talk about greed ... talk about greed. so, i think this legislation is a real litmus test, because if we can't do this, then i question what we can do to right this ship that is all about the footprint of the federal government, how much money we're spending, and how many tax spen- tax expenditures are out there. anybody that tells you this is about raising their taxes, no. this is about saying to them that you have to pay the taxes that the free market says you should pay, not avoid taxes by these other goodies. this isn't about raising their taxes. this is about saying, you need to pay your taxes, like average citizens do, as it relates to their businesses. you shouldn't get this extra

help in the tax code that allows to you avoid taxes. it's a tax expenditure. it's real money that will come to our bottom line as it relates to our deficit, and it is important to get it done. and, madam president, i yield the floor. correspondent madamr. cornyn: m? the presiding officer: the senator from texas. mr. cornyn: madam president, i would yield myself up to 15 minutes. the presiding officer: without objection. mr. cornyn: madam president, i want to talk just a minute about the ill-considered proposal that we'll be getting on at 6:15 tonight and the administration's

chaotic approach when this comes to national energy policy. i say "kay otoike pproach" because to pay attention to what the president and this administration have said about fossil fuels and energy will give you whiplash if you try to keep up with it because so many apparently inconsistencies between what is said and what is actually done and then when something like high gasoline prices becomes very much a concern around kitchen tables in america, then all of a sudden the president again, as he announced the last day or two, that he's all of a sudden hope for more domestic production here in america. but it is a problem for a number of reasons. one is that who in their right mind would invest the kind of money that is necessary in order to develop our domestic energy reserves when the administration and the president himself seem to be of two minds about whether we should punish domestic

production or whether we should encourage it? and i would suggest to you that the message has primarily been one of how to discourage or how to punish domestic production of energy in favor of imported energy from abroad. for example, one of the mixed messages the president gave was in march of 2010 when he proposed expanding offshore drilling along the atlantic coastline, the eastern gulf of mexico, near my home in texas and the north coast of alaska. at the time he said, as follows. he said. "the answer is noter drilling everywhere all the tievment but the answer is not also for us to ignore the fact that we're going to need vital energy sources to maintain our economic growth and our security." wcialtion i agree with that statement. but, as you know, following the deepwater horizon incident last anger the administration

overreacted in a way that killed jobs and discouraged energy production here at home. now, we all agree that when something like this terrible incident occurs, tweendz find out what happened -- we need to find out what happened, fix it and make sure it never happens again. but every time there is a car accident, we don't ban driving. every time there is an airplane crash, we don't ban flying. we find out what the problem is, we fix it, and then we move on. and that's not what happened in the gulf of mexico. first there was an overbroad moratorium that was issued by the administration, which ultimately ended up being struck down by a federal judge. but after that the administration was not through. where the former moratorium no longer existed, there was a permtorupermatoriu.

m and only 12 deepwater permits have been approved in the last months. only 12. there were in addition cancellation of the dozens of lease sales in utah and montana and exclusion of new areas in the gulf of -- eastern gulf of mexico and off the atlantic coast. that's, to me, completely inconsistent with the president's statement just in march 2010. then we know there are numerous examples where the environmental protection agency has thrown up roadblocks and impediments to energy production right here at home. well, because the president has not had an adequate response or at least his actions have been inconsistent with his words, he reversed himself again this saturday and he said, now he supports more domestic oil and gas production, like he did more than a year ago. but my conclusion, madam president, is this is not an energy strategy. this is a public relations

strategy. this is a how do i get reelected strategy. it does not solve the problem or the pain that americans are feeling at the pump. and, unfortunately, this strategy too often ends up being a job-killing strategy as well. but when high gas prices are in the news, when people around kitchen tables all over america are complaining about the loss of their discretionary income, the fact they're having to cut corners so they can drive their kids to school or they can drive to work, finally we hear -- have a new speech and a new announcement from the administration, but very little when it comes to a coherent energy strategy. another mixed message is that the administration at times have suggested that we have actually overproduced domestic energy. and you may ask, how could that be possible? how could it be possible that we are producing too much oil and

