necessarily the result of an arab spring. most notable it's been a decline to the israel and the united arab emirates which has taken been a steep decline in cases. and saudi arabia is just outside the top 10 largest arms importers but is one that we expect to see in this field fairly soon. ongoing of euro fighter and last year's mega deal for the past decades maybe longer with 115 new rebuilt f-15s from the u.s. in the other areas. before moving on to concluding remarks i think i'll mention the rise in iraq which has risen just into the top 20 for the period 2007 to 2011 as it seeks to rebuild its armed forces and security forces with international assistance but also going it alone and seeking its own suppliers. we've also noted in a similar regard afghanistan increasingly

significantly too. my concluding remarks and the plug for the sipri database is -- i think there's a lot more information a lot more data with the top five recipients that i mentioned today and i recommend people to check it out and play with it. and i think what you can find there is transfers perhaps between the larger suppliers and recipients. as chantel mentioned reactive arms acadditions in north africa between algeria and morocco and southeast israel. one can also locate their information on who is supplying arms being used for internal repression in syria or in other states in the middle east. one could also transfers as to weather they are appropriate. the acquisition of uganda of the aircraft supposedly to deal seems excessive in my luview and others in uganda parliament would also use this information

and find it a useful starting point. there are others who want to mention this too. there's also arms using conflict. kenya's use of weapons in somalia we also identify the supplies of those and provide some information in terms of when orders are made, when deliveries are made in some cases the value of those deals but i think the important thing for us is that this information can be used to inform international and domestic discussions on procurement and export controls and i'll leave it there. thank you. >> okay. thank you very much, paul. matt, let me turn it over to you on the small arms. >> okay. all right. i'd like to begin by thanking sipri not only hosting today's event but also their invaluable contributions to the field. i can't think of a project that i've worked on in the last two years in which i haven't used the arms transfer database and, frankly, i think i would be lost without it. so keep up the good work.

my presentation is based on insights that we've gleaned on the four-year trades -- on the authorized global trades on light weapons that we're wrapping up that's wrapping up in geneva. the purpose but the first is to derive an animal estimated dollar value for the trade in small arms light weapons and parts accessories and ammunition but debatably as important if not as important is to to do a comprehensive assessment of all major sources of data on small arms light weapons but it's very hard to have a meaningful discussion about policy issues concerning small arms and light weapons. if you don't have good data on what's being exported, where and to whom. and what we've discovered is that this data is partial at

best. one more. >> i think i'm going to skip this slide actually in the interest of time and just list some of the sources that we assess. obviously, i don't have time to go through all of our findings today but i did want to highlight a couple key characteristics of the small arms trade. the first being the huge difference and our knowledge about small arms transfers regionally, transfers to within and from europe, north america and to a lesser extent south america and the pacific region is much better -- it's much better documented. it's much better detailed than data than most parts of the rest of the world. there's country-specific exceptions such as south korea but generally speaking the data is much stronger on these regions than in others. and the same applies to the

categories of weapons that we've studied. for example, firearms is much more robust than data on light arms ammunition. useful data, on light weapons ammunition is almost impossible to find for most countries. we approached dozens of governments and scoured sources and found what we believed to be fairly comprehensive data on 10 or 11 so huge disparities in the data on that and similarly for accessories, weapon sites, fire control systems, laser range fires, aiming devices, these are all very important items on the modern battlefield and yet data on it is anemic to say the least. and then there's also big differences in terms of completeness and specificity of national reporting on their transfers even to the same mechanisms so u.n. register of

conventional arms, for example. some of the reporting is very, very good, very detailed and other reporting is inconsistent and comparatively weak. and then finally our research allowed us to identify some trends, some improvements in transparency and to identify some ways, some simple ways, that transparency could be increased. so one of the ways in which transparency is improving is more a byproduct of the change in the way we communicate and communications technology than any deliberate effort to improve state reporting on arms transfers. the proliferation of smart phones, digital cameras, video cameras when coupled with the increasing usage of online file-sharing sites such as youtube has yielded some remarkably interesting and useful information, information

we may not have acquired otherwise or certainly would have acquired as quickly and here's an example. this is a screen shot from a video that appeared on youtube in january 2009. it's of a military site in venezuela. as you can see it features venezuela's leader hugo chavez and he's talking about the transition of igla-s missiles which are russia's latest generation of man pad air defense systems. we've heard rumors about this sale for months prior to this but nothing -- we couldn't confirm it through traditional sources and then all of a sudden, voila, and all it took is typing igla into their search and up popped this one. this isn't one footage. we've seen amazing footage, libya of insurgents in iraq and afghanistan and i think the potential of these sources is great and untapped.

and then in regards to improving transparency, youtube alone is not going to fill in the gaps for us regardless of what we -- how wonderful we think it is. but there's several other ways to improve transparency, many of which are fairly simple and not all that complicated. the first is more consistent and more detailed reporting by states to the u.n. registrar of conventional arms. that mechanism -- is quickly becoming one of the best sources of data, small arms and light weapons, the weapons not covered by the slippery arms database which is still king which is major databases to acquire data. while it may be great to have more of the big producers and exporters to report, the other states -- it's equally important that other states report. combined the data from minor

importers, when analyzed together can fill in gaps left by nonreporting by the states that actually export their weapons. and then secondly -- and this is to the journalists in the audience, when appropriate, and when safe, take pictures of the weapons that you find -- take pictures of the markings, take pictures of the markings on crates that you find of weapons and copy and upload shipping documents. a few clicks of the camera and an upload and you can reveal the model of the weapon, the data manufacture and the weapon and the serviceability and the likely threat posed by the weapon, sometimes the number of weapons exported and given shipment, the country of manufacture all incredibly important for assessing threats and arms buildups. and all it takes is just probably a greater awareness

amongst journalists of the need and the value of doing it. they're not sexy shots. you're not going to win a pulitzer. the right shot could really revolutionize probably too strong a word but significantly improve our understanding of the arms trade. and then finally, for the researchers our experience through this project and other projects is that there is vast untapped data potential sitting on government computers that some -- many governments are willing to share, have profited -- oh, sorry, not leaked aboveboard redacted properly released. [laughter] >> i should make that clear. nobody is indicating hacking here. but anyway, through the freedom of information act and just picking up the phone and calling governments we've gotten

hundreds of records that wouldn't be available and tens of thousands of records on the illicit arms trade and weapons received through arm caches and here are some of the examples of weapons that -- or photos that we've acquired through this process and these are photos of rpg seized in iraqi arm caches and these are iranian arm designations and we've confirmed through lot numbers that they are recently manufactured through the lot model that's from the u.s. government and british government photo of the weapons and one of the personal favorites that i threw in just because i think it's amusing is the head mounted c5k rocket launcher that they recovered in iran. so anyway, i think i'll conclude there but i'll be happy to take any questions that you may have. >> okay. thank you very much, matt. be careful there and don't do any kind of illicit thing.

rachel, please. >> i'll go a step further. sure, i want to thank sipri not only for this panel but as matt said for those of us who toil in the arms trade world, no, if you didn't have the sipri database you wouldn't be able to do a lot of the work that's necessary. and so again, i look forward to delving into this year's database a bit more deeply. it may seem that the arms trade treaty is a little bit off-topic as we're talking about, you know, data trends and where things are in terms of major exporters and importers but i think it gets people thinking about -- well, this is a billion dollar trade, multibillion dollar trade. it's occurring all over the world as paul was saying some of the countries that are the major exporters, importers raise concerns for various reasons and so it's only natural to think

about the types of controls that must be in place to govern this trade. and what many people don't realize is that unlike many other major weapons categories there really are very few global controls on the arms trade and no common international standards governing the supply and transfer of conventional arms. so there are many national agreements. we could have a whole panel on different national agreements or regional agreements on the international arms trade. because there are no common global standards, for about the last 30 years there have been a variety of piecemeal attempts to try and establish some controls over this global trade, in particular to close the dangerous loopholes that have allowed arms to flow, to human rights abusers, to terrorists, perpetuate some conflicts

virtually with impunity. the idea of global standards or a global treaty to govern the arms trade is actually being put to the test really for the first time. this july states will meet in new york to negotiate a legally binding arms trade treaty with the intent of developing the highest possible common international standards for the transfer of arms. i do want to stress it didn't just appear out of nowhere. oh, let's meet in july and i do want to give a little bit of background because i have found that as we get closer to july, people's interest in the arms treaty is increasing but their knowledge base is very, very low and so there's a lot of misinformation about what the arms treaty is or isn't and so i just want to -- if you can divulge me to give a little bit of background on what this movement is about and the arms

treaty really originated from the nobel peace laureates international conflict which was launched in 1995. it was years in making but the big launch is in 1995. the treaty proposed global principles given the export of international arms and over the next decade or so these ideas were further developed by ngos and supportive governments taking into account a lot of regional initiatives that were developing at the same time. so years of discussion outside the u.n. led to the passage of the u.n. general assembly resolution in 2006 that was entitled towards an international arms trade treaty establishing standards for the import/expert transfer of conventional arms and the u.n. is really the first toe in the water so to speak on this issue. and the resolution called for the u.n. secretary-general to

seek views of member states and to establish a panel of government experts to see if this panel was even feasible. that group concluded its work in 2008 and recommended that maybe the u.n. should dabble a little bit more. over 100 member states actually presented their views to the second general which is unheard of to have that high level of participation and so the u.n. then moved to the next phase which was to develop an open-ended working group that met in 2009. that open-ended working group looked at the scope parameters and, again, the feasibility of this area and after one year, the general assembly again voted to begin actual negotiations on an arms trade treaty that will culminate in this conference in july of this year. but since 2010, the u.n. has engaged in preparatory committee

meetings. and these preparatory committee meetings which were held in 2010, 2011 and most recently in february really looks at the potential elements of a treaty. the scope of a treaty, what should be included in it, the criteria that states could use to determine whether to transfer arms, the national measures that would be necessary to implement a treaty, the types of assistance that states might need to fulfill their obligations of the treaty, among many other topics. so just to give you kind of a flavor of what was discussed, to consolidate, you know, all these meetings into a few sentences, the scope of the arms treaty might include all conventional weapons, which could include small arms and light weapons, it could include ammunition, it could even include the parts and components necessary to make all of those weapons. but the scope doesn't just include the types of weapons that are going to be covered. it also includes the types of transactions because you say

transfer but transfer could mean a lot of things. it could be import, export, reimport, transit, brokering, transshipment, you name it -- any process along getting a weapon system from a to z might be included within the scope. the criteria of the treaty could include prohibitions of arms sales to countries if there's a substantial risk that the arms could be used to commit serious violations of international law such as genocide or crimes against humanity or war crimes. or they may say that states shouldn't transfer weapons that are used to support terrorist organizations. or it may simply say, here's a list of things states should take into account when determining whether to authorize a transfer of arms, such as socioeconomic or sustainable development. it will be implemented by states at a national level. there's no super national body that's coming in and saying to

states, you can transfer this or you can't transfer that. national sovereignty will remain paramount. the treaty will likely describe the what that states should include in their national systems but probably won't provide the precise details of how to do it. that's going to be left up to national governments to decide. clearly, this is a daunting task. the international arms treaty arms is quite complicated and to distill it into a comprehensive treaty is -- will be quite a challenge. as part of the prepcom work the chairman of the process who is roberto garcia martin of argentina did his best to try to summarize the myriad views of member states. he produced a chairman's draft paper which some of you might have seen that will be a reference document for the treaty negotiations, but i want

to stress this is not a treaty text nor is it the basis for negotiations and that's an important -- an important distinction. it includes many of the ideas for an arms trade treaty that had been proposed by member states and as a result, has a lot of contradictory, unclear, underdeveloped ideas as well as things that are completely impractical or what i would say would be none necessary. and i think that's been very frustrating for member states and for civil society but i believe that the paper served a useful purpose. it gave us an idea of the structure of the treaty which saves us a lot of time in july. it allows states to present all their views on an arms trade treaty and it's an important confidence-building measure. when you're working in the national arms system particularly in the u.n. it's good for states to understand that no one's pre-judging the outcome. that this -- the att wasn't developed in advance and it's

going to be strung on states in july. so where does that leave us? between now and the end of july states are developing their national -- [inaudible] >> okay. [laughter] >> maybe we won't be meeting in july. i don't know. [laughter] >> i don't know what that means. [laughter] >> i wouldn't interpret that as a sign. >> is that a sign? >> no. [laughter] >> i'm looking for half full/half empty signs. >> so states are developing their national positions. the end goal, of course, is to end up in july with an arms trade treaty that's actually developing these standards and curbs the international and -- curbs the irresponsible and illegal trade. with those comments about the att, i just want to make two points on what has been raised already. paul talked about potentially troubling trends of new exports

of conflict or particularly despotic regimes or human rights abusers. the att is not a panacea. it's not going to stop arm sales that we would rather not see but what it will do is make it more difficult for states to justify them. because there will be more scrutiny about international arms sales and it will start to create norms about arms sales so it gives states a tool in their foreign policy toolbox. and just again to plug sipri's work and the importance of transparency in arms transfers, sipri's work -- and matt's work as well would be a lot easier if states just made this information available. and we didn't have to, you know, dig quite so much. and so presumably there will be a transparency aspect to the arms trade treaty that will hopefully allow this information

to be presented in a standardized consistent and regular manner which will make all this work easier. and so in conclusion, in my opinion, the att needs to be practical and effective and we need to balance the very worthy aspirations and ideals concerning the arms trade with the reality of the global arms trade which we've heard from this morning. it's not going to help to have a treaty at the end of the day that legitimatizes irresponsible transfers or leaves us with such a burdensome that it hinders the legitimate commercial trade and nobody wants to be part of it. so, you know, just lastly, unlike other conventional arms treaties like the land mine ban i want to stress that att is not about banning anything. it's about for the first time the rules of the game.

it's about developing clear international standards for the global trade and arms. so we will see how states do with that task in july. >> thank you very much, rachel. i think it was very helpful to provide a little bit of background to the att and let me turn to bill. how does the united states see these issues? [laughter] >> well, first, let me start off by thanking sipri for its vital work on the subject of arms transfers over the years. it's played a crucial role in defense matters before it became internationally acceptable or sexy to discuss these matters. discussions like today are particularly welcome because it means sipri is continuing to do its vital work and we're here to enjoy the fruits of its labor. i'm here not to address the trends in the international arms trade as paul did and as matt did but rather to talk about two of the instruments that provide information -- well, one of the instrument that provides information on one that's being created that will also as well.

conventional arms transfers are a crucial security concern for the united states. and we have always supported effective action to control the international transfer of arms. internationally we've been pursuing this on the two fronts that i'm here to talk about today. the united states has been a strong supporter of the u.n. register since the first resolution established a multistep process to operationalize a voluntary register of conventional arms transfers. the register was intended to help identify -- i'm sorry, to help prevent the excessive and destabilizing accumulation of arms in order to promote stability and strengthen international peace and security taking into account the legitimate security needs of states and the principle of undiminished security at the lowest possible armaments. by any measure the register has been a resounding success establishing a global norm of transparency in military matters and re-enforcing control to the

u.s. military. more than 170 states have participated in the register at least once. more than 1 foesht states have participated three or four times and more than have participated at least 7 times and 50 have participated more than -- more than 50 have anticipated every year. by reporting on both exports and imports, the register has captured the vast majority of the international arms trade in the reggie seven categories. even though some states may not participate in the register in a given year or may have never participated, the register transfers many of them by having the import of the transfer even if the importing state does not report on the transfer. one mistake that many make in considering the effect of the register is to look at the volume of the international arms trade and conclude the register is ineffective because the arms trade hasn't shrunk because it was created and that's looking at the wrong end of things. the question isn't whether the register has succeeded in reducing the size of the international arms trade, but

rather whether it has contributed to restraining its growth. in other words, what would the size of the international arms trade be if the register did not exist? i think it would unquestionably be larger and that more and he was destabilizing bill would occur fueled by irresponsible transfers of arms. the issue of irresponsible transfers brings me to our second -- to my second topic the arms trade treaty. the arms trade treaty will be quite different of the u.n. register as it's being created for a different reason and based on different premises. the att is aiming to address the fact that there is no overarching international instrument to regulate the international trade and conventional arms. when conducted responsibly arms transfers are a legitimate commercial enterprise. the international arms trade provides nations with material necessary to fulfill the basic -- the most basic functions of a government protecting its citizens and enforcing its national sovereignty. nations have the right to defend themselves but as we all know there's a dark side to arm

transfers that can have devastating consequences for people in regions. it can support terrorists, enable genocide and create and sustain and compound proliferation nightmares. the att discussions have demonstrated a shared recognition of the disruptive and oppressive impact of illicit or ill-advised arms transfers by a number of countries and organizations. that's why we need an att. to better control some of the worst transfers across international borders. the united states is committed to actively committed to obtain a treaty that's legally binding standards for conventional weapons. we recognize an arms trade treaty won't be the be all or end all. it won't stop terrorism. so-called legally binding instruments are absolutely meaningless to such people because they are criminals who don't and won't abide by any reasonable agreements. this means that the only effective way to inhibit their activity is indirectly. all states must recognize the obligation to enact and enforce laws within their effort it that

criminalize, isolate and punish those terrorist groups operating within their territory or gaining transactions that originate and/or transit through their territory. and if the state claims sovereign jurisdiction does not have a capability for such enforcement then the international community must work with that state to develop such a capability. the united states is acutely aware of the key role that arms transfers play in the national security of most states and we must take that fact into account in designing the att tailoring the goals and objectives. we need to make sure the att reporting regime does not conflict with other reporting regimes and create reporting fatigue on arms transfers. i can tell you as a state which actively reports its imports one of the burdens we have is he can't whiching the data that we actually then report internationally and we also report internal because we're diligent on reporting to capitol hill and it does actually take a great deal of effort to do all

the reporting that we have to do. the reporting is not being done for the sake of transparency for its own sake. but rather to provide other state parties with information they need to judge how the treaty is being applied and practiced. and att should require state parties to report annually to other state parties on their implementation of the treaty and on either their physical transfer of arms or their authorizations for transfer of arms. in reporting on implementation, the state party should report on the actions they have taken on the reporting period to implement the treaty and on any changes to the international system of controls. ..

given the register involves political commitment to report transfers while the att will involve illegal commitment to report transfers as part of a broader commitment to put in place a national system of control, i expect participation in the register to far outstrip the att for years to come once we actually have an att. i expect some countries who participate will not be interested in joining in the arms trade treaty. when you to maintain a register as a separate distinctive by viable and by valencia into allowed to continue to pull its objective of promoting transparency in conventional arms transfers. we need to promote a strong and effective att as a means to promote common international standards for the international congressional arms. we have an important role to

play in the conventional arms as the sipri. >> thank you very much, bill. i would like to open it up to the audience, but maybe i will take the prerogative of the chair here and offer a little bit of background. one of the questions i had is how to the current efforts to try to control conventional weapons relate to afterwards with what would in the 70s be camp talks and i wonder if anybody can talk a little bit about that and the second question i would have is that you know, it looks like states have come and you mentioned this in particular too, the importance of transparency measures. get at the same time we have also seen a decline in the reporting of the u.n. register and so, what does this mean for our future efforts on the att?

do any of the panelists want to -- bill? >> from my perspective let me first address the issue of the decline of participation over the last couple of years in the u.n. register. it is indisputable that participation has gone down. it used to be between 90 and 125 countries would participate on an annual basis. over the last couple of years it has actually declined to being in the middle 70s. that is indisputable. the question is why you have the decline and from my point of view i think we have had the decline for a couple of reasons. one is the continuing failure of the register to include small arms weapons as a category. it means that the register is less relevant to the security concerns of many states around the world who are not directly threatened by the registry of existing categories, vehicle combat. they are more threatened by small arms weapons. it is true that small weapons or in the register is an optional

eighth category if you will but it's only optional and i think that states in africa and latin america and asia are looking at the continuing failure of the register to include small arms and concluding i need to participate in this because it doesn't actually direct live reporting on it. i think also that there has been turnover of personnel at the office of disarmament affairs which implements the register which has affected their ability or their willingness to go out and contact member states and to remind them about the need to report data to the register to pursue submissions to the register. i think that has been in lag over the last couple of years and finally think also states are looking at the fact that we have an arms trade treaty negotiation that will be starting this summer and they're wondering what is going to come from that and they have been focusing their attention on att and not focusing their attention on the register. i think they're waiting for that shoe to drop at the will to see what's going to come from that and they are thinking well if we have an arms trade treaty we may

not need to have a register to provide data to the register. i think that would be short-sighted. but i think some of them are waiting for us to finish the att to go sheesh and to see what the obligation will be under the att for data. >> anybody want to add anything? let me open it up, and please identify yourself and maybe we will take a few questions. >> i and dan from the american university. you talk about the -- it must be very difficult to know how much of the product is reaching the regime hearses the state actors within a geographical area. is their data on such a thing and if so, does it look as if the sources are gaining or losing position in the world? >> the woman here in the front.