gas here at home when we have to import 60% of what we use from abroad? well, the congressional research service that we depend on -- the arm of the library of congress -- has documented that america's recoverable resources are far larger than those of saudi arabia, china, and canada combined. we have more here at home than saudi arabia, china, and canada. and america's recoverable oil, natural gas, and coal endowment is the largest on earth. and we've learned in the last couple of years that america has more shale gas from previously unrecoverable reserves, thanks to new technology, horizontal trill drilling and the like. we've got enough natural gas to last us 100 years here in the united states. but compare that -- really, that gift we've been given of

domestic energy at home with what the administration said just in 2010. the treasury department issues an interpretation or explanation of the administration's policies when it talks about energy production, and this is what the treasury department said in 2009 or 2010. the treasury department -- this is secretary geithner, appointed by the president, confirmed by the senate. but the treasury department said, to the extent the tax credit -- the tax credits we're talking about here -- encourage overproduction of oil and gas, it is detrimental to long-term energy security. so the treasury department, president obama's treasury department, are making the extraordinary claim that i have not heard any senator make here because it is so implausible, that these tax provisions encourage overproduction of oil and gas right here in the united states. if we are overproducing oil and

gas in the united states, why is the administration telling existing lease holders they have to use or lose the leases that we have? it is an ideological fixation that says we have to discourage production of oil and gas even though about 80% of our energy needs are -- come from fossil fuels, because we prefer alternative forms of energy. well, i do, too. you know, solar panels, wind, biodiesel -- these alternative sources of energy are important, but we simply don't have enough of them to keep our economy moving and to remain -- and keep prices low for our domestic production, our domestic consumers, i should say. well, another part of this mixed message is our dependency on imported oil. on march 30, 2011, president obama was called -- called for reducing foreign imports by a third.

but then he went to brazil recently when he told the people of brazil that he encouraged offshore drilling in brazil. and he said that america wanted to be brazil's best customer. in other words, other than producing what we have been given by the good lord right here in america, american production, american jobs, he wants us to be brazil's best customer by importing energy from abroad. well, part of the vote that we'll be having at 6:15 or so tonight is another part of the mixed messages that we have been getting when it comes to energy. this is the so-called close big oil tax loopholes act. now, we know why the senators who introduced this bill have dodge so: because they've been getting so much heat back home because of high gas prices, their constituents are demanding that they do something. but what we are proposing to do

has nothing to do with bringing down the price of gas at the pump. in fact, it will likely increase the price of gas at the pump. in fact, the chairman of the finance committee on which i sit, he said, you know, this is not going to change the price at the gasoline pump. that's not the issue. i don't see that as an issue at all. the senior senator from new york said this was never intended to talk about lowering prices. the majority leader himself said, it's not a question of gas prices. its a a question of fairness and priorities. well, madam president, if gasoline prices being paid by americans all across this country aren't the priority, and if jobs that are created and sustained by producing domestic oil and gas right here in america aren't the priority, my

colleagues who are proposing this legislation have the wrong priority. well now we're told they've got a new idea. the money that we supposedly save from these tax provisions will be used to pay down the deficit. but the truth is, the amount of money that would go to -- quote -- "pay down the deficit" -- even if our friends across the aisle had a conversion and decided that that was their priority rather than spending 43 cents on every dollar in borrowed money, borrowed from our kids and grandkids, and bought by the chinese it would only be a drop in the bucket in the $1.5 trillion deficit that we're spearnsing this year and the -- that we're experiencing this year and the $14 trillion national debt that we're going 0 have to reckon with in the next couple of months. if the deficit -- if deficit reduction is the priority, i submit the very best way we could do that is to pass a

balanced budget amendment to the united states constitution. but that's not the priority of the majority leader or of the majority, or of our friends across the aisle. so if the rationale is not to reduce gasoline prices, if the rationale to this bill is not to produce a balanced budget, then what is it? what is it? well, the majority leader suggested it was fairness. fairness. well, the chamber of commerce, united states chamber of commerce calls it punitive taxation, picking out five taxpayers in america saying we're going to raise your taxes and leave everybody else's the same is discriminatory and it is punitive. but it also, in the immortal words of rahm emanuel, former white house chief of staff, now the mayor of chicago, i guess it never let's -- it's a case of never letting a crisis go to