>> good morning. i am from georgia, international trade and security. thank you for putting this together. a very interesting panel. i have two questions if you will allow me. the first one goes to our expert on the panel. you mentioned one of the trends, one of the worrisome trend in the arms, is the capacity building type of transfers that we see more and more of. do you see that as a call for lifting that strategic trade control and how we monitor and control the capabilities building as something that we need to look at with new eyes or

from a different perspective? and how would that relate to the discussion regarding the arms treaty and the possible inclusion of -- [inaudible] the second question is to you matt. it's quite fascinating to see our friend displaying his new purchase and such a youtube ask away but how do you foresee this type of social media tweaking and facebooking and u2 being? how do you weigh that against the possibility of tweaking the competition or painting a picture of something in the wrong place? how can you evaluated this type of information and an put anything together with anyone? thank you. >> paul would you like to take

it first? >> i was going to add to bill's comment tracking the -- and one of the things we have noticed the decline and most states we feel perhaps the relevance of the att with regards to what happens to the report and watching that report may be comes through in not pushing those states to sort of see the value in confidence building and getting the report is one of the things that is key there. with regards to our arms transfers database we don't just look at transfers to space that to all state actors but i guess compared with matt we have much fewer transfers there although did we do and t. tank guarded weapons which you will see with some states and also with some nonstate actors because we are not tracking in our database the ammunition and a the small arms and weapons. we have some evidence and information of the database but i don't think as much as matt

has with the lifted arms project. we have do have a project countering illicit trafficking which pays a lot of attention to looking at the tools to help with preventing trafficking by air and now the maritime as i mentioned and i think they are looking at ways of exploring these particular issues. with regards to the trends in terms of transferring more than just the complete system but the means to produce the components from different areas, i think, and i guess rachel will agree, it really talks to the agency discussions i think in terms of the need for ensuring that these actually have control systems in place. when talking with european licensing officers one of the things they raise is one of the facts they take into account which is a risk assessment as to what extent they have expert control systems in place and how they regard them and how well they are regarded internationally so i think that

is an aspect of something that is worth tracking. for is one of the things i think that shows is a biased market. i think what we are seeing with some of these recipients are able to the great demands on supplies in the past and you are seeing transfers not only of equipment that the means produced and i think that really -- in the discussions i'm used to you have people talking about group of supplies and everyone else is the recipient. i think it is much more complicated as you said and therefore to me that really talks of the need to have the global instrument. i will also but in on matt's social media because we also use open-source materials and at the same time we have -- that we have used as well. with regards to the information we have, we have a private database where we keep some of the rumors, the kookier stuff as well as the things that we think are really interesting that we cannot verify so if we just have one image as matt show there we might still be cautious but what

we found is with a small team that we have we are able in many cases to cross-check and verify them with different sources and the time lag might be something from 2011 that we would like to put in the database for the public but we are just not confident about and we are happy to speak with people if they have a query. do you have information about such and such a transfer? we are happy to share that with the caveat. >> i just wanted to jump in on a couple of things as well. on the nonstate actors, the piece of it the arms stay treaty is going to only look at state to state transfers so one of the goals of course would be to prevent diversion into the illegal market and most often that a legal market is being used by nonstate actor so there is a link in the arms stay treaty to the nonstate actors but it's a very politically sensitive issue at the u.n.

because some nonstate actors are seen as more desirable than others and then other states even in terms of allowing them to acquire weapons and so the treaty is most like likely only going to focus on the states themselves. on the building of equipment and the technology transfer, that may in fact be within the scope of the arms stay treaty. if you look at the papers it has been suggested that technology transfer and equipment to build weapons and looted within the scope. a couple of cautionary notes about that, you want to make sure that you are capturing which you actually intend to capture. that if you have a very broad definition of what that can mean, could be that you're actually covering like the e-mail exchanges about a weapons system and about any details that again each one of those is a subject to criterion that would overburden the system. the key here is to really avoid

the major loopholes that could be created, where components for example are the technology where you could take apart say a fighter aircraft and send it piece by piece and avoid the stipulations are the applications of the arms trade treaty so you need to figure out how to avoid those loopholes but also to future-proof the treaty and that new technologies that are being thought that we haven't even thought of yet would still be captured down the road so there is the fine line between specificity and leaving things broad and general enough that you capture things that you don't overlay, that you don't overly capture. >> yeah, in regards to data users, there are many different nonstate actors depending on what you mean by a nonstate actor. i think it's important to clarify what we mean but regardless it doesn't really matter because and users are rarely specified in data arms

trade transfers. i would say also there are very few states that if you mean by nonstate actors if you mean unauthorized and users or illegitimate and users and terrorist criminals and drug cartels etc. there are very few states that permit such transfers directly in and those states that do, they don't publish data any way. but what would be useful in terms of end-user information to the extent that this doesn't compromise commercial sensitive information and proprietary information is transfers to entities that develop a history of leakage or diversion. that would aid in a result of diversion to the black dark it. in regards to and the excellent question of photo shoppingshopping, that is a real concern and sometimes it is very

obvious that most of time i mean the technology is out there to do that and it is sophisticated enough and available enough for the imagery, it could be, they're not going to spots disparities so i think it's a capacity that we, the ngo, the research community have to develop to make better use of this technology in this pursuit. >> i would like to say something about att and the issue of the capacity building transfers. i recently found the att will need to address this and include this somehow in the scope of items that are covered. i think the u.s. should use technology to technology transfers but in careful in making it overly burdensome on states that comply and that gets at what rachel was talking about, what states need to do and how they need to do but also

in terms of what gets reported that there is not going to be reporting on technology transel sam parts and components. yes there should be a requirement for states usage of those things to national controls and integrate them into the national control system but i just don't see because of the numbers involved and other issues that there is any way to report on parts and components being transferred in the context of the reporting regime of the att is going to create. so i think it's likely we'll just have an obligation on states to control the transfer of them but not see them actually reporting on the transfer of them. >> okay, yes, please. >> you thank you. i have a question for mr. malzahn and anyone else in the panel who would like to comment on the question. the expert controls in the u.s., the administration has taken the position that they are going to

reform the process in many reforms about two years ago which i am not sure what the status of those are being worked on. there was a report two days ago reinforcing the message that industries are very unhappy with the expert controls and they are continuing to push for reforms so i guess my question would lead, where are the implications eventually for the arms market if controls respond in the u.s. and where do you see that going? >> well, couple of things about that. one, i don't work directly with the expert comptroller. i'm around colleagues who do and we talked to them so they inform what we are doing in the arms trade treaty in terms of the substantive discussion we have had it prepcom and the

negotiation and at the negotiation, it's not the case of the tail wagging the dog. the way the negotiation happens won't directly determine what the u.s. will do in the expert comptroller effort. we will make sure that what we do on the att reflects what is going on in the expert control reform discussions. in terms of what is likely to come out of the export control reform, i hope we streamlined more efficient, less burdensome regulatory regime for u.s., for the u.s. companies or for companies which do business in the u.s.. but, the affected is going to have on the international arms trade i think it remains to be seen and certainly is not going to expand the international arms trade. this is how the u.s. goes about regulating the companies and what we are talking about doing is streamlining and make them more effective, not about deregulating them and removing controls on them. it is not about controls. one thing i will say as far as claims by the u.s. industry by

the overly burdensome regulation, i will note with his incredibly burdensome system of regulation we still are the largest arms exporter in the world and in terms of i take industry into concerns very seriously but you also have to keep in mind the background of all this going on and an industry never likes regulation, never likes control. on some level it is interfering with their ability to go out and maximize their profits or whatever. if they are responsible company and what not but it's the role of the government to regulate and control industries that need regulation and control and we think the international arms trade is one that we need to continue to need control and. other countries recognize the same kind of thing. >> any of the other panelists want to comment on this issue? >> i also work with a center for an international treaties.

more directly towards hugo, as much as the state department, to make an government supports the att and is working rather diligently towards this, there is still the issue of passing it through congress and a majority says -- saying they are against the att. >> it's a particular kind of att. >> right, so in that sense how do you expect that to move forward in congress and changing their minds because as much as as -- right off the att in general. >> can you explain that in particular? >> there are two different congressional letters from 45 republican senators and 13 democratic senators in which they expressed their opposition to an arms trade treaty that would undermine the 2nd amendment and the u.s. that would conflict with the second amendment and administration couldn't agree more. we are not going to participate

in a negotiated that would undermine a second amendment. the right of the u.s. on national basis is a side for itself the rights and the abilities of its citizens to buy arms and to transfer arms internally. the att will not cover that at all. the att is about the international transfers, transfers between states so i actually agree with the letter. i read both of them and what i see and there doesn't require me to do anything differently in terms of the negotiations with the u.s. because we are not going to allow an att to get into this. this is a door that the rest of the negotiation accepts as close to the att is going to cover international transfers not internal transfers and not internal regulation issues related to as i said stuff with the 2nd amendment right to buy arms and what not. so i don't have a problem with the two congressional letters and again it's not that they oppose an att. they oppose an att that complex

with the 2nd amendment. dalan terms that ability the u.s. the u.s. to ratify the att, i think that will depend on the specifics that are in the treaty. we are hoping to do it in july or to push for negotiating a treaty that we will be able to ratify the but it will ultimately be up to the senate to decide on ratification are not. we are certainly aware of the kind of treaties that the senate is likely to ratify and we don't want to negotiate a treaty or participate in negotiating a treaty that we expect the u.s. will never be able to ratify. so my goal is to negotiate one that will allow the u.s. to ratify it. >> yes, please. the gentleman and then we will go to you. >> and my name is randy and i'm with gw. i had several questions. earlier legitimate arms transfers were mentioned and i was wondering what you could find as the legitimate ones?

the u.s. is monitoring a couple of programs and it may be considered very legitimate. additionally, there is -- it is self-regulated and not enforced. what kind of incidents as would there be to not report whatever might not be legitimate in the last one is as far as the sipri methodology, is it like the payment, the contract being signed but it's being delivered, because some contracts have an opt out clause and may never -- >> rachel first and then we will turn to paul. >> i'm going to take them in reverse order. i think the point you just raised about are you talking about authorizations or actual physical transfers? that is still to be determined, and it does make a huge

difference, because you can have a license and never transfer something but you will still reported if you are reporting authorization so it may look like you know 120 fighter aircraft when they actually never did. we discovered this in the registered register during the last review and some states were reporting authorizations in other states were reporting actual transfer so in a way you are comparing apples-to-oranges. in addition because of the time lag and paul can talk to this, the time lag you may not be capturing everything in a calendar year that actually is reflected in that calendar year so there is a lot in terms of the recording that the att will have to look at, some of the existing instruments and try and figure out how to best mitigate some of the problems that have arisen from that, and within that. in terms of enforcement, one of the aspects of implementation of

the treaty will be to have national enforcement systems, and that sounds very obvious that there are states that don't have any legal, judicial infrastructure to actually address violations of laws as far as controls. you know in this country without his talk about there are so many laws but are they actually being used? what he was actually convicted of had nothing to do with all the kind of glamorous crimes that he was accused of committing. enforcement will have to be very specific at the national level and there has to be, that allows you to have some accountability that states can't just act with impunity. that kind of leads to what is legitimate, what is irresponsible? i think that what the treaty will probably have to decide is what is legal and what isn't,

rather than using the word legitimate and irresponsible because that is kind of like other things that you know when you see it, but it is in the eye of the bubble there. so i think with the treaty will do is really defined perhaps without a definition, of what is a legal transfer? what are the state to state transfers that we are talking about? again in a very general way he could states will authorize sales in different ways. basically using a national, transparent predictable clear process. that will help going back to the earlier parts, that will help industry, manufacturers around the world to then understand what is necessary for country to country to country in terms of abiding by a particular law. hopefully the criteria will somewhat define what would be responsible or legitimate versus

irresponsible as well, because you are saying that the treaty did not want to see transfers that are going to human rights abusers or to commit other atrocities or this whole list of societal and global ills. so that will start to again kind of amorphous lead but define those concepts without having to say you know, the russian sales to syria is irresponsible. you don't have to name them or give them many examples but you kind of start closing, closing in on what kind of the global community would like to see in terms of arms transfers that are going forward. >> the a question question on the sipri methodology, we have to out bugs in the one i presented today was logistics and that only relates to deliveries. but what we have is we have the more i guess we call it a -- which are called trade

requisites. the recipient information on the order date and a particular deal on the type of equipment being transferred, the number, the basic deliveries if anything happens and where we can find it and the challenge on the financial value of that particular deal whether it includes a particular missile or training, so i guess the answer are to outputs which are useful put together in some cases to regard with algeria and morocco we have noted a steep increase of delivery to algeria and understanding the past couple of years -- mcafee look at the orders you can see reactions that i think if you put both parts of the state together you can get interesting sort of findings on the reactive acquisitions and concerns about raising another fact there. i guess i was going to add to rachel's comment. at the moment we have u.n. arms

embargoes which have been from our spec that -- perspective considered illegitimate or irresponsible if you are authorizing transfer to an entity subject to u.n. security council sanctions and already you have a baseline there but i think is rachel said there other cases which i think any many of us consider sort of the hope that the att will enable a building up by the states parties of other things that are considered to be an agreed-upon as being sort of unacceptable. >> just to add to that, while we all recognize the value of the u.n. arms embargoes many national laws do not reflect the illegality of violating a u.n. arms embargo, so you may be violating a u.n. arms embargo but may not be violating any national law where you are actually operated so there is a little bit of disconnect in that speaks to the need for clearer global controls that each state can say, a checklist that i have

this, that in the other thing but another example of where i think italy there was a case where someone operating within italy and was violating a u.n. embargo and there was no law to actually you know, capture the person and take them to court. >> you my question is, this individual as a major supplier against their own interest because i believe so many countries comply have a major interest and i'm just wondering if you have some idea of who may be forcing them? thank you fragos be okay, so this is a question about the transfers of success in july of the att and i guess it is addressed to all the panelists and you probably have all kinds

of different respect is but we will start with you, bill. see what i will say is i am hopeful and optimistic. at&t has made -- att has made more progress than most people expected and that showed i think where the common ground actually is that can be reflected in the treaty. in terms of willis succeed in doing that i don't know but in terms of the likelihood people will resist and att i don't think the exporters want to have an att because it provides a way for regulating the playing field if you will, leveling the playing field and having a consistent set of requirements that they're able to understand and deal with and compete in. what they don't like is what the companies don't like, to have an on level playing field and this will of the about leveling the playing field. what the att should do is level the playing field to a higher standard rather than leveling it down but i think it will be about leveling the playing field so i think actually the

resistance to an att will come from some of the importers in terms of a are going to not be enthusiastic about having the criteria we are likely to have the treaty in terms of human rights and other things be applied to some of them and they are going to be afraid it will interfere with their ability to import weapons. we are going to have an interesting negotiation in july about this. what i will say is enough voting on the different resolutions and stuff that they passed an overwhelming support with only some 20 or so extensions on it and for a couple of them one no vote in the u.s. but that is a different story. [laughter] but as i said we strongly support negotiating a strong effective treaty. but it's going to be the skeptics that we will have to condense and that is what the negotiation will be about as to whether it is likely or not, i

think it's possible. i'm optimistic and i'm hopeful but i wouldn't say it's a sure thing. it will be a negotiation and there is not much time to do it and. four weeks might sound like a lot of time to you all but somebody who negotiates multilaterally, it's not much time at all. >> anybody else want to comment? >> i'm going to defer to the agency expert. [laughter] >> rachel? >> i think that none of us would be engaged in this effort if we didn't think that there was a chance of success and how you define success i will leave to your interpretation. i do think that, as bill said, i was amazed at how far we came, even in a very short period of time with prepcom. even amongst the skeptics, there is a clear commitment to see where this road takes us. at the end of the day, it may not be an outcome that people

lived live with and frankly i think a poorly written or and att that doesn't do what it set out to do isn't worth having. so we are not just having this exercise so that in july, the 27th of july we can say oh we still have the treaty so i think it's important to get the right treaty and that is where the success would live. but that said, there has been an impressive willingness even amongst the skeptics to engage in this process. i think a lot of that can be credited toward the chairman himself. he is a very astute and experienced diplomat who has really done a remarkable job in building confidence and not in kind of a token way. but really allowing everyone to be heard and to feel like they are being heard and they think that is an important role.

i think a lot of times we think of the u.n. as this very political oregon, which it is, but i think also it is very much driven on the personality of the people within it and they think this negotiation, we have had consistency among the people involved in the deliberations and so trust has been dealt, so i think if you would have asked me in july of 2010 if i thought it was possible, the first day i would have said a little more evidence, today is a little more glass half half-full then i would have said then. >> i think it does matter and we have seen it in a multitude of multilateral state negotiations. let me shift a little bit. >> if i could just make one comment, sorry to drop. i couldn't agree with you more rachel, the outcome needs to be a strong and effective treaty. the u.s. is not interested in having just a piece of paper which doesn't actually do

anything. needs to be a treaty which actually do something because we don't want to have a tree just for the sake of having a treaty so we can then move onto the next crisis or have the next negotiation but it needs to do something and that is what we need to get out of in july, a strong effective treaty. >> from our perspective, although the fact that it is being held in that context, in and that we are not seeing the traditional divisions of global south and global north is an interesting dynamic and development there. i think also the statement by the five parliaments of the security council last year was interesting as well in terms of a step forward. so i think there are a few things that have been surprising as well. when i first joined sipri we had to write a paper about the att and it was extremely skeptical and people said that won't fly and they pointed to the u.s. skepticism as a major surprise but as rachel said there has been a remarkable progress in berger as it is interesting to

see that dynamic. one of the things we have not looked at which we would have in the league of nations time one of the dividing lines and internationally regulating control was because they didn't have the recipients on board. the recipients weren't on board and i think to me that strikes an interest in changing the states in africa and asia and the americas that are pushing for this so i think it is very interesting, to change there. >> i would like to go back a little bit too the data and you talked a little bit, you talked a little bit about the reactive acquisitions and the small arms races in certain regions that you see developing. i wonder if he could talk a little bit about that and then i that i would like to ask our colleagues here on the panel dealing with the controls, do you think that a treaty like the

att to prevent irresponsible or destabilizing transfers, you know, would you be able to give me a good example of how that would work in practice, and maybe paul you first on the different trends in regional security. >> okay, the example i spoke about earlier of algeria and morocco is one we focused on a couple of years ago in this sipri before the changes in libya but we have also seen libya and merging with at major importer. algeria was requiring a lot of equipment from russia and other countries ostensibly selling it with regards to combating al qaeda and mockery of -- mark maghreb. what we actually saw was in morocco turning to suppliers to enable vessels and, in aircraft

and the reactive opposition will collaborate clearly in the next couple of years so you will be able to track acquisitions by a algeria system by system in many cases with the moroccan acquisitions. for me personally because my focus with regards to the import on russia and central asia and the soviet space concerned about archer by sean not just because they will be hosting the bonn conference but more broadly we have seen a dramatic increase in terms of archer by sean despite the fact there is an arms embargo. number of states are continuing to supply archer by sean against the backdrop of the eloquent directory and the potential for the use of force to change that situation despite the effort of mediation. armenia which we haven't seen as a major importer is beginning to talk about not acquiring systems to the israeli built up and i guess for us that is an area of

particular concern. the other area in terms of that -- is southeast asia where we do see significant buildup in terms of the maritime system and combat aircraft but at the same time in a number of those cases very clear descriptions of the threat in the region and in some cases explaining what systems have required and a bit overkill but perhaps you can see rules for that but a lot of it varies with the influence of military and keeping up with the complex as well as looking to china and what is happening there but i don't think they are seeing that as a driver. the chinese response to our warnings for an arms race. i would like to see more develop confidence and security building and more robustly put in place but i guess the three areas i'm talking about that is one where i think a number of recent --

reasons for the current increase in one could point to the fact that we have a very late modernization in that region. a lot of programs they are going through now we talked about in the '90s with the asian financial crisis and a lot of those plans now we are seeing that delay and i guess what is being a quite there -- acquired there would have been more developed than it would have been then. >> anything on the example. >> i think obviously, the actual mechanics of the att have not yet been decided but again, these will continue to be a national decisions, whether or not to transfer her. with the att will do, it gives states a process or outlines what the process should look like, so that it is clear that to get an authorization you go to party x axe and then you go

to do whatever is required and these are the kinds of assurances whether they are assurances or other type of assurances you would need. it would presumably make the system more predictable and then again, it's unclear if the criteria will be absolute prohibition, if it will be should take into account, should be kind of a middle ground or maybe a tiered approach and some are absolute and summer taken into consideration. presumably it would make the system more predictable both for the companies and countries involved and the experts but also for the recipients as well. in addition, you know in terms of that reporting from what is going where, i think there will be more predictability and more clarity in that to keep track of some of these arms, potential arms buildups or reactive purchases as paul is calling them, but it's not going to be

the solution do you know, all of the ills that are related to -- i think it's really just one piece of a big puzzle, and it could be useful as register wise, and just identifying what systems are going to wear and allowing states to get a better global picture. obviously not in real time, but anymore regularized timeframe then you would have before so i think it's an important confidence building measure, transparency measure but also in terms of just early warning or those kinds of things as well. >> in regards to small arms i want to build upon what rachel said. transfer controls are extremely important that it is one piece the puzzle in terms of ensuring that weapons are used only by intended end-users. there is also stockpiles and a moving stockpile security.

there is strengthening border controls with regards to man pass which is one of my main focuses. there is airport security and technical countermeasures for civilian aircraft. there is a host of measures that states can and should take to prevent unauthorized access to weapons. >> are there any other questions? >> question is for paul. paul, looking into the future, which regions do you see as problematic in terms of arms control? >> i guess i will mention the one that we didn't discuss, at

least with african now i guess there are concerns for a range of reasons. with regards to uganda which we have seen a buildup in terms of acquisitions from russia, and as i said that pro-of those acquisitions with regard to the task at hand are unclear so i think the issue of the money could be better spent. let's put it that way. the lack of oversight in discussion in parliament in uganda is another concern being raised there. with regards to kenya there has been a number of transfers to the somali incursions and i think they are you can see in that region the question of there may be well-versed rich and some transfer controls by some states but also to build capacity in peacekeeping and an ability to intervene to resolve the situations so i guess one of the challenges or a challenge in striking a balance is one of the

things that i think is difficult. we'll be currently looking at issues with regards to equipping under security secretary reform projects in terms of good and bad practice on that project will be taken on the next couple of months in the luminary workfare is looking at a number of cases from afghanistan and iraq to also west africa and east african cases. i think i will have a better idea in terms of some of the concerns for some of the ways perhaps to mitigate and eliminate the concerns with particular regions in the coming months. we are using the states that we have plus a number of entities we have had as stakeholders. >> thank you very much. you will get the last question. >> i just wanted to ask, as we look ahead to the negotiation in july, what do you anticipate

will be the key issues and the potential sticking points, either the diplomacy, where you think major efforts either need to be focused or internally focused? >> i need to think about that for a moment. the. >> while bill gates gets into the specifics because obviously i'm not negotiating the treaty but i would honestly anticipate, given my experience with the u.n. processes, that no word is too small to focus for weeks attention on and that includes and/or the or i. >> the difference between happy and glad. if there is one. >> but in terms of, and that is just, i'm not trying to be cute but you know, again going back

to how u.s. negotiations work and the personalities involved and the people woke up on the wrong side of the bed, that can truly affect how we move forward but i think the key, and there will be key sticking points in all of the elements of the treaty, but i think determining what the scope is, both in terms of the weapons covered and the transaction is going to be a protracted debate because there are those that want a very minimalist scope and there are those that want literally anything you can possibly think of now and in the future. so some kind of balance will have to be made and a lot of this will be compromised. i think the criteria themselves, not only what those criteria are, but the standards that are applied to them, the absolute prohibition through do you know balance into account. again that is going to be key and i think the other kind of

meat of to this, there is a lot of meat at the other key issues will be what does national implementation look like? how do you balance kind of what i said at the beginning, the what and the how and to not be so general that you mix helping countries have their national control system, develop them, but how do you not prevent, as bill said you don't want to lower the playing field. you want to raise the playing field so figuring out what that looks like at the national level i think will be challenging. i think those three, that is going to be the bulk of the discussion and then we will get bogged down and principles for a long time. does that give you enough? we actually you didn't leave me with a lot of things to say. one thing that i think we have not gotten a good handle on, most of the folks in the discussion a bit on the exporting side, the responsibilities of the exporting states and we have

less progress in talking about the rights right amount of patience of the importers and also of the transshipping states and i think we are going to need to make some progress in july on that because we haven't had that much discussion up until now. we have been focusing mainly on the export side of the equation but it needs to address those other things as well. i think the biggest, one of the biggest tensions that exist and they are i think is going to be what rachel mentioned earlier, the tension between having a treaty that is very aspirational in nature that tries to do lots of things and is very ambitious versus having a treaty that actually is capable of being implemented by state parties. there is a base tension there and i don't think it's one that we have fully resolved. from the u.s. point of view whatever comes out of this needs to on one hand, it does need to move the ball forward and needs to do some aspirational things but it must also implement so it

is worth of paper that the treaty as written on that it is not just an empty document that does nothing. and that is going to be a real tension there because i see some of the other discussions that have been going on particularly in the program of action context about the potential between what people want to do versus what is actually possible. i think that one issue that we are going to have to resolve as the issue of transparency and reporting because there are still states out there for whom reporting international transfers is a taboo subject. some of the states have never participated in the register on the importing side and that will be something we'll have to resolve. there people out there who want to have extremely detailed transparency reporting requirements and the other states, sorry, mandatory and the other states don't want to have any kind of reporting. that is required under the treaty. and i think that as i mentioned

before we need to be careful to pay attention between trying to provide too much detail in the treaty, spelling out in great detail exactly what states need to do because i think the more detail that is in the treaty, the less likely it is we will have a successful outcome from this. you can't have everything -- but you need to be careful that the more you want to put in there in terms of detail, the heart is going to be to negotiate because as rachel said those comments do matter to the people. i've been both at the prepcom, we had a discussion on what the language of the resolution actually meant relating to how the conference was going to take its positions and what consensus actually means. so there are unresolved issues out there. but i agree in terms of the difficult subject, scoped criteria, transparency national platoon -- national implementation. we also need to look at tensions with states joined the treaty.

for the exporting states that have it strong export control system the treaty will not require them to do that much and it wanted put that much of a burden on them but it will be burdensome on states which don't have national control systems from building those things and putting those things in place. they actually want to do this in the treaty will need to provide some mechanism for assistance for them doing it. but the assistance is not going to be assistance all of the gwc which talks about technology transfer and what not. this is going to be in assistance for capacity building under the treaty, building up of capacity to implement the arms trade treaty. the biggest problem i see in july is multilateral negotiations, there's not much time at all. i worked on the conference between 1994 and 2005 so i was there when they negotiated this cbt be but that was a negotiation that took three years and they meet for 24 weeks

ear. we are talking about 72 weeks of meetings that produce the nuclear test ban treaty. we have for instance like to produce an arms trade treaty and the subject is dealing with the arms trade. the ability of the states to defend themselves and that is one of the most basic security concerns of states have so it's a really sensitive issue. it's going to be challenging to negotiate this. so i think the time is really going to be a big problem but again, i am hopeful. [laughter] >> it's also a major arms treaty that will be concluded for a long while. so i would like to thank all of our panelists here for providing us with a very comprehensive view of arms transfers and a difficult place to try to control it at the diplomatic level. i would also like to thank my colleagues for helping organize this event, marcia keller, shannon zimmerman and zach and i

would say stay tuned. we will have other events like these. go to our web site, webb sipri.or/america. we hope to see you soon and you can inscribe yourself on our list. thank you very much and thank you very much to paul, matt, rachel and bill. [applause] >> thank you all for coming. [inaudible conversations] a live picture of the supreme court here in washington d.c. where today the nine supreme court justices have completed

oral arguments on the nation's health care law deciding whether not the law is constitutional. of the court has refused to televise the deliberations they have agreed to release same-day audio of the oral argument throughout the three days of testimony. you'll be able to hear it at its release at 1:00 p.m. eastern and right now, it is plain back on c-span3 and also c-span radio and on line at c-span.org. you can also listen and add your comments. we will also have later today from the c-span networks. the house and senate are back today. the house returning at noon eastern. they gaveled in for morning our. they will be back at 2:00 p.m. for legislative business. this week they might take up a short-term 90-day extension of the bill dealing with the surface transportation programs. by the way house democratic leaders on the record urging all democrats to vote against that extension. they will also consider the republicans budget resolution for 2013. live coverage of the house on c-span. the senate gavels and in just over half an hour at 2:00 p.m..

at 4:30 they will begin debate on a promotion to rollback oil industry. fouts on that at 5:30 eastern and live coverage of the senate right here when they gaveled back in on c-span2. and now remarks from former treasury secretary robert rubin from a recent economic summit hosted by "the atlantic." this is about half an hour. >> you welcome to viacom summit. i'm going to ask my first question, what the joke was that you shared with chairman volcker? >> i suggested that if u.s. the first question which is the better fly fisherman, follow me. >> and his answer? >> each had a different answer. i said me and he said he. [laughter] >> i think this is an interesting time to have that conversation about the economy because of how it is changed as

the perception of the landscape and less humans. we have been having this conversation at the end of december and january. there would have been darkness all around. the euro is on a virtual break it. the eurozone was heading into recession and the united states, the economy seems to be barely growing possibly in the verge of another recession. the fiscal picture here is all screwed up. we have enormous question marks about the stimulus, tax cuts, sequesters and the federal reserve wondering whether they have done enough for quantitative easing but what a difference two months makes. the stock market yesterday hit the highest level since the dark days before lehman brothers, good news on retail sales so just delay the landscape, would like to ask you, are things getting better as the behavior of the markets have us to believe? have we gotten past the biggest obstacles in the risks to the global economy? >> i think -- both of us have been around these issues for a long time.

there have been good numbers over the last few months and clearly a lot of analysts have raised their estimates of 2012 and hopefully that turns out to be right. but my view at least would be that we also will continue to face large headwinds as we have strong headwinds as we have for quite some time. the consumer is still not back where it should be in terms of their strength. we have issues around housing, foreclosures and oil prices, the eurozone and the possibilities of issues around china, the stagnating real wages and we have large fiscal deficits creating uncertainty in the business community. we have state governments that are contracting and at least goes on and on. my view at least as well as certainly hope that is right, i think they're still an enormous amount of uncertainty and the way of a think of it in my own head as a think about these things is the consensus forecast is somewhere around 2.5% for 2012 and i think it would be anywhere from a wide range,

anywhere of a wide range of that number. that is the short-term it perspective that i have. >> for for the last lesson at the single biggest risk has been europe. in 2010, when the greek problems first blew up, that was causing a -- and it happened again last year, but so far it looks like one of the reasons marks are doing better is because europe seems to be getting a handle on these problems. ..

>> let's take europe for the moment. in terms of the existential crisis, the eurozone cannot continue in this form. there will have to be major structural reform. i think i'll take an extended period of time to accomplish. the more immediate question is will there be some stage of stability from which they convince last them until they either do or do not get to a long-term reform. whether the ecb did was to buy time, this enormous reserves question, i think i probably did not. but they did nothing about the long list of substantive problems that they've got to resolve if you'll reached interim stability.

i think at least, it's clear actually, that the leaders, were behind the curve indian with greece and their behind the curve right now. they've got to get their story regimes in place but they also to balance that but they have to balance that, not have too much austerity sue all said, underwent a two the effects of the stories themselves. there's a whole bunch of the issues, and very, very importantly, they have got to have reform. got to have reform. labor laws that affect this is because the crisis countries are without exception on noncompetitive and additional, have to do whatever measures they can to promote growth. >> an interesting question -- >> so my answer is, let me give you conclusion. i think that a failure of the eurozone say over the next year could have effects that are

somewhere between severe and extreme. and i think on balance despite the failure of leadership displayed since this crisis began, i think the probability is extreme, the extremity of the consequences of failure on balance probably create more than likely do not scenario that they will ultimately, that there will be challenges within his period of time. that leaves a lot of risk. if they do not, if they keep going right up to the edge of the abyss and pulling back, if you get to the edge of the abyss with markets, say fundamentally unsound from your taking a lot of risk those markets get out of control. i still think while probability is somewhat greater than not, they will reach this treated of, place of stability. i think there's a lot of risk. >> you said a moment ago you the european central bank have bought time, not as much as people thing. that's one of the questions you're. everybody know central bank can put a lot of liquidity in the

system which has the effect of a gigantic band-aid. i mean, how effective do you think this has been and how much time has this bother european? >> my impression is, i do spend a lot of time with people who live with these issues but my impression is there is a now that the ecb has brought a rather considerable period of time. i think they bought a lot less than most people do. spirit talking weeks, months? >> no, no, no. a prevailing view is they bought a year or more and i think it probably bought quite a bit less than a. the reason is twofold. number one, i think there is the risk that if the leaders of the eurozone leaders don't act, that at some point the market will simply say, it's were the inverse of moral hazard. the market will silver city speedway acted because they're being given this time by the ecb. they will not act. then you'd have a real market, serious market problem. the other possibility is that ecb continues to broaden

liquidity, now they the two tranches, provide additional tranches or something that some variants of it. and leaders still haven't acted. the markets could say, the system will be flooded with euros and if it's flooded with euros at some point back increase in very serious issues. it does raise the question of how committed the ecb is to combating inflation over the long term. and that could create a market reaction to get rid of an effect all euro denominated securities. and that could create an undermining of the market. so i think what ecb done is for a constructor i think mariel is an excellent cover of the ecb but i think there's real limits as to how much time can be bought. i think the real question is will the eurozone leaders finally do what you need to do and establish this interim stability, or will they continue to kick the ball down the road? if they do i think that less time than a lot of people think. >> i think that when people say

you ecb has bought time, but the political leaders have to have more political permanent solution, to radical views about what the solution is. you can take the german view which is austerity, austerity and 30, austerity. and, therefore, that takes a form of like really to turning the screws done in spain and italy and singh cut your deficit now. it takes a form of fiscal context to every eurozone member must amend its constitution to balance the budget. it has look at america's debt ceiling and says yes, we want that, to. >> they have a look very carefully. >> that said, that was going on there. there is another view that austerity is the wrong thing right now. the best path to growth is to take the risk out of sovereign bond markets, real problems that spain and italy has. it's not the budget debt and deficits which are not that extraordinarily large, relative

to for example, the united states or great britain. the problem is that their bonds are being treated like junk-bond. people do not trust him to pay their money back. what you need is a lender of last resort or some form of debt -- each member takes response but for each other's debt. these are like to opposite prescriptions to the problem. what's your view on the? >> i think of cover a lot of ground. let me go back. i think the mutual decision issue, i think mutual decision is going to have to, shouldn't they have to. almost surely has to be part of a long-term reform. i think they'll take a long time to get along with your boss and whatever else. >> but doesn't have to be a part of the solution? >> no. i don't think it can be nor does it have to be. it can be done anytime you need to reach an interim stability. so then you get to the debate, which some people say there has to be this massive austerity in order to retain the confidence of the bond market. i think there has to be austerity but i think of to find

a balance between, in of austerity to support or to win the competence of the markets, but not so much as to undermine the economy to the point where you are actually losing, losing the effect of austerity because you have such an adverse impact on growth. so i don't think either and is right. extreme austerity is not right and the absence because that will undermine gdp. no austerity is not right because you will lose confidence of the markets. i think it's that balance that each of these countries has to find. usually italy doesn't have a bad, they'll have large deficits but it's true, they have a large debt-to-gdp ratio. spain didn't have large gdp ratio prevent large deficits and both of them are uncompetitive. >> that's true. let's move to -- >> it is true. [laughter] >> let's move to the united states now. we talked about some of the

efforts to basically pull the european economy back. let's talk about the federal reserve now. this weeks, this month issue of the atlantic as ben bernanke calling him a hero for everything he did. mr. volcker which is asked what he thought. he said it was his policy not to comment on what other chairman did. however, you are not a fed chairman. so let me ask you, how has -- how is the fed during? >> i think ben bernanke has done a good show. he came into an impossible complex and difficult situation, and took someone unprecedented action. which combined with t.a.r.p. and other activities prevented us from going over the abyss. so i think he has done a very good job. i think that's a little different though than the question that we now face, which is from where we are today, what do you do going forward? and i at least think it is the economy slows down, even those who have a boy in view of the con are projecting growth of

something like 3% of gdp which is still a slow recovery and there's projecting unemployment a% or something like that. the consensus forecast 2.5%, that's a slow recovery. so clearly we have a long way to go. having said that, i think a lot of discussion, a qe3, i think a qe3 would probably accomplish very little or virtually nothing. i was at a dinner last night with a group of really distinguished -- i'm not an economist but i was with a group of really distinguished economist. one of them guess that qe to have 10 basis points effect on interstate any of about 20 basis point. so even there the thought was very little of that. in the rates were already so low, but much, much more importantly, whatever effect it might accomplish and i think it will be very limited, i think that that effect on interest rates would have relevant little effects on business and consumer