waste to, advance another ideological agenda. but the truth is we know that our tax code is already biased against u.s. domestic energy producers. and if your goal is to tax people who are making money in america, this chart demonstrates that the oil and gas industry is down the list of industry sectors that are making far more money. the tobacco and beverage industry, the pharmaceutical industry, the computer equipment industry, the chemical industry, the electrical equipment industry, the manufacturing industry, the apparel industry, the machinery sector. all of those come well ahead of the oil and gas sector when it comes to making money. but you know, i didn't think making money was a crime in america. i thought we still believed in the free enterprise system and the very people that our friends across the aisle are going to be punishing are the retirees and

the pension holders, the people who own stock in these oil and gas companies that are going to be forced to pay higher prices and ultimately be passed along to the consumer, i believe, in higher energy costs. the other revealing thing about this debate is they want to punish people who produce american energy right here at home, and they're going to leave opec and these other countries to pay lower effective relative rates. so if you raise taxes on american producers and you don't do anything to similarly raise taxes on their competition, what's going to happen? what's going to happen to the saudi arabian oil company? what's going to happen to the iraq national oil company, the kuwait petroleum company, the state-owned oil company of venezuela and the like? these are places where we end up buying oil because we don't produce it at home, and we're

going to raise taxes on the people who produce it at home, and to make it in effect cheaper on domestic energy producers to produce it and sell it to us. it makes absolutely no sense. it's punitive. it's discriminatory, and it's not going to solve the problem that most america is complaining about today, which is high gasoline prices. in fact, it will make it worse. but if my colleagues want to talk about fairness, let's talk about fairness to the 9.2 million people who are employed in the oil and gas sector in america. now, i've witnessed the people who work in this sector in my state. in march, i visited a brand-new drilling rig that's using the very latest technology to produce natural gas from the hainesville shale in east texas. this is an amazing technology that goes down thousands of feet and drills horizontally and uses high-pressure fluids to fracture this shale, in effect a rock, to

get natural gas out of it. down in the gulf of mexico after the moratorium was issued, i stood on a deepwater drilling platform that was left idle because -- the presiding officer: the senator has used 15 minutes. corn madam president, i'd ask for -- mr. cornyn: madam president, i'd ask for two more minutes. the presiding officer: without objection. mr. cornyn: i could go on about the impact on job creation in my state and across america, but if in fact our colleagues are interested in tax reform, if they really are concerned that the tax code is unfair and some people don't pay enough and others pay too much, i would just ask them to consider the fact that according to the congressional research service, 77.9% of our primary energy production in america is fossil fuel sources and that federal tax support targeted energy in 2009, 12.6% went to fossil fuels. 12.6% of those federal tax

supports went to people who produce oil and gas. conversely, 10.6%, the congressional research service tells us, of primary source energy was produced using renewable sources. yet the federal tax support targeted to renewable sources of energy was 77.4%. so why are we picking on american oil and gas production, forcing us -- well, actually hurting job creation at a time when unemployment is unacceptably high, forcing us to rely on imported energy and actually rewarding our foreign competitors who will not have to pay higher prices. and when in fact, even as our friends across the aisle acknowledge at the very best, this won't bring down the prices tufrpl, they say that -- prices at the pump, they say that's not the point. if that's not the point, the point appears to be a game of

got kh* ha and -- got cha and this finger pointing we've seen inside the beltway. i think the american people are sick and tired of this game playing when in fact they sent us here to solve real problems. if we could find a way instead of this game playing, instead of this phony game of got cha to try to work together to solve real problems to increase domestic supply which would bring down prices at the pump as the president acknowledged when he said we have to look at domestic production i think we could reward them in terms of appreciation, appreciation in terms of jobs being created here. madam president, i yield the floor. mr. rockefeller: madam president? the presiding officer: the senator from west virginia. mr. rockefeller: madam president, to me, this

argument is in fact all about fairness. it has nothing to do with class warfare. it has nothing to do with got' cha but has to do with abgrow tkpwaeugs of social responsibility -- abrogation of social responsibility on the basis of levels. every once in a while we have a debate here in the senate or senate committee that is revealing and stunning all at once. recently i had one of those moments when i had the opportunity to ask some questions to guess what? five executives from the largest oil and gas companies in the country. not linking price of gas, but in the people's minds it is, with the gas prices head up $4 a gallon, many people spending close to $100 a week to gas up their car, i was cautiously optimistic that we would have in this senate finance committee