behavior as compared to all of these other forces that affect you what businesses do and consumers do. i would just finished that up by saying we remember from college economics this notion of pushing and what new. monetary policy eases but the actors and the economy, businesses and consumers don't want to act. it's all the other factors that influence business and consumers in my opinion that will determine what happened. having some slightly low interest rates will be irrelevant. >> when the fed -- >> and there are risks. >> that's what i wanted to ask you. the fed would say to that, why not do it even if the risks are squarsmall? >> i think we're independently dashed on conference that the fed ultimately welcome back inflation as paul volcker a rogue we did when he became the fed chairman. and i think the risk is if you keep monetizing, or you keep him

from qe2 dequeue e3 to whatever you do after that, i think the risk is that the global markets lose confidence in you to combating inflation to become concerned that you're going to monetize the debt if we continue to have these kind of fiscal deficits. that raises to problems. one is, not inflation right now, but probably inflation right now is extremely low. that is two problems. one is over the long run. and number two if we don't do with our fiscal situation at some unpredictable point, i think will have severe adverse effects. and within that context the real possibility of severe market crisis. and if you have not only unsound fiscal conditions we have, but you add to that a heightened fear, because there was some fear anyway about monetization, a heightened fear i think you increase the probability of that happening, though when that might happen is unpredictable

whether it's a year from now or five years from now or whatever it may be. but there are risks. >> that takes us neatly into the next question which is the whole fiscal site. it yourself the second week of november. we just had a very important presidential election, and now you're gone into the president-elect's office. he says, bob, or mr. secretary, or whatever your position is -- >> sir. [laughter] >> that wasn't what president clinton called me i might add. >> in seven weeks time a number things will happen. payroll tax cut will expire. there goes 1% of gdp. sequester speaking to another 1% of gdp. all of president bush's tax cuts expire, that's roughly 2% of gdp. by the way we're about to hit the debt ceiling. your former colleague at the

treasury tell us will have four or five weeks and that takes us a genuine first of all the shuffling around you guys used to be. what do we do? >> greg, i think i was adding acronyms, i'm not sure we got to the same place. i think all these things happened as you described with about a four or 5% into it already. gdp is already more like fight. growth will be, in a situation where growth is already moderate at best, slow recovery no matter what, and i think this period, all of us should be watching this with enormous interest. i think this period, the postelection period which is to say the first couple of much of the about of january are a period of just enormous denounce importance to the country in terms of policy. i also think it is a period that will be a period of intense political strategizing and negotiation. i remember during the first debt

ceiling problem in 95, really had potential being a crisis, and in the government shutdown. we would go into the chief of staff's office day after day and we're trying to figure out how to negotiate, what are the issues, what are they going to do, what are we going to? i think this will be more intense because the stakes are so enormous. i think and abroad since i think there are three possible outcomes. i may not gotten to all of them. one is, and i think it's a real six passionate a realistic chance this could happen. that the parties will decide to work together in some fashion that then produces a constructive and serious response to our fiscal challenges. i don't know what odds would be put on that but i think it's a realistic chance, especially as polls now show about 84% disapproval rating of congress.

then there's the and decided. [laughter] that's the truth. so maybe, maybe it went in the incumbents lose regardless of who controls the house, if enough incumbents lose maybe a bunch of elected officials will recalculate and decide maybe it would be better to be more serious governance. i think that is a realistic possibility. >> another possibility is, kick the ball down the road, take the tax cuts, extended for expert of time, whatever it is, undo the sequestered in one fashion or another. all of our problems will stay underdressed which i think will be most unfortunate, but certainly possible. the third possibility, though i think this is a relatively low probability is they do nothing. the either kick the ball down the road, nor have a constructive response in which case all the things she said happened and we have a four or 5% negative hit, negative impact on gdp, and you have the middle-class tax go up which is not what the democrats want and have a higher income tax go up

which the republicans don't want. you have a sequestered which nobody wants. so i presume the probability of the happen is relatively low but i suppose it's not inconceivable. >> doesn't matter who is the president? let's say it is president obama. that does want to the probability of your scenarios? >> you know -- >> that would probably be with at least one part both of the houses in controlled by the republicans. >> i would like to see president obama reelected. i think very well of him and that's what i think. there are people have different views. but let's take your scenario. let's say it's a divided government. i think a divided government might actually offer a higher probability of getting to a constructive solution than a government which all three are controlled, all three parts of the government are controlled by the same party to the reason is you have a divided government and you faced the snatch outlined before, and if each party looks at it and says we

really do not want the outcomes that will happen without our acting, then they will be forced to work across party lines and have a divided government by definition. if all three, the house, the senate and the presidency are on the same party, then they might decide to work across party lines. i think there's a real chance they might because it might be that party isn't going to want to take sole responsibility for the extraordinary difficult decisions they have to make. there's a possibility that decide use reconciliation procedure which takes 50 votes in the senate in which case they would take something much tilted either side of the issues. so i think a divided government has a higher chance of producing constructive results. though i think one party controlling both, one party controlling both can also do so because i think that party simply decide we don't want to take sole responsibility. but it does open the possibility at least of reconciliation procedure which is a special procedure, where you don't need

60 votes in the senate to adopt something that is more toward one end or the other of the spectrum. >> we have about 10 minutes left. i will try to take one of two questions, but if some folks want to go to the microphone, i'm going to take the opportunity to ask a couple more questions. that does not leave a lot of time to fix a fiscal problem that is developing for decades. tax reform, the last time we did it, it took years. the final process, the result of something that began before the 84 election. what are the odds that even with the best of intention we can get what needs to be done in seven weeks, before we hit the debt ceiling, before the sequestered kicks in, before all that other stuff happens? >> i think it could be done but i think your point is extremely well taken. you can get a conference of taxes on in appeared of time if you can't get a coveted title reform in that period of time. but what you could do, i think erskine bowles and alan simpson's did our country and

enormous system by setting up the framework. even if you don't agree with the specifics i think they did the country a tremendous service by setting out a framework. so that framework as you all will remember was 10 years to get to a point where the debt-to-gdp ratio first stabilized and then slightly begins to decline. i think you could not do the tax reform, i agree with that. but you could i think, greg, put together a structure of changes that would get you to retain your program that stabilize the debt to gdp, that with simple measures. you probably want to do for the implementation of the program for a couple of years to give the recovery more time to get traction. you certainly i at least think you would want to have robust public investment within the context, because as bernie schwartz and others can tell you, we've got to have infrastructure, we got the basic

research. we've got to have a whole host of other programs if we're going to be competitive. i think you could do that. if it takes you a few months into 2011 to do a, then what you need is some kind of a bridging, a bridging mechanism. i think there are various legislative strategies you could use that would bridge to the point we did it. been the danger of the bridge is always the first bridge, then they can't agree, then you get to the point where they kick the ball down the road instead of acting. but i think you probably put in place a bridging mechanism. that would increase the probability that they would have to act. >> right and how do you prevent them from building a bridge and kicking a can over it. >> you are mixing metaphors, but your point is -- >> let's start over here. please take your name and your affiliation. >> my name is bonnie. i'm an economics supporter at the "huffington post." you mentioned it could be a market crisis and we don't deal with our fiscal problems and.

but u.s. treasury bond interest rates are very low right now so why do you think we have to do with it soon? and do you think -- >> what? >> soon. and also do think that we should have a public investment program right now that eventually help stimulate the economy, maybe reason, and eventually help raise tax revenues? >> let me, i think i got your questions right. been a key short answers to both. i think within the context of establishing is essential to have, i said this before. to have robust public investment because we need to be competitive with an emerging market world, china and its header, and they are fit investing heavily and we have to do the same thing. basic research, infrastructure and whole host of other areas. we have to make room for the. i don't think, i think the probability of a fiscal crisis in the short term is very low. but i think the probability of a

serious set of adverse effects as a result of our fiscal situation if we don't address it, at some unpredictable time is extremely high. within the context one of the kind of adverse effects you could have would be a severe bond and currency market crisis. whether that's a year off in time for his fighters off in time our tenures oftentimes it's unpredictable. one thing i did to you for sure, i've been around markets my entire adult life, markets can change dramatically an instant, almost instantaneously with out notice. so i think it is imperative that we act. that probability of a crisis increase as time goes on but why are rates so low right now? because there's very little private investment. a lot of money flowing into this country. and because of china because of the concerns in china. also because there's a lot of risk aversion. there's been a desire to have treasuries. but i think, not only do we not normalize the rates, to make our

fiscal situation more serious, but i would not take comfort from that in terms of where the probability is that at some point though that point might well off and on for maybe near in time, we will have extreme can we have the possibility, the high likelihood of adverse effects one kind or another. and within that context, a serious risk of a severe crisis. >> would you prioritize public investment or deficit reduction? >> i don't think, i think that's a false choice. it's a good question. i just think it's a false choice. i would have, i would put in place, i think erskine thinks this, and a president obama did he give a speech in april and then he gave a speech labor day and then the monday after labor day which he set out in his economic, and they both said the same thing. i think erskine said the same thing. which is i would get ourselves back on track fiscally because i

think that's imperative, but we'll have to significantly increase revenues and after disciplined about priorities, and by increasing revenue and being disciplined about priorities and reformed entitlements so they are sound financial footing's, we have to create room for robust public investment if we are going to be competitive. and also, if we're going to do with what is a very strict income distribution problem in this country, stagnant meeting real wages and increasing inequality, it is unhealthy economically and it is certainly unhealthy in a terms of social cohesion and i think it is an important problem to address. >> we are almost out of time but i want to take the prerogative of asking the last question. i don't know if this can be answered quickly, but chairman volcker -- has an op-ed in today's "new york times" a former executive from goldman sachs, before you entered public service, and he basically argued that the culture of this from ann walsh a change dramatically. i just want you get any sort of

thoughts on that whole notion, and more broadly enormous change financial reform of all sorts, you know, the volcker rule and so wanted to think the reforms that have been put in place are adequate and they do what is needed to avoid what we've been through? >> we basically had, i didn't read, i've heard about but haven't read it yet, i left by the way december of 92. but in the event -- [laughter] no, that's not a comment on anything. i'm guessing i've been away for a little while. but i've not read the article. i think it's a good question. all the questions are good questions. it's a good question. we had just been through a mega- crisis that virtually no one saw coming. there was a tale risk and a function of a semi-view a function of a lot of forces operating at the same time. that the institutions didn't see. i didn't see. the regulars didn't see. the analyst didn't see. the congressional oversight

committees didn't see. virtually no one saw. that's one reason it was a seat. there would have been more preparatory reaction if you will. so you wind up with a financial system that had far more pashtun i'm sorry, far more downside than virtually anyone participate. we clearly need to have serious financial reform to put in place, measures that would protect us against the level of systemic risk. virtually no one thought we had. and i think on the whole was been done is done. i think consumer protection agency was the right thing to do. not only will protect consumers but reduced systemic risk to i think derivatives were the right thing to do. having said that, i would oppose they came out in 2003. a good book by the way, for those of you who haven't read it. and it's available in paperback. what i said was i thought the real solution, i said i thought derivatives did post a lot of serious problems and i thought that the most effective approach, and i still think is,

the most effective approach to the charybdis issue would be capital requirements. i think it was done to the full google is the right complicated issue. i think the big question with respect to the volcker rule is how the distention between proprietary trading and market making going to be defined. and i noticed the other day the regulars now divert their decision on that. it's not surprising to me because i think it's a very hard line to draw and it's important terms of how our markets work and what the structure of the financial system will be. >> thanks very much. that's all the time we had. we appreciate your time. [applause] >> looking live at the supreme court this afternoon. the nine supreme court justices deliberate the constitutionality of the nation's health care law today. today is the first of three days

of televised test when. more specifically today the court dealt with a question, if the health care law was attached, this is the supreme court have jurisdiction. on wednesday dobie to question before the court. in the morning, if the individual mandate portion of the law is unconstitutional can the rest of the law survive? in wednesday afternoon, it is the loss expansion of medicaid coverage unconstitutional intrusion on states. the court has agreed to release same-day audio of the oral argument throughout the three days of testimony. you will be able to hear it as it is released each day at about 1 p.m. eastern. right now the oral argument is plane back on c-span3. c-span reader in c-span.org where you can also listen and add your comments. we will have later today on the c-span networks. >> we are also talking about the health care oral are you her facebook page. we are asking you how interested are you. you can weigh in at

facebook.com/cspan. right now the u.s. senate is coming back into session. they are planning on working on a motion to proceed to a bill to roll back oil industry tax breaks. votes on that this afternoon at 5:30 p.m.-ish and. and now to live coverage of the u.s. senate here on c-span2. the presiding officer: the senate will come to order. the chaplain dr. barry black will lead the senate in prayer. the chaplain: let us pray. almighty god, look beyond the harmful paths on which we have walked and see our spirits created in your likeness and

longing to commune with you. speak to our lawmakers today, and teach them to listen through earthquakes, wind and fire for your still, small voice. guide them to learn the language of prayer and daily experience its power in their lives. may they be calm when you would have them listen and obedient when you would have them act, always eager to receive directions from you. we pray in your great name. amen.

the presiding officer: please join me in reciting the pledge of allegiance to the flag. i pledge allegiance to the flag of the united states of america, and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington, d.c., march 26, 2012 to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable joseph i. -- the honorable richard blumenthal, a senator from the state of connecticut. the presiding officer: the majority leader. mr. reid: the senate will be in a period of morning business until 4:30 today. following that morning business, the senate will reconsume consideration of s. 2204, the

repeal big oil tax subsidies act. at 5:30, there will be up to two roll call votes. the first cloture on the motion to proceed to s. 2204. if cloture is not invoked, there will be a second cloture vote on the motion to proceed to the postal reform bill. mr. president, there are three bills at the desk due for a second reading. i'd like the clerk to report if you so order. the presiding officer: the clerk will read the titles of the bill for the second time. the clerk: h.r. 5, an act to improve patient access to health care services and provide improved medical care by reducing the excessive burden the liability system places on the health care delivery system. s. 2230, a bill to reduce the deficit by imposing a minimum

effective tax rate for high-income taxpayers. s. 3321, a bill to amend the federal credit act, and so forth and for other purposes. mr. reid: mr. president. the presiding officer: the majority leader. mr. reid: i would object to any further proceedings with regard to thee these pieces of legislation. the presiding officer: the objection having been heard, the bills will be placed on the calendar. mr. reid: mr. president, tens of thousands of bridges, 70,000, to be exact, millions of miles of roads across the country are in a state of disrepair. rather than putting americans to work fixing these roads and bridges, and of course repairing the crumbling train tracks, highways and sidewalks across this country, house republicans are pandering to the tea party. they can't do a bill, they can't do a bill. they have tried. they can't do a bill. they are now not fighting us. they are fighting among

themselves. as if putting the tea party ahead of efforts to repair our nation's crumbling infrastructure wasn't bad enough, house republicans are risking almost three million jobs in the process. i was very disappointed last week to hear that the house republican leaders will pursue a three-month extension of the highway bill. that is without any -- at this stage without any suggestion that they would go to conference with us. it would seem to me that's the most practical thing to do -- have a short-term extension, and during the process of work, see what we can come up with, working together. i know this is foreign language to what's gone on in the house in the last year and a half, but that would be a good idea to try that. work together to come up with a bill, two-year bill, three-year bill working together. we could do that on a bipartisan basis as we did here. their short-term band-aid bill is no solution. communities and contractors need certainty especially going into the summer construction season.

the projects won't -- we want to make sure the projects don't grind to a halt in three months because the house once again refuses to act. the american people certainly know at this stage who to blame because of the problems, it's a crisis, it's a chaotic place we find over there. they are looking to cost us three million jobs. one week remains until these projects around the country lock the gates, lay off their workers. it's time for house republican leaders to do the responsible thing -- take up a senate-passed transportation bill, pass it. the american people are watching and time is wasting. mr. president, while house republicans are squandering precious time and risking american jobs, the senate will now move forward with a bill to repeal billions of dollars in subsidies to big oil companies. last year, big oil raked in $137 billion in profits.

more than ever before, but still received billions of taxpayer-funded giveaways. that makes sense. even with domestic oil production at its highest level in almost two decades, prices at the pump are rising. oil companies are making money hand over fist. when the price after gallon of gas goes up by a single penny, quarterly profits for five major oil companies go up $200 million. so i heard on the news this morning that the price of gas the last couple weeks has gone up 12 cents. well, mr. president, that's more than $2 billion for the oil companies. this country continues to send taxpayer dollars to some of the most profitable corporations in the world. the most profitable. they are doing better than google, microsoft, all of them. they are the number-one profitable -- they are the number-one profitable corporations in the world.

so it's time to end this careless corporate welfare. i'm sorry, mr. president. the only real way to bring down the price at the pump is to reduce u.s. dependence on foreign oil. that will take additional responsible domestic oil production and smart investments in clean energy technology. the senate will vote this evening to advance the repeal of big oil tax subsidies act. this legislation ends more than $2 billion a year in tax breaks for big oil, and it invests the savings in a clean energy industry where it will grow our economy and create jobs. repealing wasteful subsidies won't cause oil prices to go up. repealing wasteful subsidies, i repeat, won't cause oil and gas prices to rise, but reducing american dependence on foreign oil will cause prices to fall, for sure. but if republicans continue to fall in lockstep to the drums of oil companies making record profits, one thing will be

obvious -- republicans care less about bringing down gas prices than about helping oil companies that don't need help. congress should pass this legislation and do it quickly before another taxpayer dollar is spent on wasteful handouts to big oil. how does the american people feel about this, of course? by an overwhelming margin, they agree with us. the senate must also quickly move to reform our postal system. in the coming weeks, we also must reauthorize the violence against women act, pass additional job creation measures, take up the crucial cybersecurity bill. the pentagon says passing the cybersecurity legislation is the single most important action congress can take to improve national security as well as bring a bill to the floor very soon. bipartisan efforts to craft comprehensive cybersecurity legislation have been ongoing for years. it is now time to act. it's time for republican colleagues who have been involved in this effort from the start to sit down and help us move this matter forward. we're going to move this bill

onto the floor. we have had hard work by senator lieberman, senator collins. it's a bipartisan bill. i would hope both parties would agree this legislation is a priority. i hope so. as always, mr. president, i hope democrats and republicans will be able to work together to forge a path forward on these most important issues. would the chair announce the business of the day? the presiding officer: under the previous order, the leadership time is reserved. under the previous order, the senate will be in a period of morning business until 4:30, with senators permitted to speak therein for up to ten minutes each.

the presiding officer: the clerk will call the roll. quorum call:

a senator: mr. president. the presiding officer: the senator from nebraska. mr. johanns: mr. president, i ask that the quorum call be set aside. the presiding officer: without objection. mr. johanns: mr. president, i ask unanimous consent to enter into a colloquy with my republican colleagues for up to 30 minutes. the presiding officer: without objection. mr. johanns: mr. president, i rise today to once again speak

about a topic that i have spoken to many times over the last two years, and that's the health care law. today i'd like to focus on a number of aspects of the health care law, but to start, i would point out that this law actually enacted the largest expansion of medicaid since its its -- inception in 1965. the law dramatically increases government spending, it ties the hands of states, it's going to bankrupt state budgets, and it traps nearly 26 million americans in a broken system. last week's medicaid actuary report indicates that 25.9 million more americans will be dumped on medicaid under the new law. and the week before, the

nonpartisan congressional budget office pointed out that federal spending on medicaid will increase by $168 billion. that's just compared to last year's projection. that means that this expansion alone is projected to cost the federal taxpayers $795 billion through 2021. that's at a time when not only our federal budget is struggling, but in addition to that, our state budgets are in trouble. added up, the federal government will spend $4.6 trillion on medicaid over the next ten years, a staggering number, $4.6 trillion. medicaid spending is projected to increase 35% once the law is

fully implemented. so with our national debt now approaching $16 trillion and compounding exponentially, as we borrow 42 cents of every dollar we spend every day, while instead of reining in costs, the health care law is doubling down with spending. but the medicaid expansion did not stop with wrecking the federal budget. it hammers state budgets as well. this program already consumes 24% of state budgets. the law's medicaid expansion will force $118 billion in additional unfunded mandates on our states through 2023. the national governors' association has weighed in on this issue, and they said --

quote -- "spending on medicaid is expected to consume an increasing share of state budgets and grow much more rapidly than state revenue growth, resulting in slow or no growth in education, transportation, or public safety." the nebraska impact tells the story. the governor commissioned a study in nebraska to see what the impact would be of the health care law on the state budget. nebraska will spend an additional $526 million to $766 million over the next ten years, on its medicaid program. the expansion could add up to 145,000 -- could add up to 145,000 nebraskans to the

medicaid program over the next decade. currently, one in nine nebraskans are enrolled in medicaid. the new provisions of the law will expand eligibility to one in five nebraskans, 20%. governor hien aman addressed this issue and said this unfunded and unparalleled expansion of medicaid is an unfair and unsustainable mandate on nebraska and other states. the federal health care law is an extraordinarily large and excessive unfunded mandate for states. it is potentially devastating to our state budget. now, today with me on the floor i am joined by two former governors. all three of us have had to deal with balancing budgets, and we have no choice but to make sure that at the end of our

legislative sessions, our budgets are in fact balanced. senator alexander, you were vocal in speaking out against this policy during the health care debate. you've got a rather unique perspective because not only are you a former governor, you're a former u.s. secretary of education. i'd like you to take a few minutes and explain how this law is going to affect the health care system, our educational system, our states, and for that matter, our country. mr. alexander: thank you. thank you, senator johanns. you have a unique perspective yourself as a former cabinet member, governor, and now senator. but all three of us here today, including the former governor of north dakota have wrestled with this business of the rising cost of medicaid paid for partly by the states according to rules set in washington, and how do we deal with public education,

especially higher education. i remember during the debate last year, i suggested to our colleagues on the other side of the aisle who were supporting the health care law which i thought was an historic mistake, because it expanded a health care delivery system that we already know is too expensive instead of taking steps to reduce it. i suggested to them that they go home and run for governor, they ought to be sentenced to go home and run for governor if they vote for it and see if they can implement it over an eight-year period of time. here's why the senator from nebraska is suggesting this and let me try to be very specific and that is the effect of the health care law on -- the effect of the health care law on higher education in the states. now, this isn't all president obama's problem. 30 years ago, when i was a young governor, i was still struggling with saying you get down to the end of the budget

process and you have money either to put in higher education or to medicaid, and the rules from washington say it has to go to medicaid. i remember going to see president reagan and saying why don't we just swap it, mr. president? you take all of medicaid, let me -- we states take elementary and secondary education. i wish we had done that. but we didn't do it. and gradually the increasing washington-directed costs have distorted state budgets until as the senator from nebraska said 24% of state budgets foe for medicaid. now we're in the process where because of the health care law we're going to have millions of americans on medicaid. employers -- and we don't know the number but we know it's going to happen, pliers are going to decide 50eud rather pay my $2,000 penalty and let my employees go into the change or in medicaid. then costs to states go up, the senator from nebraska talked about what the current governor

of nebraska said, our former governor, governor baaddeson estimated between 2013 and 2014 it will be $1.2 billion in new tost for the state of tennessee from the medicaid expansion. what most people don't realize is the effect this has on higher education and student tuition. i hear a lot of talk about let's see if we can lower student tuition. one weway we could lower sit not take money from stloans and -- student loans and pay for the health care bill. most people aren't aware we spent $8.7 billion of so-called profits the government makes when it boreos money at 2.8% and loans it to students at 6.8%, the government took some of that money to pay for the health care bill. if it didn't do that, it could lower the interest rates on student loans aceert the congressional budget office and

safe $2,200 per student. so the health care law is costing students who borrow money more on their loans. and in addition i'll close with this example, it's raising college tuition. you say how could the health care law cause tuition to go up in california or tennessee? well, if in tennessee as last year, increases for medicaid went up 15%, that's how much more state tax dollars it had to go up, and spending for the university of tennessee and community colleges went down 15%, then the result of that was tuition went up in our state by about 8%. and that was true all across our country. so the effect -- and i'll come back to this later if we have more time -- is that the health

care law mandates that the states spend more money on medicaid and as a result, the state has -- it cuts the money it's spending for the university of tennessee or nebraska or north dakota and in order to keep the quality of education up, tuition goes up and so students are paying more for tuition and they're paying more for interest rates on their student loans directly because of the health care law. president obama shouldn't be blamed for 30 years of rising costs of medicaid but he should be held responsible and this health care law held responsible for making it worse. mr. johanns: senator alexander, you raise some excellent points there. because governors only have so much revenue they can deal with. this they can't invent it, if you know what i'm saying. so governors sit down, they've got to figure out what the needs of the state are, and if the federal government is taking that decision away from

governors by forcing them into expanding their medicaid, there's going to be less money available for programs like k-12 education, higher education. let me, if i might, turn to our colleague, senator hoeven. you were a governor for ten years in the state of north dakota. please explain the impact that medicaid expansion would have on your budget decisions as governor, and just the impact the health care bill is going to have on your state. mr. hoeven: thank you senator johanns. it's good to be but and -- with you and also lamar alexander from the great state of tennessee. we share the common experience of serving as governors and bring that perspective to our work here in the senate. and as senator alexander just said, there's no question that

obamacare is making the health care challenge in the united states worse. he's making it worse. and we've got to find a way to empower our people, and really in our roles as governors before serving in the united states senate, that's what we tried to do. when it came to medicaid, when it came to health care, how do we empower our people whether it's health care or anything else, in a way that not only makes their lives better but that makes sure that we are fulfilling our responsibility as good stewards of the state's treasury on behalf of the citizens of our respective states. you know, last week was the second anniversary of the obama health care legislation, the second anniversary, and the fact is thins that law was passed -- that since that law was passed and just a minute ago senator alexander expressed some of the things that he talked about when that debate was had

here in the congress. but since that law was passed, over the past two years americans have become more unhappy with the legislation. the obama health care legislation has actually become more unpopular over the last two years as time has gone by because quite simply americans don't want government-run health care. americans don't want government-run health care, and that's what obamacare is. americans want to be free to choose their own health care provider, their own doctors, their own hospitals, and they also want to be able to be free to choose their own health care insurance. and frankly, they're going to do a lot better job than having the federal government do it for them. that's just the fact. and of course that's very much at issue now with the supreme court deliberations, the judicial review they're undertaking now on the

constitutionality of the individual mandate in the obama health care legislation. of course, the question is, is that individual mandate constitutional? and if it is, if they find that that individual mandate is constitutional, then is there any limit to the government's ability to intrude into the lives of our citizens? this is a huge question. and if so, what happened to the concept of limited government that was so carefully developed by our founding fathers in our constitution? it seems to me that that concept of limited government really is -- is gone. and that's an incredible problem for all of us that extends far beyond health care. as former governors, we understand the need to limit government. whether it's the local level -- you were a mayor.

senator johanns, you were a mayor in lincoln, nebraska, before you were the governor of nebraska, now a senator from nebraska, and you understand that one of the fundamental responsibilities of a mayor, of a governor, of a senator, is to make sure we honor the constitution and we limit the power of government at the local, the state, and the federal level to intrude into the lives of our citizens. that's exactly -- that is exactly what our founding foundation were -- founding fathers were striving to do in the constitution, the concept of checks and balances. we have a legislative branch and a judicial branch and an executive branch because that creates checks and balances on the respective powers of each branch. why? to protect our citizens. to limit the reach of government. we have a bicameral congress, a house and a senate, to make it harder to pass laws, not easier. to make it harder to pass laws.

again, to protect the people of this country. we have the 10th amendment that reserves powers to the state not expressly provided to the federal government, again, to limit the power of government and protect the people of this great country. and, of course, that's what we have in our bill of rights. that's what it's all about. so here we have obama-care. it raises taxes by half a trillion dollars. it raises taxes $500 billion. it cuts medicare half a trillion dollars. it cuts medicare by $500 billion and yet at the same time it places huge costs, a huge burden on the states. the c.b.o. now estimates, congressional budget office now estimates that over the next ten years, it will cost the states $118 billion -- that's a

$118 billion cost to the states when they're trying to balance their budgets. they're already facing challenges balancing their budgets and we put that kind of huge cost on them. at the same time, think of what it does to our small businesses. now, again, as governors, i mean, i know how it was in my state. i think it was true when you were governor of nebraska of the i think it was true when senator alexander was governor alexander in tennessee. we understood that job creation was job one, that you've got to make sure that your businesses are able to -- to work effectively, to compete and to employ people. that's the engine that drives our economy, that small business base. and so when we look at obama-care, we look what it does to the states, $118 billion over ten years. look at the costs it creates for small business. look at the confusion it creates

trying to comply with all of this. so what do small businesses do? what do they do? you talked about it just a minute ago. senator johanns in your comment,s, you said,s -- in you, you said okay, so what does a small business do? either, a, they try to comply. that drives up their costs. or, b, they cancel their insurance and they default to the government-run insurance. but it not only creates a problem for them in determining whether or not they're going to continue their health care for their citizens, which our citizens have shown over and over again they want that employer-based health care, but it goes to their very decisions as to whether or not they hire more people. so here we are with 8.3% unemployment, 13 million people looking for work, and we're going to make it harder for small businesses across this country to put them to work because they don't know if they can comply with obama-care, let alone stand the costs. and that affects every single american.

so, look, we need to change the approach and that's what we're here talking about today. we're talking about an approach where we can empower people to choose their own health insurance and their own health care provider, an approach that encourages competition, competition that will help bring costs down, give our consumers more -- giving our consumers more choice. we're here to talk about how we help the states, working with our citizens and our small businesses, reduce costs, reduce waste and fraud and abuse. the president of aarp, president barry rand, estimates that $180 billion are lost annually in waste, fraud and abuse under medicaid. now, think what our states could do on behalf of their citizens in all 50 states if we here in the congress, working with an administration that will work with us, would empower the states to go after that waste, fraud and abuse by giving their citizens more say over their health care and by encouraging

competition among insurance companies to really provide more choice, to provide more access, and to go after that waste, fraud and abuse. look, there are so many things we can do but it's not through a big monolithic government-run insurance program that puts costs on the states and puts costs on our citizens. and that's what we need to change, and we need to change it now. so, again, i want to thank senator alexander for being here today and for his work to empower people when it comes t to -- to health care. and also, i particularly want to thank senator johanns for calling us together to discuss this very important issue on behalf of the people of america. mr. johanns: senator hoeven, thank you for your comments. you mentioned that job one for every governor is job creation, and before i turn to senator alexander, let me just congratulate you.

whatever you did in that capacity worked. you have the lowest unemployment rate of any state in the united states. i'm proud to say nebraska is number two in that regard. but i'll guarantee one thing you learn is that you don't create jobs by putting a big, wet blanket of more regulations on the job creators. and i just used a phrase that i think was coined by senator alexander. senator alexander, i worry that all of these rules and regulations are going to have a -- a very damaging impact on job creation. i'd like you to talk about that. what do you see this impact -- this health care bill's impact on job creation in our states? mr. alexander: well, thank you, senator johanns. i listened with interest to the governor -- former governor of nebraska, former governor of nebraska. let me give you a specific

example. i met -- in response to your question, i met after the passage of the health care law with a number of representatives from -- from chain restaurants. chain restaurants -- and we all -- the kind we go out to dinner at modest costs -- are among the largest employers in america. they employ largely low-income and young people, people who are the waiters and the waitresses that you see when you go into ruby tuesday's or o'charley's or one of these places is someone with a part-time job or someone working their way up. many of these companies offer some health insurance to their -- to their employees. at one of the companies, ruby tuesday's, which is headquartered in tennessee, the chief executive officer told me that the cost of the health care law to his company would exactly equal the profit of the company

that year. now, this is a company of several billion dollars in revenues. one of the -- one of the companies that's even more successful than ruby tuesday's in terms of profit over the last few years and is larger told me that their goal was to have 90 employees per store but after the health care law, they'd have 70 employees per store in order to comply with the costs of the health care law. now, this not only raises the cost of business but it reduces employment in the united states. and, unfortunately, senator johanns, i'm afraid what we may find is these restaurant companies, after 2014 -- we're about one year away from a ticking time bomb for state budgets and for businesses but also for people with employer health insurance. i'm afraid that these companies are going to look at the penalty and say, i'd rather pay $2,000 per employee and let them find their way into one of these

state exchanges, or into the medicaid program, and millions of americans, because of the health care law, are going to lose their employer-sponsored insurance and millions of americans are not going to have as many jobs because of the costs imposed on businesses like these restaurants. mr. johanns: senator alexander, you raise a good point and i'm mindful of our time limit here and i'm just going to take a minute or two here to wrap up because i do think senator alexander, senator hoeven, you've both raised very good points. i look at this health care law and i often wonder, whoever wrote this law, who were they talking to? they certainly were not talking to our small- and medium-sized basis cross this country. why? -- businesses across this country. why? because, just as senator

alexander points out, there's going to be a point here where that business owner, large or small -- and every spot inbetween -- is going to look at the penalty, $2,000 per employee, and say, you know what? it is vastly cheaper for me to drop coverage and pay the penalty. in fact, we figured out for a large retailer in the united states what that savings would be and it was over a billion dollars a year. does anybody believe for a moment that they're not going to do what's right by their shareholders and pay that penalty and save a billion dollars a year by dropping health care coverage? well, once that dam breaks, the dam breaks. and then you remember that promise so often made, 4747 time-- 47times the president sau like your plan, you're going to get to keep it. well, you're not going to get to keep your plan, you're going to

lose your plan. well, they certainly were not talking to gofners when they wrote this bill. any governor will tell you that medicare is a broken system. it literally is bankrupting state budgets under current circumstances, and then you add 26 moremill million peoplmill n people and they're going to have a serious access problem. 46 million docs do not take medicaid patients. so where are they going to find their health care? as many of us pointed out, it's like saying to someone, here's your bus ticket, travel anywhere you want. and oh, by the way, there aren't enough buses to haul the people that we've given a ticket to. and that's exactly what we're going to be facing here, is a growing access problem. and then with the cuts in medicare, well, they sure could not have been talking to medicare providers, because you start cutting reimbursement rates, which is exactly what they're doing -- a half a

trillion dollars cut out of medicare -- and you're going to have access problems there, too. and so all of a sudden, senior citizens can't find a doctor. and don't believe my statement on that, read the reports from richard foster, who is the chief actuary at c.m.s., who has studied this and said, look, this is the consequences of this legislation. well, at the end of the day, it's pretty clear to all of us that this is failed policy. it was quickly put together to try to ram it through to roll the minority to get this done and we ended up with a very failed piece of legislation. the american people do not like this legislation any better than the day it was passed. in fact, they like it less. the more they learn about this legislation, the less they like it. i'll just wrap up with one not thought. we all know that these days the supreme court is hearing arguments on this case.

it is my hope that the supreme court will intervene, will decide that this law is, in fact, unconstitutional and then we can build a health care law the way it should be done, a step at a time, consulting with medical providers and governors all across this country to build a policy that makes sense for our health care system and for our citizens. that's what should have been done in the first place. that's what we need to do. with that, mr. president, i'll yield the floor and i'll note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorutuesday's quorum.quorum ca: quorum call:

nor senator mr. president? the presiding officer: the senator from arkansas. mr. boozman: i ask consent that the order for the quorum call be rescinded. the presiding officer: without objection. mr. boozman: thank you, mr. president. we are reading in the news about the violence all around the world and remember about the tremendous bein sacrifice of amn troops as they protect and preserve the interests of our nation. these men and women serve with courage and honor, and it is our duty to honor and standard with those who have stood for us. today i'm here to pay my respects to staff sergeant jerry reed ii, an arkansas soldier who isacrificed his life while in

support of operation enduring freedom. he graduated from rugs h russele high school. he served three years and then reenlisted in 2008 and served in iraq, germany, korea, and afghanistan. staff sergeant reed served as a tank driver and gunner with the army's 28th infantry brigade, 2nd battalion "a" company in germany. his sister katherine spoke of how he loved the military and planned to make it a career, as he was interviewed with the russellville courier. his family and friends describe him as a man who would have had no trouble fitting into the military, for he was one that faced danger head-on. he was a protecter and looked out for his friends. he loved being outdoors and

fishing and spending time with his family. on february 16, 2012, staff sergeant reed passed away while serving in afghanistan. mr. president, staff sergeant reed made the ultimate sacrifice for his country. he is a true american hero. i ask my colleagues to keep his family and his friends in their thoughts and prayers during this very difficult time, and i humbly offer thanks to staff sergeant jerry reed for his selfless service to the security and well-being of all americans. i note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

a senator: mr. president? the presiding officer: the senator from montana. mr. baucus: mr. president, i ask further proceedings under the quorum call be dispensed with. the presiding officer: without objection. mr. baucus: mr. president, i ask consent that the following staff of the finance committee be allowed on the senate floor for the duration of the session for debate on s. 2204: juan

mcado, david sklar, maroon dobo and evita banara. the presiding officer: without objection. mr. baucus: edmund girk said every prudent act is found on compromise and barter. compromise and barter, that means give-and-take in order to work things out. i want to apply burke's famous aphorism to the two leaders of the public works committee: the chairman, senator barbara boxer of california and jim inhofe of oklahoma. one of the senate's leading liberals and one of the senate's most dyed in the wool

conservatives. while senators boxer and inhofe openly acknowledge there is much they do not agree on, they both agree transportation infrastructure is a smart investment in american roads, safety and jobs. so they worked hard to craft a consensus highway bill that three-quarters of the senate could agree to. i've always believed this kind of cooperation is the key to success. we can do great things for this country when we work together. when i had the honor of leading the environment and public works committee, i also had the true, distinct pleasure of working with senators from both parties who understood burke's principle of barter and compromise, such as john warner of virginia and john chafee of rhode island. so it is very gratifying to know that tradition of the environment and public works committee continues to be strongly upheld by the chairman and the ranking member today.