hearing a real dialogue on the idea that everybody had a shared responsibility and that you share your responsibility, in this case for the need of balancing the budget, coming closer to it, and then from that you then can share prosperity. but you've got to share responsibility first because that's what leads to the discipline that allows prosperity generally in this country to get ahead. i thought that the oil executives might at least veal a bit of -- might at least reveal a bit of discomfort on their part about how gas prices are standing like a dead weight on our economy, about the fact that they make so incredibly much, inexplicably, unexplainably much money, especially when they together earned just about $35.8 billion in profits in the first

three months of this year. how wrong i was. they were eager only to defend the way big oil does business, defend the enormous salaries, defend the business model that puts control of gas supply in the hands of a few. one wouldn't even answer, when he was asked about his company's claim that trying to reduce taxpayer subsidies which is what we want to do given to this industry would be un-american. he said that a number of times in that exchange. it wasn't very fruitful, but it was insightful. as i said then, put simply, these men are all completely out of touch, deeply, profoundly out of touch with what the rest of the country is going through. and that's, again, what it's about. fairness. do you know other people are suffering? your situation is this.

very profitable. other people are going on very hard times. and isn't there some way, in this case $2 billion a year out of -- instead of making $125 billion a year profit -- not just, you know, more money, but actually out of profit, $125 billion would go down to $123 billion. would not hear of it. would not hear of it. they are so caught up in their profits that they have lost sight of what is happening in mainstream, new hampshire, in mainstream, west virginia, across our economy, our schools, on main street and around the kitchen table. well, gentlemen -- the five -- here's some of what you need to know. for starters, the congress is in the midst of a full-throated debate about how to reduce our growing deficit without breaking the backs further of working families or leaving our seniors out in the cold. literally.

or reducing our support for the veterans who serve our country, and children who just happen to be our future. we are debating proposals to cut back social security and the promise that we made to generations who have worked and want to live their final years with dignity. we're debating legislation that forces medicare to be privatized, how it costs about each senior citizen about $6,000 more per year. i hope they know that. medicare privatized, chopped up, made an optional grant program run by states to drastically scale back. the congress is debating deep cuts to federal programs ranging from highways and airports to medical research to coal mine safety inspections and money for schools. everything, everything. quite simply, we're talking about making drastic cuts to programs that touch the lives of

virtually every single person in this country, except for them. and the slick executives seem blind to the real-world consequences of having made almost $1 trillion in profits during the past decade. profits. and while collecting $4 billion a year in subsidies courtesy of the very same u.s. taxpayers who i've just been talking about, the same taxpayers that were also forceed to pay at the pump and whose lives are being changed dramatically because of their position. why them? because they're a symbol. they are the top of the heap. they always prevail. they always win. they always have the lobbyists, the campaign contributions. they always can get what they want. everybody always caves to them because they're so big as they

fly around in their shiny jets. i don't think it's going to be that way this time, madam president. and the same oil executives who blanche if anyone questions their megasalaries. speaking of salaries, it might be interesting to know that the c.e.o. of exxonmobil is paid $29 million a year. i'm just trying to think of new hampshire, the presiding officer's state of new hampshire, i wonder how many people make $29 million a year just in salaries. i don't know if that includes stock options or not. during my conversation with these executives last week, we talked a little bit about how the effective tax rate on their profits is significantly lower than what average workers make in my home state of west virginia and in the presiding officer's home state. exxon paid a 17% effective tax rate over the past three years.

17%. while the average individual in my state and the presiding officer's state paid an effective rate of 20%. now, is that class warfare? is that got ' cha or is that about fairness, about people doing something to help their country when the country is almost on its knees? the effective rate, to explain, is the amount of tax that you're actually paying on income earned when factoring in deductions and credits. it is a vast understatement to say that west virginia, like many others all across the nation, are not having an easy time during this period of record oil company profits, and they -- those five -- understand perfectly well that there is no longer any justification for maintaining generous subsidies for this highly profitable industry. the public appears to feel that

way. the poll numbers are just stunning. 70-30, it's not right, we should take away the subsidies. it varies according to poll, but it's always high up. including 2-1 republicans across the country who believe they should not be able to have those tax subsidies that we are so easily giving them. they know that without a willingness to sta re- down sacred cows like corporate subsidies, not just with them but with others, we won't ever be able to make progress in eliminating the massive federal deficit which is staring us in the face. why wouldn't they care about that? so easy for them. it's called sharing, being fair. no, doesn't work that way. the average west virginian, again, makes $32,000 a year. they can't afford another ten years of handouts to big oil.