in order to craft the highway bill, both of these leaders faced pressures not to compromise. each had ample opportunity to give in to those pressures and give up on the bill. but instead of drawing lines in the sand and pointing fingers, they chose to reach out their hands and meet in the middle. they talked to each other, and more importantly, they listened. they opted for pragmatism over ideology. they disagreed without being disagreeable. they worked closely with senator vitter and myself to incorporate the best ideas from all sides. and ultimately those good-faith efforts prevailed. they prevailed when the committee reported our highway bill title with unanimous support. we continued working together to meld that product with contributions from the banking committee and the commerce

committee, along with a fiscally responsible plan to pay for this investment with the finance committee. earlier this month 75% of the senate came together to pass a highway bill that would create or sustain approximately 1.8 million american jobs each year. that's according to the department of transportation. what a tremendous achievement reached by working together, creating or sustaining 1.8 million jobs a year. from my state of montana, this bill would create or sustain 14,000 jobs each year, and it cuts through red tape to put people to work on jobs even faster. it gives the state of montana and our local communities the flexibility they need to fund the alternative transportation projects that work best for them. it invests in the land-water conservation fund and continues a vital program to support our

communities. and it does it all without adding one single dime to the federal deficit. simply put, this bill is an investment in jobs we can't afford to pass up. that's why this weekend montana's largest newspaper, the billings gazette, called on the house to pass the senate bill. i join that call today. the current highway bill expires at the end of this month, and construction season is starting soon. as the "gazette" notes, a short-term extension doesn't provide the certainty we need to get highway projects off the ground and workers on the job. we cannot afford to put these jobs on hold by kicking the can down the road, especially if we don't have to. and also especially if we don't have much more road to kick the can down. the senate bill is the product

of months of debate and cooperation, of give and take from all sides, carefully crafted into a bipartisan investment we can all be proud to support. it has already passed the test overwhelmingly bipartisan support in the senate, and there is no reason the house should not take up this bill and pass it right away. the house should understand that we need to work together to achieve solutions the american people rely upon. edmund burke understood that. thankfully, senators boxer and inhofe really understand it too. i want to thank them for that. mr. president, i suggest -- mr. president, i now ask to speak on another matter. mr. president, president truman once said healthy citizens constitute our greatest national resource. two years ago last week we passed the affordable care act.

we passed it to help give every american access to quality, affordable health care. people like zeez from helena, montana know how much this health care law provides. doctors diagnosed her by age seven. by high school she carried an oxygen tank. she received a double lung transplant. even with insurance companies, she and her family paid tens of thousands of dollars out of pocket. things looked even worse when she hit an arbitrary coverage limit. if she had lost her insurance before health reform, she might not have been able to find any insurance coverage at all. insurance companies could have turned her away simply because she was born with cystic fibrosis. but know thanks to the affordable care act, she will

always be covered. she will always have access to the care she needs. a year ago on the affordable care act's first anniversary, cees shared her story about seeing health care reform signed into law with her local community. she said she cried tears, tears of extreme joy. and she wrote -- and i quote -- "i knew that i no longer had to worry about losing or being denied coverage because of my preexisting condition. and i no longer was going to be denied coverage for exceeding arbitrary caps set by insurance companies." cees's story is not unique. health reform is working for people in montana and across the country, and it's saving them money. the the law improved our health care system to focus on prevention and keep americans healthy creating forms to pay for quality of care rather than

quantity and service. in two years health reform has lowered costs for millions of americans. parents can now afford to cover their entire family, including children up to the age of 26. more than two and a half million young adults have been able to stay on their parents' plans, thanks to health reform. two and a half million. prescription drugs are now cheaper for seniors because of the act. already more than five million medicare beneficiaries have saved more than $3 billion on drugs. again, that's $3 billion saved by seniors on drugs. and health reform eliminates the so-called prescription drug doughnut hole. this puts dollars back in seniors' pockets, dollars that they can use for groceries and electricity bills. seniors now receive free annual wellness visits. they receive free screenings. this focus on prevention leads to better health outcomes.

it keeps them healthier. and it saves money by allowing seniors and their doctors to catch conditions like high blood pressure or diabetes before they become serious and costly. health reform also helps those who wish to retire early, to afford insurance until they qualify for medicare. the law has provided almost $4.5 billion to aid businesses to give early coverage to these employees. let me repeat that. the law has provided almost $4.5 billion to aid businesses to enable them to give early retiree coverage for their employees. health reform is also saving americans money through new consumer protections. it's any insurance company abuses. medical loss ratios are the one that most firmly comes to my mind. because of health reform, parents cannot keep their kids with preexisting conditions on their plans and insurance

companies can no longer exclude these children. insurance companies can no longer place lifetime and restrictive yearly limits on their health coverage that cost americans like whitney tens of thousands of dollars. and insurance companies can no longer go back and scrutinize applications for tiny errors as a way to deny payments after a customer gets sick. health reform has also created the medicare and medicaid innovation center to put good ideas from the private sector into action. the center is already working with more than 7,100 organizations, hospitals, physicians, consumer groups and employers included producing costly -- reducing costly hospital readmissions. health reform provided law enforcement with new tools and resources to protect medicare and medicaid from fraud and abuse. these efforts recovered more than $4 billion last year.

new antifraud provisions in the act, in the health care bill helped recover more than $4 billion in fraud last year. just a few weeks ago, federal agents made the largest medicare fraud bust in u.s. history. 91 people were charged with defrauding taxpayers for nearly $300 million. more parts of the affordable care act to help consumers would start in the year twowrt include the state-based affordable insurance exchanges. on these exchanges, people will be able to save money how? by shopping for an insurance plan that is right for them. it's like getting on expedia or orbitz. shop around and find the one that's best for you. for too long, individuals and small businesses shopping for insurance on their own have had very limited options. the plans that were available

were often too expensive. now for the first time, insurance companies will have to compete against each other for business on a level playing field. that will mean lower premiums, better coverage and more choices. health reform has also reduced government costs by dramatically slowing the growth in spending. according to our nonpartisan scorekeeper, the congressional budget office, health reform slowed the growth in health spending by 4%. that will save taxpayers dollars and help get our deficit problem under control. we need to let the law keep working to save families and taxpayers more money. the congressional budget office tells us that repealing the affordable care act, reappealing it now would increase the federal deficit by nearly $143 billion over the next decade. repeal would cost the federal

deficit $143 billion over the next decade according to the congressional budget office, and it would increase the deficit by more than a trillion dollars in the decade after that. repealing health reform would also leave tens of millions of americans without insurance. studies have shown this would cost every american family an extra thousand dollars a year. boy, that's something that we just can't afford. the affordable care act has already saved millions of americans money to help them get affordable health care and millions more will get access in the coming years. healthy citizens are indeed the greatest asset our country has. we need to let health reform keep working for all americans. mr. president, i yield the floor.

mr. kyl: mr. president. the presiding officer: the senator from arizona. mr. kyl: mr. president, first i would like to take a moment to wish vice president cheney well as he recovers from his big-time heart surgery, heart transplant surgery. my wife carol and i have him in our thoughts and players, and we send our best wishes to him and to his entire family. i'm sure that the angler as he was called would rather be out fishing in wyoming on the snake river where i know he has been very, very happy. i hope he can get back out west soon. in the meantime, i know he is fortified by our wonderful family, his wife lynne, his two daughters and his grandchildren. we wish him all the best. second, mr. president, in a recent column in "the arizona republic," my friend bob rob laid out a very thoughtful contrast between president obama's budget and the alternative put forth by the house budget committee chairman paul ryan, which the house of representatives will be acting

on this week. in his column, robb notes that the ryan budget would get the federal deficit below 3% of g.d.p. by 2015 and after a decade would reduce our debt to gpt ratio -- g.d.p. ratio from 87% -- to the share that affects private sector economic performance and casts doubt on the government's ability to even repay its obligations. robb explains and i quote, that despite the cater walling of critics, rhine doesn't achieve this through brutal budget cuts. quite the contrary. he explains why the ryan budget would allow spending to increase about 3% each year compared to the obama budget 5% annual increases. and he concludes that low interest rates are currently muting the effects of our growing debt on the economy but could change overnight. as he put it, if it changes, the federal government will have to take action much more drastic and quicker than the relatively gentle and gradual pathway

provided by the ryan budget, end of quote. mr. president, i hope senators will take a few moments to review this column in its entirety and ask unanimous consent that it appear in the record at this point. the presiding officer: without objection. mr. kyl: thank you. third, as we know, mr. president, today the supreme court began hearing arguments about the constitutionality of the affordable care act. it's one of the most critically important supreme court cases of our time. a "wall street journal" editorial noted last friday, and i'm quoting -- "few legal cases in the modern era are as consequential or as defining as the challenges to this law. the powers that the obama administration is claiming changed the structure of the american government as it has existed for 225 years. constitutional questions the affordable care act poses are great, novel and grave, end of quote. the editorial entitled "liberty and obamacare" lays out the constitutional problems with the

affordable care act and focuses on the bill's centerpiece, the individual mandate to purchase health insurance. as the editorial notes, the case against this provision is anchored in ample constitutional precedent, and i quote their conclusion. the commerce clause that the government invokes to defend such regulation has already applied to commercial and economic transactions, not to individuals as members of society. the court has never held that the commerce clause is an ad hoc license for anything the government wants to do, end of quote. mr. president, i urge my colleagues to read this article and ask that it be inserted in the record at this point. the presiding officer: without objection. mr. kyl: and finally, continuing the point about the argument on obamacare and referring to a different piece that appeared in the "wall street journal," i wanted to talk just a little bit in more detail about the justification of this mandate to purchase health insurance, the requirement that every individual in the united states be the recipient of a defined, a

specifically defined policy by the united states government. the rationale that the government has provided is that if we don't do this, then free riders are people who don't have insurance or might get sick will end up shifting all the burden of their care on to the rest of us, and therefore the government needs to regulate that by forcing everybody to buy insurance. well, on march 20, the journal published a piece by douglas holtz-eakin and vernon smith, a former c.b.o. director and an economics professor respectively, which i think really debunks this argument on the merits. it explains the real reason why this mandate as well as a dramatic expansion of medicaid are both unconstitutional, and i just wanted to recite or highlight perhaps the points that they make here. first, holtz-eakin and smith address this individual mandate question. states, of course, have general police power to regulate the

conduct of their citizens, but federal power by contrast is very limited over individuals. the authors here make the important point that health care policy has traditionally been a state's function. health care needs for individuals and varies from region to region. as a policy matter, states have a better understanding as to what kinds of improvements the health care access are needed. here is what they wrote. quote -- "the administration's attempt to fashion a singular, universal solution is not necessary to deal with the variegated issues arising in these markets. states have taken the lead and passed reform efforts. they should be an integral part of improving the functioning of health care and health insurance markets." end of quote. so if the states have the legal power to address health issues and they are better equipped to do so, then where does the justification for federal jurisdiction come from? the authors note that the administration's argument is

that the federal government mandate is needed to address the cost shifting, the thing that i talked about before, but they node that this is a red herring. in reality, they write the mandate has almost nothing to do with cost shifting, end of quote, and that's because in actuality the young and the healthy, the people that aren't buying health insurance aren't imposing much of a burden on the system because they don't get sick that often. they don't knee as much insurance because they don't need as much health care, and the authors say -- quote -- "the insurance mandate cannot reasonably be justified on the ground that it remedies costs imposed on the system by the voluntarily uninsured." in other words, as i said, there isn't that much free writing going on. the authors conclude that the real purpose of the mandate is not to decrease the costs of uncompensated care. it's meant to force the young and the healthy to buy health

insurance at rates far above the amount and scope of coverage that they actually need because they are generally healthy individuals, but this extra money will help fund health insurance companies and therefore offset the huge increased costs imposed upon them by obamacare's many new regulations. this is the real reason for the individual mandate. in fact, as an amicus brief by over 100 economists points out, and i quote -- "the affordable care act is projected to impose total net costs of $360 billion on health insurance companies from 2012-2021." end of quote. with the mandate, however, -- quote -- "insurance companies can be expected to essentially break even." end of quote. well, this is no coincidence. so if this is the real justification for the mandate to purchase health care, i submit

that it should have been done through an enumerated power, perhaps under the tax power of the federal government, which is at least one of the powers that the constitutional explicitly provides. in any event, this individual mandate cannot be justified to regulate interstate commerce. now, the supporters of the mandate have therefore introduced a second argument. they say well, health care is just different from all other commerce. it's bigger. everybody has to have health care, as if they didn't have to have food on the stable or shelter over their head or clothes on their back and so on. but in any event, they say that health care is different, and somehow this difference gives congress the right to force people to buy government-defined health insurance under its authority to regulate interstate commerce. but the argument that this market is different is beside the point, even if it were true, because it does not articulate a

constitutional limitation that is judicially enforcable. the question before the court is whether there is any limit to congress' power to regulate commerce. obviously, the framers would never have countenanced a federal requirement to purchase a product so that the government could then regulate it, so what limit on constitutional power is suggested by the health care market? none. and that is precisely the point. the government cannot draw a line and as a result it would have to argue that there is no limit to its powers, and that, of course, would run counter to the reason why the framers put limitations into the constitution. well, the individual mandate is not the only provision in obamacare that's constitutionally impermissible. the medicaid expansion is also violative. while congress has well-established power to use its purse strings to encourage the states to adopt certain federal policies, it cannot force them or compel them to do

so. obamacare's medicaid expansion essentially coerces the states into complying with new medicaid policies. this occurs in two different ways. first, if a state does not comply with the obamacare eligibility expansion, it would lose all of its federal medicaid funds, even for patient populations that the state had already covered long before obamacare was passed. few in any states would be able to continue their economisting medicaid programs if they lost all of this federal funding. an anorth koreaas brief -- an amicus brief examined medicaid data to determine the economic impact of states losing their medicaid funds and it found if states were forced to absorb federal medicaid expenditures do into their own states state budgets -- quote -- "the expenditures would jump by 22.5%" -- end of quote. in other words, there is no real choice. the options for states are do as the federal government says or

leave medicaid, which by now is so engrained in the care for the indigent that unwinding it, in effect disentangling it from existing state-federal relationships is impossible and would obviously jeopardize care for the population without other health coverage. this is coercion plain and simple. it's unconstitutional. and second, obamacare expands medicare eligibility to everyone under 138% of the federal poverty level. for individuals who make less than 138% of the poverty level, obamacare provides no means for complying with the individual mandate other than enrolling in medicaid. in their brief to the supreme court the states suing over the medicaid expansion said it best. quote, when congress mandates that medicaid-eligible individuals maintain insurance

but provides no means for them to obtain it, it is impossible to label the state's participation in medicaid voluntary" -- end of quote. the only way you can get it, it's not voluntary. well, obamacare as a whole cannot survive without these unconstitutional provisions and these are the reasons why i believe that it will and in fact should be struck down as unconstitutional. mr. president, the last thing that i'd like to comment on is an unrelated subject. it has to do with comments that the president was overheard making in a meeting that he was holding with russian president dmitri leb deaf -- in south korea. he had a hot mike which, in other words, captured comments he was making privately to president medudev and he requested a little space in negotiations over missile

defense until after the election when he said we have more flexibility. well, obviously this presents a problem that is going to have to be discussed with the u.s. congress. because if the president is in effect saying that he'd like to make a deal to limit u.s. missile defenses now but he would be accountable to the american public if they became aware of it before his reelection bid, it would be very difficult for him to make the kind of concessions that mededev wants. but if the russian president will wait until after the next election, then the president will have more flexibility to work with the russians on what they want. well, the russian president said i will pass this on to vladimir. mr. president, here are a few things we know. we know that president obama canceled plans to station antiballistic missile systems in poland and the czech republic. he supported language to link

missile defense to nuclear reductions. we know the administration is sharing tborgs the russians including missile defenseness europe. the president has significantly reduced funding for and curtailed development of the national defense system, undermining our ability to interest yr effectively intercept ballistic missiles, and we know the president has doubled down on efforts to reduce our nuclear arsenal while failing to honor his promises to modernize the aging weapon complex. what we don't know is what president obama has in mind for working with the russians after his reelection when he would, as he put it, have some flexibility in negotiating with them. perhaps the russians and who -- in whom the president confideed should shed some light on missile defense plans, perhaps the president should shed that light on these negotiations with the american people before discussing them with the

russians. mr. president, i yield the floor. the presiding officer: the republican leader. mr. mcconnell: as americans filled up their cars with gas this weekend, i'm sure a lot of them wondered how much higher gas prices could actually go. well, today the democratic controlled senate plans to send these folks a message. if they had their way, gas prices would be even higher. today, democrats will propose raising taxes on america's energy manufacturers, something

common sense and basic economics tell us will lead to even higher prices at the pump. this is the democratic response to high gas prices. frankly, i can't think of a better way to illustrate how completely and totally out of touch they are on this issue and that's why republicans plan to support moving forward on a debate over the legislation, because it's a debate the country deserves. we're going to use this opportunity to explain how out of touch democrats are on how gas prices, and put a spotlight on the commonsense ideas republicans have been urging for years. ideas that reflect our genuine commitment to the kind of all-of all-of-the-above approach the president claims to support but actually doesn't. this isn't terribly complicated. americans from maine to california are frustrated at high gas prices. and what do they see in washington? they see democrats pushing legislation that even they admit doesn't have a thing to do with

lowering gas prices. at least seven democrats are on record saying this bill doesn't do a thing to lower gas prices. last year, its own sponsor said that nobody's made the claim that this is about reducing gas prices. all of which raises a -- an obvious question. what are we doing it for? how does this help the american people now? of course it doesn't. in response to record high gas prices, democrats in congress want to raise taxes on the very people who produce it. meanwhile, the president is blocking a pipeline that would decrease our dependence on middle east oil and create thousands, literally thousands of american jobs. the americans see the democratic response to high gas prices to make them even worse. that's the democrats' response to high gas prices, to make them even worse. and they're starting to wonder if this might as well be the

democrats' official slogan, vote for us, and we'll make things worse. because whether it's jobs or debt or spending or gas prices, that's the democratic record. which leads me to health care. today as we all know, the supreme court began hearing arguments on the president's health care law. among other things, the court will consider whether the mandate at the core of this law is constitutional. and as one of the many public officials who 2350eu8d a brief before the court opposing this law, i believe strongly that the law is in fact unconstitutional and i hope the court agrees but even if the court ends up disagreeing with me the case for repeal has become increasingly difficult to refute. the president was right to seek reform, but the bill he gave us and that the democrats forced through congress on a party-line vote just isn't working. instead of lowering costs, it's increasing them.

instead of strengthening medicare, it raided medicare. instead of helping states, it's created financial burdens they can't even bear. instead of lowering insurance premiums, it's caused them to actually go up. when it comes to jobs, some have called the law the single biggest detriment to job creation in america right now. and most americans believe it's unconstitutional. this law is a mess. an absolute mess. and regardless of what the court decides, it needs to be repealed and replaced with commonsense reforms that actually lower costs and that americans really want. so we'll keep one eye on the supreme court this week, and we're basing our opinion on something simpler than the legal arguments we'll hear this week. we're looking at whether this law helped or hurt. and on that question, the verdict's already in.

just like so much else this president has done over the past few years, look, we need health care reform, but this law has made things worse. and on that basis alone it should be repealed and replaced. that's what americans want, that's what we plan to do. mr. president, i yield the floor. mr. levin: mr. president. the presiding officer: the senator from michigan. mr. levin: once again oil prices have spiked to high levels threatening our economic recovery. prices are now nearly $110 a barrel, up nearly 30% since october of 2011. only five months ago. for years now, the commodity markets have taken the american people on an expensive and damaging roller coaster ride with rapidly changing prices for crude oil. in 2007, a barrel of crude oil started out costing $50 a barrel. by tend of the year the price had nearly doubled.