the current high gas prices are like a dark cloud. the working class and rural states like mine commute 25 miles or more each way every day. and high gas prices can eat heavily into their weekly paycheck and, of course, they do. things are much worse in the summer, of course, when people travel, if they can any longer afford to. i hear often from constituents who are experiencing sticker shock at the pump, police departments, schools, hospitals, community organizations feel the pinch of rising fuel costs and the pinch of everything else that isn't coming through. philanthropy is down, depressed economy. it's bad. even the smallest increase can have a serious impact on family budgets and a business's bomb tom line. -- bottom line. i do not mean to suggest that the oil industry profits and subsidies are the sole culprit

for rising gas prices. that is correct. because taking what people say who are industry experts and economists too has convinced me that the big factor in rising costs of energy is the role of the speculators and i won't get into that much now. but i will say that these speculative investors make a quick profit in betting on what the cost of a barrel of oil might be next friday. and if they turn out to be right, they get a whole lot of money. i mean, it's -- it's -- it's stupid. it's wall street at its dumbest and they've shown us several ways to be that way. they take no risks themselves. i'm not alone in thinking these speculators are driving up oil prices and creating more price volatility. i've joined with other senate colleagues in asking the federal trade commission to look closely at the role of speculators in the oil futures market and in pressing the commodity futures

trading commission to get moving on a power that they already have, which is to set margins on what speculators can make, crack down, rein this in. ultimately what's needed in the big oil industry is a sense of fairness. not too much to ask. when it comes to paying taxes, when it comes to paying the price for gas, to me fairness has always meant shared sacrifice in tough times and shared success in good times. the -- it's the sense of giving something for the larger good, not stopping to be competitiv competitive -- that's not being competitive or aggressive or even profitable, but at least to show for a minute that they see where we are today. if they had expressed concern about average people and then refused to take any decrease in their tax subsidies by -- paid

for by these people that i'm talking about, that wouldn't have given me much comfort but at least it would have been just a bit of a bend. we got none of that. we like our business model. we're staying with it. don't punish us for being profitable. we do business the way we do business. we've been doing it for 130 years and that's that. so what's needed here is a reminder that a lifetime of always beating their adversaries, of never losing or giving anything of themselves to the greater good does not, in fact, lead to a prosperous cost or morally just society. that's not too much to ask, especially of big oil, and i'm not going to stop just because they don't get it yet. i thank the presiding officer and yield the floor. mr. barrasso: madam president? the presiding officer: the senator from wyoming. mr. barrasso: thank you, madam president. madam president, across this country, americans are feeling the pain at the pump.

gas prices are approaching $4 a gallon. families are going to spend on average about $800 more on gas this year than they did last year. unrest in the middle east and a weak dollar is driving oil prices even higher. now more than ever we must produce more american energy. we need to do this to reduce our dependence on foreign oil. and americans are looking to washington for leadership. madam president, all you have to do is pick up today's "usa today" to know how much. and i know you hear about it too when you're at home on the weekends -- how much this $4-a-gallon gas is impacting people in our states. "poll: gas prices hurting many. $4 a gallon requires cutbacks." let me just read to you,

madam president, "as gas prices hover nearly $4 a gallon, nearly 7 in 10 americans" -- nearly 7 in 10 americans -- "say the high cost of fuel is causing financial hardship for their families." this is a new "usa today"/gallup poll. more than half -- more than half -- "say that they have made major changes to compensate from the higher prices, ranging from shorter trips to cutting back on vacation travel." it goes on, "for 21%, the impact is so dramatic," they say, "that their standard of living is jeopardized." so here we have families all across the country, in your state as well as in mine, families who are dealing with kids, bills, a mortgage and this sort of increase, $800 out of their ability to pay for other things this year, clearly impacts their quality of life.