in 2008, oil prices shot up in july to nearly $150 a barrel, and then by tend of the year crashed to $35. in the beginning of 2011, oil prices took off again, climbing to over $110 per barrel in may. then they began falling and in october, oil traded at $75 per barrel, a drop of more than 30% over four months. and now five months later oil prices are back up to nearly $110 a barrel. this unpredictable and incessant price volatility is burdening american consumers and businesses with both uncertainty and expense. some in the media are blaming events in the middle east for the latest oil price spikes but middle east instability can't explain these large gyrations. we've seen sirnt, unrest and armed conflict in that region for more than 50 years without

seeing the same pattern of extreme price volatility in oil prices. that volatility has become a feature of u.s. oil markets over the last seven years. there's something else at work, mr. president, behind the spikes and sudden drops in the price of oil and other commodities in recent years and we have strong evidence showing what it is. it's the increasing role of market speculators betting on price swings. for years now the permanent subcommittee on investigations which i chair has been digging into the problem of excessive speculation in the commodity markets. since 2002, the subcommittee has conducted a series of investigations into commodity pricing 230eubging in particular on how -- focusing in particular on how speculators have changed the game. our investigations have used specific case histories involving oil, natural gas, and wheat prices to show how

excessive speculations in the futures and swaps markets have overwhelmed normal supply and demand factors and pushed up prices at the expense of consumers and american business. in 2006, for example, the subcommittee reece -- released a report which found billions of dollars in commodity index trading by speculators in the crude oil market had helped push up futures prices in 2006, caused a corresponding increase in cash prices and was responsible for an estimated $20 out of the then $70 cost for a barrel of oil. since then, even more speculators have entered the commodities markets. today we have commodity index traders, exchange traded products and even mutual funds betting billions of dollars on crude oil prices on a baildalely basis. speculators have now come to come nature our futures and swaps markets, overwhelming the

commercial users and producers whose use and need these markets used to set fair prices and hedge risks. at a november hearing before my subcommittee, the chairman of the commodity trading commission gary gentzler estimated 80% of the outstanding contracts for crude oil are now held by speculators. that fact is new, it's significant and we cannot ignore it. it used to be that prices were determined primarily by fundamental market forces of supply and demand for physical commodities. when commodities were tight, and demand high, prices generally went up. in contrast, when supplies were ample and demand low, prices generally went down. nowadays that relationship is largely absent. here are some startling facts from recent press and government reports that show how u.s. crude

oil prices today have been disconnected to supply and demand. first is the fact that the united states has ample oil supplies, in the neighborhood of 350 million barrels in storage, which is toward the higher range since 2008. world supplies are also adequate with the saudi arabian oil minister recently stating that world supplies are stronger today than they were four years ago in 2008. in addition, the united states is producing more domestic oil than it has in years. in 2010, u.s. domestic crude oil production increased to 5.5 million barrels per day, up from 5.1 million barrels in 2007, and is still climbing. in 2011, overall u.s. refining capacity also increased.

perhaps most surprising of all, in 2011 for the first time since 1949, the united states exported more gasoline, diesel and other petroleum products than it imported. the united states is projected to do the same in 2012 and 2013. at the same time, u.s. oil supplies stayed steady, and production increased. u.s. demand went down. in 2011, u.s. fuel consumption actually sank, and oil demand in north america contracted by a half of one percent. some of that drop was due to lower economic activity, some to greater energy efficiencies and some to higher energy costs. for example, u.s. demand for gasoline sank nearly 3% last year. more broadly, in 2011, total u.s. demand for all types of oil

products fell to 18.8 million barrels a day from 20.8 million barrels a day in 2005. that's a drop of 10%. the end result is that over the last year, oil demand was down and supply was up in the united states. under normal economic conditions, both factors should have led to lower oil prices. instead, despite steady or improving oil supplies and steady or dropping demand, u.s. crude oil prices became more like a roller coaster than ever. now, what explains the price volatility and escalation? the answer is pretty clear to me, after ten years of investigations by our subcommittee, and it's the large amount of speculation in oil markets which is a major contributing factor to high prices. speculators who now comprise more than 80% of the u.s. futures oil market are bidding

on contracts, speculating on price swings and helping to drive up price volatility and crude oil prices. higher crude oil prices translate directly into higher gasoline prices. according to a february 27, 2012 article in "forbes" magazine citing a recent report by goldman sachs, oil speculation -- quote -- "translates out into a premium for gasoline at the pump of 56 cents a gallon. in other words, speculation is adding 56 cents to the price of each gallon of gas bought at the pump. now, here is a reuters chart that uses cftc data. it folk us o -- it focuses on ts of the crude oil speculators, the group of traders that the cftc refers to as managed money and which includes commodity index funds, hedge funds,

commodity pool operators and commodity trading advisors. the chart uses cftc data to track the ratio of their lon long-to-short crude oil futures holdings over time. last month there was a spike, way over here to the right. speculators held more longs than shorts by a 12-1 ratio. the largest recorded difference in five years. that same week, u.s. crude prices hit a nine-month high of $110, and it's no surprise that when more than 80% of the market suddenly bets 12-1 on prices going up, oil prices do just that. and as you can see from this chart, mr. president, these spikes occur in the last year or two. before that, we did not have the spikes. before this, there was this huge amount of speculation in the oil

futures market. we did not have these large spikes which we've had in the last few years. the reality is that oil prices, again, are not just affected by physical supply and demand but by speculative pressures on oi oil -- on prices, excuse me. speculative prices -- speculative pressures on prices. that means if we're to get a handle on oil prices, excessive speculation must be curbed. there's a lot we can do to combat excessive speculation and i've spelled out some of these steps in the balance of my statement, which i would ask the presiding officer to be included in the record. the presiding officer: without objection. mr. levin: mr. president, just then in closing, until we limit excessive speculation in commodity markets, the american economy will continue to be vowel next to violent price swings and american consumers and businesses will continue to

be whipsawed by oil prices unconnected to actual supply and demand. american families cannot afford the current price of oil and gas and neither can our economy, which after four years is beginning to turn a corner towards real growth. today's prices, nearing $110 for a barrel of oil and $4 for a gallon of gasoline, are a clarion call to action that congress and the cftc ignore at the nation's peril. mr. president, i thank the chair and i yield the floor. the presiding officer: the senator from indiana. mr. coats: mr. president, this past friday marked the two-year anniversary of the passage of the affordable care act, otherwise known as obama-care. that law was signed into -- or that bill was signs into law just two years ago this last --

signed into law just two years ago this last friday. waicht in the senate at the time -- i wasn't in the senate at the time. i was actually in the state of indiana campaigning to be in the senate as a representative of that state. and as such, i had a very considerable amount of time crisscrossing the state and talking to hoosiers about the health care plan and their response to what was going on in congress and to the passage of that law. from small diners and restaurants all across indiana to visits to small business, large business, medium-sized business, big industrial giants, small mom-and-pop operations, medical providers, ordinary citizens -- we in indiana joined the nearly two-thirds, or perhaps even more than the two-thirds of the rest of the country, that polled in opposition to the passage of this law. hoosiers didn't then and they

don't now want to have a one-size-fits-all nationalized health care system. they want a healthier health care system. they want reforms to the current cost problems and excessive rising costs of health care, and we outline several of those, and this is really the first of many attempts that i will try to make as we go through the year addressing this plan which is moving toward ever and ever greater implementation and particularly kicks in in the years following this one. hoosiers, as i said, did not want the plan then, they don't want it now. they don't want to have federal bureaucrats making their health care decisions for them. they want less government intervention and higher quality of care. and they don't want a health care system that increases costs and premiums while hurting job creators with fines and penalties. they want affordable care and

good job opportunities. now, two years after passage of that act, i continue to hear these messages from the people of indiana and from others. and we discover more and more information about what is contains in this massive, 2,700-page bill that was passed in early 2010. i'd like to just discuss a few of the things that -- of the impacts of this obama-care law today and then there will be more, as i said, more to talk about later. the first is the individual mandate, and of course that's one of the issues the supreme court is hearing right now and will be making a determination on. obama-care is the biggest example of government intrusion in the everyday lives of americans, whether by forcing individuals to buy insurance, enacting onerous regulations on small businesses, or by raising taxes and imposing penalties. the health care law forces every

american to purchase a health insurance plan, or, if they choose not to do so, to pay the government a fine. this is unprecedented in american history. it is the first time the federal government is forcing citizens to purchase a product or a service that they mare or may not want, or as a consequence of not choosing to do so, pay a fine for their decision to say no. this administration basically is saying to americans, we know what's better for you than you know for yourself. we know what's better for you than what your doctor suggests is needed. and if i don't get a government approved health care plan, we're going to assess you with a fine. now, that is a basic fundamental principle of constitutional law and the supreme court will be making that determination.

but i suggest that this congress needs to continue to debate this and be prepared to act, depending on what the supreme court decision is, which will come down later several months from now. the second thing i'd like to talk about briefly is the higher costs that emanate from this particular piece of legislation. in addition to man daight that all americans have health insurance, the obama-care hits individuals and families with increased costs at higher premiums. the nation's nonpartisan budget experts at the congressional budget office estimate that when fully implemented, this law will increase insurance premiums on a family policy by an average of $2,100 a year. therefore, the affordable care act is hardly affordable and increases the already high premiums that people are having to pay for insurance. the president's own chief

actuary at the center for medicare services reported that the lawyer will increase national health care costs by $311 billion in the first ten years alone. increase is the key word here. increases by an additional $388 billion. so the goal of reforming the nation's hm -- health care system initially was to reduce the skyrocketing costs for americans, not yeast it, and yet we are now being told by the experts and the president's own people that it will increase costs. secondly, i'd like to talk about the impact of this law on businesses. i talk to dozens if not hundreds of businesses across the state of indiana, both in that campaign year of 2010 and then last year traveling as a a -- as a senator throughout the senate. the president's health care prescription results in bad side effects for american businesses

by anything the very job creators with new taxes and new regulations that they desperately don't need at this point in our struggle to regain economic growth. take the employer mandate. the law penalizes dises that do not provide employees with government-approved health care plan. beginning in 2014, american businesses with more than 50 employees will be fined $2,000 per employee if they do not offer a health insurance insurance plan approved by the federal government. now, i've talked to a number of business people that have said, look, through painful negotiations with our workers and with our laborers and with our staff, we have put together a health care plan that is accepted both by management and by employees. who recognize that if we cannot maintain some stem blens of

control over our costs, the jobs might not there be in the future because the company cannot afford to keep the people at work. and so in recognition of all this negotiation that goes on and the contractual obligations that both sides worked to achieve, understanding that if the business is hit with too much tax and too many regulations, businesses may not survive. those prans now cow com under the scrutiny of the federal government and the federal government will do whether or not those positions are potle and at quivment and if it's not, then a fine is levied against the business. i cannot tell you people business people told me, look, i will rather pay the fine than to the government impose all these new regulations on us when we are working careful with each employee to make sure they have our basic needs met.

as the businesses grow and increase the profits, we increase the benefit to them. yet, if we're forced into a set plan of set procedures for every employee, then you have two dhoises, the business people say. i can either refuse to do so and pay the penalty and pay the penalty of about $2,000 per employee, or i can let people go. but bottom line is, if i can't make my bottom line, i cannot keep this employed. the arbitrary fixed basis that small businesses under 50 employees will not be subject to this leaves manufacturers and business people who are slightly below that level -- say, at 45 or 40 or 35 -- a dilemma as they are seeking to expand their business. as soon as i hire number 50, i am are a int into the plan and t have the exemption. so what do i do?

i put people on overtime. at a time when we have over 12 million people looking for a job and another 11 million people out of work or working two or three part-time jobs to make ends meet, it could not have come at a worse time. then there is this lineup of taxes included in this bill that we continue to find more and more of as we read the fine print in the so-called -- in the 2,700 pages of fine print. indiana is a state that is home to a lot of medical device manufacturers. in fact there are over 300 medical device registered manufacturers that employ 240,000 hoosiers in the state of indiana. and another 28,000 people that benefit from that employment. there are more than 400,000 workers nationwide by industry, and so what does the -- what did the obamacare plan propose?

well, we need some payforce, and the payfors are that we are going to impose a tax on these medical device manufacturers. the presiding officer: the senator's time has expired. mr. coats: i sense that i am approaching a deadline in time, and i wonder with the consent of my colleague, if i could ask for five more minutes to -- the presiding officer: without objection. mr. coats: i thank you, mr. president. these medical device manufacturers are employing people at an average rate of about 41% greater than the average worker rate of pay in my state, and so these are desired jobs, but again, employers and manufacturers of medical devices are telling me they're being forced to go overseas with the burden of regulation and a tax that has nothing to do with the essential programming of the health plan. and that's not the only tax. that's not the only tax that's

imposed in this law. there are many hidden taxes that we're just learning about. the excise tax on charitable hospitals, the drug industry tax, health insurance industry tax, insurers excise tax and bluecross blueshield tax hike. the health care law imposes more than $550 in new taxes and penalties, most of which will fall on the middle class. third, the impact on the state of indiana -- obamacare forces states to expand medicaid rolls so significantly that it will be imposed upon the states in a way that can cripple their ability to try to find some balance had their budgets. in indiana, where our budget is in far better shape than many other states, we still cannot afosheafford the current medicad program let alone the projected new costs that will be required under the obamacare law.

an outside group has estimated that $3.1 billion in new costs over the next decade will be imposed on who is ae who is hoos because of this health care law. this added expense does not include any payment relief to providers, and therefore shifts the cost to patients by driving up premiums for all hoosiers. in conclusion, mr. president, we have to ask the question: what's the remedy for this fatal disease called obamacare? well, the remedy may lie with the supreme court, and they're hearing arguments 0en this today and will for the next two days and we'll have a decision by may or june on the constitutionality of this law. but it also, most likely, will end up back here in congress one way or another. and that lives the responsibility of addressing this. from forcing individuals to

purchase insurance and burdening state budgets, i believe the health care law is so deeply flawed that it must be scrafd and replaced -- scratched and replaced with real reform, reform that lowers the cost of care, allows the doctor, your doctor, not the government, to decide the kind of medical care you need and provides flexibility to states. mr. president, real health care reform laws cost, improves access to quality care, empowers individuals, and preserves personal liberties, and that's not what we have in the law that currently is on the books. so whether through congressional legislation or court action, obamacare needs to be overturned and replaced with commonsense provisions that put patients, not government, not bureaucrats, in charge of health care decisions. obamacare has proven to be the wrong prescription, and it is time for a new treatment. americans want reform that remedies our ailing health care system, not one that weakens it

and drives it deeper and drives us deeper as a nation into debt. mr. president, i yield the floor. mr. bingaman: mr. president? the presiding officer: the senator from new mexico. mr. bingaman: mr. president, since this is the two-year anniversary of the passage of the health reform law, the affordable care act, and since the supreme court, of course, is meeting across the street hearing various arguments attacking the legislation. they heard arguments this morning, they're going to hear arguments again tomorrow morning, they're going to hear arguments again wednesday morning. i believe it is a crucial too man-- ibelieve it is a crucial y this law is needed, why it still is needed and how it will benefit families across this

country. in my view, there's considerable confusion about what the health care reform legislation will accomplish, and i'm not surprised. the opponents of the legislation have worked hard in the last couple of years trying to confuse many americans into thinking that the bill contains all kinds of nefarious provisions. kaiser family foundation did a poll, however, that demonstrated that when you -- when americans are asked about the actual provisions that are contained in the law, there is strong bipartisan support for those reforms, so i'd like to just take a little time to straighten out what the provisions of the law are and how i see them impacting on our health care system. health care reform was needed when it was enacted two years ago for two important reasons. first, before reform and even

today, one in six americans remained uninsured. that number was growing, is still growing. in my home state of new mexico, the situation was even worse. we had more than one in five people in my state uninsured. that's the second-highest rate in the nation, of any state in the nation. the large majority of the uninsured are working people, they have low incomes, they cannot afford to pay the very high cost of health insurance. the second important reason that we enacted health care reform was that the cost of health care was continuing to grow at an unreasonable rate. as you can see on this chart, this is based on data from the centers for medicare and medicaid services -- this is the office, actuary in the centers for medicare and medicaid services -- they estimate that

national health expenditures per capita increased from 5% of gross domestic product in 1960 to 18% in 2010. so absent any intervention, this figure was projected to exceed 40% by 2080. the affordable care act significantly improves the situation. it doesn't solve all the problems in our health care system, but it substantially improves the situation. due to the affordable care act, over the next ten years the rate of uninsured will be reduced by more than half. that's according to the congressional budget office estimate. low-income families will be able to afford health insurance, so they will not have to worry about going broke just because they get sick. the rest of america will not see their insurance premiums rise to absorb the cost of expensive hospital care when the uninsured

have nowhere else to turn. with full implementation of this law, americans will get higher higher-quality health care while statement we rein in the growing cost of health care. the law does so while protecting key parts of the health care system such as medicare. it extends the solvency of medicare from 2017 prior to the enactment of this legislation to 2024. and despite claims to the contrary, these reforms are fiscally responsible. they decrease federal health care spending by well over $1 trillion over the next two decades. stated simply, the law protects the a13ebg9 aspects of our heale system that are working well and fixes many of those aspects that are broken, and i it does so in fiscally responsible way.

it achieves this through provisions that are intended to support three main goals. will the me go through those -- let me go through those. the first is to ensure that health insurance is affordable. the second of those goals is to improve the quality of health care. and the third is to begin reining in the rapidly rising costs of health care and create efficiencies in our health care system. wlet me start with this coverage expansion. under the law, people who need health care can get health insurance coverage. there is financial assistance to those who cannot afford it and according to the congressional budget office's most recent projections, 93% of americans will have affordable health insurance coverage by 2016 with full implementation of this act. that is 30 million more

americans who will be covered who are currently uninsured. some of these provisions have already taken effect and had a significant impact. for example, young adults up to the age of 26 can now receive health insurance coverage under their parents' insurance, regardless of their marital or school or employment situation. and since the implementation of this provision, 2.5 million uninsured young people are across the country have gained that health insurance coverage. this includes over 21,000 young people in my home state of new mexico. in addition, 20,000 seniors in my state who are in the so-called coverage gap for prescription drugs under medicare are now saving on their prescription drugs because that so-called doughnut hole is decreasing in size as a result of this legislation.

this will benefit 3.6 million seniors nationwide -- is benefiting already 3.6 million seniors nationwide. children will preexisting conditions are no longer able to be discriminated against, and adults with preexisting conditions who cannot get insurance have the option for coverage in a high-risk pool. with full implementation of the law, those adults will be in the same circumstance as children with preexisting conditions in that they will not be able to be discriminated against. what's more, the major coverage provisions are still to come. they begin in 2014. medicaid will be expanded to cover more low-income americans, those whose incomes go up to 133% of the federal poverty level. this is a critical provision since experts tell us that the

expansion of medicaid coverage is the most cost-effective way to provide insurance to low-income uninsured individuals and families. 17% of the nonelderly population nationwide benefit from the medicaid expansion and the tax credits in this legislation. in new mexico, as well as the states of ts texas and louisian, the estimate is that 36% to 40% of residents could benefit. lower- and middle-class income families will be eligible for health insurance tax credits to help purchase health insurance while most americans will still get health insurance through their employers, those that do not can purchase health insurance through the health insurance exchanges. these will be virtual insurance shopping malls in each state that will offer an

easy-to-understand menu of options with which to compare insurance plans. so we will have informed and empowered consumers who can choose a plan that is right for them and their families. the intent of the health insurance exchange is to level the playing field, increase competition among insurers, and thereby keep rates competitive. contrary to much of the rhetoric that we've heard, states will not shoulder the fiscal burden of this coverage expansion. limiting costs to states was a priority when we drafted up this health reform legislation. in fact, the federal government commits to assume 100% of the cost of the medicaid expansion for newly eligible individuals during the first three years, beginning in 2014.