well, americans want answers and they deserve answers. they want to know, how am i going to pay my gas bill? well, when we have american energy, energy right here in this country, they say, why are we so dependent on foreign countries for our energy? they want to know, where is the leadership in washington. well, this very we're, the president has finally, finally said that he understands the need to produce more american energy. well, you know, he's used that same line many times before. the actions of the democratic party today on the floor of the united states senate do not track with the lines coming out of the white house. the administration wants americans to believe that the administration has seen the light. but, you know, republican representative doc hastings, member of the house of representatives, has already

called their bluff. representative hastings is the sponsor of legislation that would allow more energy production, more energy production off the coast of alaska. and he said that it is -- quote -- "ironic," he said, "that the white house is now supporting this idea." he said because the white house just recently opposed the idea when he introduced it in the house ohouse of representatives. now, you know, the associated press was even more direct. they said that all of the administration's ideas had come -- all of the administration's ideas had come from three bills that were passed by the republican-controlled house down the hall. and the associated press said that the white house had opposed every single one of these bills. so despite acting against the production of more american energy just a week ago, the president now wants us to believe that he supports it just

because this week he says so. well, i hope that his change of heart is sincere because i -- but i have my doubts. because unlike energy, talk is cheap. madam president, the administration is trying to use this sudden change of heart as a bargaining chip to pass legislation that is brought up by liberals in the senate this past week. unlike increased production, the bill on the floor now by the democrats will not help the american people. in fact, the bill is clear evidence that the democratic party has no plan -- no plan -- to address high gasoline prices. why? well, the solution that we hear for high gas prices is a tax increase. since when did raising taxes lower the price of gasoline? since when does raising taxes on one thing ever lower the price of that thing?

to me this is just another distraction. now, the -- the nonpartisan congressional research service has already told us that there are some commonsense facts about energy taxes. they've told us that raising energy taxes will not lower the price at the pump. in fact, the congressional research service says that increasing energy taxes will increase the price of gas and increase our dependence on foreign oil. this administration has consistently pushed policies that actually make the pain at the pump worse. you know, instead of supporting the all of the above energy production across our country, they've been more focused on excuses about why we shouldn't use more american energy. you know, if you look back over time, there is a clear pattern. in 2008, when he was a candidate

for president, then-senator obama said that high gas prices weren't a problem. he said, the only problem is that they went up too fast. interior secretary sal gla when he was a member of this body -- interior secretary salazar, said when he was a member of this body, that you would not support more offshore drilling, he said, even if gas prices hit $10 a gallon. even secretary steven chu, who's the energy secretary, was quoted that same year as saying, "we have to figure out how to boost the price of gasoline," he said, "to the levels of europe." gas prices in europe routinely hit $8 a gallon. well, with these sorts of individuals in charge of our energy policy, it's no wonder that prices are way up, up over a dollar from where they were a year ago. this administration's shutting down of drilling in the gulf of mexico is going to drive

american oil production down by 20% in 2012. you know, even former president bill clinton called the continuous shutdown ridiculous. and to make matters worse, president obama appears to be more enthusiastic about importing oil from other countries than he is in terms of using our own. you know, brazil has discovered huge reserves of shale oil and the president recently visited brazil. and he said he wants the united states to be brazil's best customer for oil. well, when it comes to oil consumption generally, the president's story continues to change. a few weeks ago, president obama tried to make the case that americans should decrease their consumption of oil. he said -- he said, you know, we've only got about 2% to 3% of the world's oil reserves and we use 25% of the world's oil. well, according to the president's measurements, the

united states has about 28 billion barrels of oil. but according to the congressional research service, the united states actually has 163 billion barrels of oil. that's over five times as much as the president says we have. and the united states is currently the third largest oil-producing nation in the world. president obama has also said that he wants to cut imports of foreign oil by a third. well, his new proposal is definitely a step in the right direction, so why would he tie it to a bill, this bill that makes american production harder and more expensive? you know, another of the president's goals is to make alternative energy the cheapest form of energy. he continues to talk about that. and i applaud that goal. but we need to make energy as clean as we can, as fast as we can do do it in ways that don't raise the prices for american

families. well, regrettably, the president's method has been to make everything but alternative energy more expensive. and the bill his party is pushing right now is another step in that direction. so the evidence is clear. the liberal energy strategy is not creating american jobs. no, it's not creating jobs here in america. it's not reducing the cost of gasoline in america. and it's not strengthening americans' national security. instead, americans are paying more at the pump. they're living with high unemployment and they are producing less american energy. well, i hope the president will follow up on his promise to help america produce more oil. i also hope he'll stop pushing the damaging legislation that his party has put forward here this week. you know, it's time we have a true bipartisan approach