federal contributions are going to phase down after that slightly over the following year so that by 2020 the federal government will be responsible for 90% of the cost of those newly covered individuals. for example, my state of new mexico is expected to receive $4.5 billion in 2014, 2015 and 2016 as we expand coverage to more enrollees. this will allow access to medicaid for about 180,000 newly eligible new mexicans. let me refer to this chart that's here beside me. this shows the congressional budget office estimate of the expansion impact on state spending on medicaid. as we can see, contrary to a lot of the statements that are made here on the senate floor and elsewhere, this increase is less

than 3%. this is additional spending on expansion. it is a small fraction, 2.8%, of state medicaid spending. this is for the period 2014 through 2022. while reform expands medicaid, it also makes it possible for some current medicaid enrollees to become eligible to participate in these health insurance exchanges and brings them into the private market. according to the urban institute analysis, the net effect enactment of the affordable care act on state budgets in the worst-case scenario will see states realizing net budgetary savings of at least $40 billion during the period 2014 to 2019. and it's possible those gains could be as high as $131 billion. with respect to affordability --

and i know my colleague who was just here on the floor was talking about affordability -- the impact on new mexico families is a good example. on average, families in my state will see a decrease in premiums, insurance premiums perhaps as much as 60%. in addition, two thirds of new mexicans could potentially qualify for subsidies or medicaid, and nearly a quarter could qualify for near full subsidies or medicaid. spoeup the senator's time has -- the presiding officer: the senator's time has expired. mr. bingaman: mr. president, i see a colleague here who wishes to speak. therefore, i will ask that the balance of my statement be included in the record as if read. the presiding officer: without objection. mr. bingaman: mr. president, my colleague said that i could proceed for a few more minutes. let me just --

mr. inhofe: -- at the conclusion of the senator from new mexico's remarks that i be recognized for up to 25 minutes pro*eup without objection, so ordered. the senator from -- the presiding officer: the senator from new mexico. mr. bingaman: i thank the senator for his courtesy. the goal is to improve the quality of care. there is not a lot of discussion about that but that is the main thrust of this legislation. a strong work care workforce is essential if we're going to have quality health care in this country. many provisions of the bill will strengthen the health care workforce. one obvious question is: what's the need we're trying to address here? let me just point out that 25% of the counties in the united states are designated as health professional shortage areas. in my state, 32 of the 33

counties are designated as health care professional shortage areas. we are absolutely last -- new mexico is absolutely last in all states with regard to both abg stows health care -- access to health care and the utilization of preventive medicine. the affordable care act contains key provisions to improve access and delivery of health care services to these areas. we train a great many additional physicians, nurses, pediatric specialists and other health care providers. there's a major push to improve the quality of care by focusing on outcomes and effectiveness of medical treatments. all of this is very positive and should have been done many years ago in this country. i'm glad that we are finally

doing it as part of this health care reform legislation. the third and final goal of the legislation, as i mentioned earlier, is to begin to rein in costs and eliminate waste and inefficiency. experts agree there is a tremendous amount of waste and inefficiency in our health care system. anyone who's gone to a hospital can see that. estimates indicate that as much as a third of medical care does not in fact improve anyone's health. thing bears repeating. a -- i think this bears preeing. -- this bears repeating. we're trying to deal with that in a variety of ways in this legislation to get more cost-effective treatment and to get more efficiency in our health care system. the law provides for savings by stopping investments in so-called cadillac insurance

plans. second, there's new transparency and accountability for insurers to justify premium increases. third, the law requires that insurers spend at least 80% of the premiums that they collect on actually providing medical care rather than on c.e.o. salaries and shareholder profits and administrative costs. fourth, the affordable care act increases competition and price transparency through these health insurance exchanges that we establish. and, fifth, the law establishes an independent body to recommend policies to congress to help medicare lower costs while providing better care. mr. president, i could go into quite a discussion of the advisory board that we established to try to control growth in the cost of medicare. i think it's a very meritorious

provision and one which, about which a great deal of bad information has been provided. but in conclusion, the facts demonstrate clearly to me that these reforms will move us forward toward more affordable health care with greater choice for american families. we will see less waste. we will see less inefficiency in our health care system. we will see higher quality of care. and we will start to bring rising health care costs under control. these are worthy goals. they are the goals of this health care reform legislation. i look forward to seeing them achieved in the coming months and years. mr. president, again, i thank my colleague for his courtesy in allowing me to continue longer than was planned, and i yield the floor. mr. inhofe: mr. president? the presiding officer: the senator from oklahoma. mr. inhofe: mr. president, we're going to have a vote this afternoon. it's going to be a procedural

vote. some will be voting different ways, but there is a substance behind the issue at large. last week the president, president obama, visited curbing, oklahoma. it may have been the first time he's been to oklahoma. i don't know. he claimed under his watch -- and i'm quoting now -- he said america is producing more oil today than any time in the last eight years. unquote. it seems that in the midst of the four to five-dollar a gallon gasoline, he's trying to convince the american people he's not the one to blame. clearly he is the one to blame. that's why i think it's important to set the record straight. after all, it was obama's energy secretary, steven chu -- we can't forget this -- who said -- quote -- "somehow we have to figure out how to boost the price of gasoline to the levels in europe." that was his energy secretary that was speaking in behalf of president obama. so the motive is to raise the price of gas.

right now we're almost, we're over halfway there. we all remember the president's statement during the 2008 campaign when he said "under my plan, the electric rates will necessarily skyrocket." his policy agenda has been in lock step with this goal. mr. president, president obama has had a four-year war on fossil fuels. now we're paying for that at the pump. the oil and gas taxes, nowhere has the president been more resolute in stopping oil and gas than his tax proposals. now we're talking about four budgets that this president has had, has presided over. keep in mind, when a budget is designed by a president, whether he's a democrat or republican, it's the president -- not the democrats, not the republicans, not the house, not the senate. it's the president that is responsible for that budget. in every budget the president has called for the elimination of all tax provisions made available to the oil and gas

industry. this year these tax increases totaled about $40 billion over ten years. while the president was going around the country last week trying to convince everyone that he's prooil and gas, he laid the groundwork for senator menendez to push a bill through the senate to raise taxes on the industry. senator menendez' bill, s. 2204, proposes to either modify or outright cancel the following tax provisions from major integrated oil and gas firms. first, the section 199 manufactures tax deduction. secondly, intangible drilling costs. sometimes referred to as i.d.c. third, percentage depletion. four, the foreign tax credits for oil and gas firms. the last time we actually had a vote in the senate on these provisions was in june of 2010. i remember it very well because that was when the distinguished senator from vermont, senator

sanders, offered an amendment that would have raised taxes on oil and gas producers by $35 billion over ten years by repealing section 199, the same thing as he's trying to do, percentage depletion andism d.c.'s while the menendez bill is a little different, it applies to the larger companies, those with substantial production levels, it's important to point out that the sanders amendment -- and i led the opposition to the sanders amendment, and it was defeated almost 2 to 1. it was 35 to 61. the president insists these tax accounting provisions are actually subsidies, but nothing could be further from the truth. so let me -- this hasn't been done yet, to my knowledge, to explain what it is. it is so important people understand what these provisions are. section 199 is the manufacturers tax deduction. section 199 was added to the tax code as a part of president bush's 2004 tax law. it was designed to support

domestic manufacturing, and it did this by providing 59% tax deduction for manufacturers, effectively lowering their tax rates from 35% to 32%. the proves was phased in between 2005 and 2010. but, in 2008 something strange happened. the oil and gas industry was singled out so that it could only claim a portion of that deduction. in other words, all other manufacturers of all other goods in america could claim that deduction except oil and gas. the menendez proposal would repeal section 199 for major integrated oil companies. in the president's budget, a similar proposal was scored at $11.6 billion. i'm going to add all these up in a minute to let you know why we're paying so much at the pump. what's most interesting to me about section 199 and its tax deduction is that it's available to any company in the united states that creates any kind of

manufactured goods here at home. firms that build and sell refinery equipment, airplanes, washing machines can all claim the deduction. it may be surprising, however, that the deduction is also available for movie producers. not oil and gas producerrers, but movie producers. that's right, the american film industry can claim a deduction for making movies. president obama and senator menendez are putting their hollywood friends and movie stars ahead of an industry that makes us less reliant upon oil imports from the middle east, and there's really no surprise there. the next thing is -- that was section 199. that's a manufacturers deduction. it applies to all. it benefits all manufacturers to encourage domestic manufacturing. the second thing is intangible drilling costs, i.d.c.'s. it's a little bit more complicated. intangible drilling costs are expenses oil and gas firms incur when they drill and prepare new wells. these costs often total between

60% and 80% of a well's cost. they are generally not recoverable and include things like site preparation, labor and design. intangible drilling costs are firmly grounded in sound accounting principles. every basic accounting course discusses the principles of cost recovery. it states that businesses should be allowed to write off their expenses from the revenue they earn to account for the cost of doing business. now, that's logical. no one is going to disagree with that. when purchasing substantial capital equipment, depreciation is often used to recover the cost of an investment over its useful life, but things like wages are nearly always deducted immediately, because once a company has paid an employee for work, it has no lasting value. to retain the value, you have to keep paying the employee. hence, it is an immediate expense and it is deducted from the revenue when determining the -- the net profit.

the i.d.c. deduction has been on the books since 1913. it's not anything new. we have lived with it for almost a century. and since most of the cost associated with the preparation of a new well should be classified as an immediate expense, things like labor, that type of thing, the expensing of i.d.c.'s makes sense. to claim that it is a subsidy is totally dishonest. every company, regardless of whether it's an oil or gas firm or any other company, is allowed to recover costs associated with their investments and business operations. if this is going to be labeled a subsidy for the entire economy, then we have got big problems. current law allows most oil and gas firms to write off these expenses as an alternative to capitalizing their costs into the total value of the asset being developed and then depreciating it, but at some point along the way, the law was changed so that major integrated oil firms are required to

capitalize 30% of their i.d.c.'s and amortize them over a 60-month period. the menendez bill would eliminate this option and require oil and gas firms to capitalize all of their i.d.c.'s. a similar proposal was in the president's -- was in every one of the president's budgets. it was scored at $13.9 billion. we're going to be adding that up in a minute. together, the repeal of section 199 and the i.d.c. should compromise 10% of america's oil and gas production capacity by 2017. this translates into a potential loss of 59,000 jobs, 600,000 barrels of oil a day in domestic production and the loss of $15 billion in capital expenditures in 2012 and potentially $130 billion over the next ten years. so that's -- now, percentage depletion, very similar to this. again, it's been with us. since 1926, small producers and

millions of dealers have had the option to utilize percentage of depletion to both similar play phi their tax filing and account for decline in the value of the minerals produced from their properties. current law allows small producers to take a 15% deduction from their gross income from a given producing property in lieu of a complicated depreciation reduction. this tax depreciation is particularly important for the production of america's nearly 700,000 low-volume marginal wells, making it essential to my home state of oklahoma. even though the small marginal wells only produce about two barrels a day, they account for 28% of the total production. we are one of the, if not the largest, marginal states out there. these are truly little guys and the president wants to go after them and destroy the incentives to keep these older wells producing by percentage

depleerks. if they were able to do this, it would increase taxes on the industry by $11.5 billion. what's most interesting about the menendez proposal is that it only applies to major integrated oil companies which aren't even allowed to claim percentage depletion, proving the 2204 is no more than political theater. the modification of the foreign tax credits for dual capacity taxpayers, the united states is one of the only developed -- i think it is the only developed country in the world that has global corporate tax systems. this means that the i.r.s. and uncle sam reach all over the world to tax profits made by u.s. companies outside of our borders. when you confine combine this with our 35% corporate tax rate, which is one of the largest -- i think it is the largest on earth, our corporate tax

policies are the worst in the world. the global corporate tax system works like this. when a u.s. firm operating overseas, they pay taxes on those profits in the countries they are operating in. for example, a united states company makes a product in south korea, sells it to the south koreans, and they make a million dollar profit. because their corporate rate is 22% as opposed to ours 35%, the firm pays $225,000 in taxes. that makes sense. if a u.s. firm has made the same profit in the united states, it would be subjected to a 5% tax which would be $350,000 in corporate taxes. now, this also makes sense except it's too high. however, because of our global corporate tax system, if a firm does this same thing in korea, then they have to pay the differential between 22% and 35%

when they bring the money back into the united states. but wait a minute, we want to bring the money back. we want to stimulate the economy here. so why would they have a disincentive to bring that money back to invest in america? in this example, a u.s. firm would have to pay an additional $130,000, so they would be doing a great thing for foreign countries but certainly not for us. it doesn't make any -- any sense at all. senator menendez' bill makes this awful policy even worse by limiting the ability of major integrated oil firms to account for the taxes they pay in other countries when they calculate what they owe the united states. the president made a similar proposal in his budget this year. if enacted, it would raise taxes by about $10 billion over ten years. and you pay for more of this. add all this up. instead of making the corporate tax system even less competitive than it is today, we should aim to completely reform it so that we move to a territorial system

that it doesn't reach outside our borders to collect more taxes. those are the major provisions of the menendez-obama bill. if they were enacted to the extent proposed by president obama's budget, there would be a tax hike of $47.1 billion. now, again, that relates to the cost of gas at the pumps. the president claims that he is doing this in the name of forcing oil and gas industry to pay its fair share. he claims that it will not harm domestic oil production, but this claim rejects the well-known process companies follow when making investment decisions. successful oil and gas companies like those in all industries are faced with seemingly endless opportunities to sort through the opportunities they have got to have a way to rationally decide which projects are in the best interests of their investors and which are not. most companies do this by determining which investments will give them the highest rate of return, given the risk.

taxes play an incredibly important role in this. if taxes increase, then cash flow from the project decreases. therefore, taxes in the united states increase the competitiveness of domestic projects decrease significantly relative to the opportunities available abroad. when the rubber meets the road, this means the united states oil and gas firms, especially the big ones, targeted by the menendez-obama bill will be more likely to select international projects than u.s.-based projects, and this is bad for our economy. the other way obama is killing oil and gas, the taxes aren't the only thing that the president is doing. they are significant. and i mentioned four of them that are very significant. but look at the keystone pipeline. he just got back from the state of oklahoma. i think his initial visit there. it's another example why he was in cushing.

that's the central part of oklahoma. those that are not familiar with it. that's kind of the intersection of all the pipelines. he said that he was going to expedite the permitting of the southern leg of keystone. that would be the leg going from cushing, oklahoma, down through the houston area. but what he didn't say is that this is part of -- the part that he doesn't have any control over. in other words, he has no control over the south half. the reason he does the north half and that which we have been talking about is that crosses a country boundary, a line from canada to the united states. so the president has a say. he doesn't have a say in this. he couldn't stop it if he wanted to. obviously, he would want to because he has already demonstrated that. moreover, his action to block the northern leg of the keystone pipeline is preventing the immediate creation of over 20,000 jobs, up to 465,000 jobs by 2035. i don't think anyone really argues with that analysis. the president's efforts to stop fast

fast fracing, that's the hydraulic fracturing is another example. another renaissance is the result of the advancements in this technology, but he has done everything he can to paint a nasty and suspicious picture of it, and he has ten federal agencies, including the e.p.a., the department of energy, the bureau of land management, looking at ways to regulate hydraulic fracturing at the federal level. in addition, he has also kept millions of federal lands off-limits to oil and gas. so as far as the hydraulic fracturing is concerned, i know a little bit about that because in my state of oklahoma, we had the first hydraulic fracturing that took place in duncan, oklahoma. that was in 1949. we have not -- there has not been one documented case of groundwater contamination using hydraulic fracturing. so the only reason that he's opposed to it is part of his war on fossil fuels. being stopped by hydraulic fracturing, he will stop all these type formations, and everybody knows that. so we have already done that, you have done the tax problems,

you have the pipeline, you have the hydraulic fracturing, but in addition to that, his attempt has been to stop production on federal lands and make federal lands off-limits to oil and gas exploration. even withdrew some lease sales conducted during the bush administration, citing the need for more environmental review. today, this is significant. 83% of federal onshore lands are inaccessible or restricted to drilling. no drilling is allowed on the entire east and west coast. no drilling is allowed in anwar, in alaska, and very limited drilling is in the gulf. oil and gas production is skyrocketing in states like north dakota and texas simply because the president has very little control over the drilling there. he doesn't have control. that's not federal land. this is in texas and in oklahoma and in north dakota. the congressional research service concurs, stating in a recent report that about 96% of the increase in oil and gas

production since 2007 took place on nonfederal lands. in other words, it's happened in spite of the president's effort. the president is passing all these punitive taxes, but since he doesn't have control over the private land, that's what's increasing. he tries to say in my administration we have expanded the production. well, that's happened in spite of his -- his policies. at the end of the day, all of president obama's oil and gas policies are making it harder for the u.s. firms to justify projects here at home. this is to the detriment of our economy. just look at it. the increase in taxes, the killing of the pipelines, the stopping of hydraulic fracturing, making it off-limits on friday's -- to let you know what some of the other states are missing out on. on friday's "new york times" front page, an article ran about oil and gas development going on in west texas. it describes how this helped the local economies, saying newfound

wealth is spreading beyond the fields in newfound towns. dealers are leasing parking lots the size of city blocks to stock their inventory of pickup trucks. housing is in such short supply that drillers are importing contractors from houston. the hotels are leased out before they are even built. two new office buildings are going up in midland, a city of just over 110,000 people, the first in 30 years, while the total value of downtown real estate has jumped 50% since 2008, with virtually no unemployment. restaurants can't be found, servers, they can't find people to work because they are fully employed. you know, we have one of the individuals from oklahoma, a great producer, who went up to north dakota. in north dakota, he is up there right now. i talked to him just yesterday, he said the biggest problem we have is we can't hire anybody, it's full employment. so there they are up there, and things are really great, and that's what the rest of the

country is missing out on. when we make the u.s. less competitive for u.s. oil and gas firms, as the president's tax policy proposes, this sort of red-hot growth goes to places like azerbaijan and nigeria instead of to midland, texas, and oklahoma city. rather than help our economy, the president and his tax policies make us more reliant upon foreign oil imports from unstable regions in the world. now, i don't know about you, but i would rather see pickup truck dealerships running out of vehicles to sell in cushing, oklahoma, than in occur act -- curacos, venezuela. president carter, by the way, way back in the early 1980's, he had the windfall profit tax. he was going to punish those bad oil companies. as a result of that, decrease domestic production by 3% to 6% which increased american dependence on foreign oil. at that time, almost all of it was in the middle east, from 8%

to 16%. it doubled our dependency by putting taxes on the oil industry here. the side effect was also declining, not increasing tax collections. so we know what happens when do you this sort of thing. we don't need to experiment again. regardless of -- regardless the president in most on the left insist u.s. taxpayers are subsidizing u.s. oil and gas firms but apparently haven't been reading the facts. the tax foundation recently estimated between 1981 and 2008 oil and gas companies sent more money to washington and state can capitals than they earned in profits for shareholders. the administration's own information agency reported that the industry paid about $35.7 billion in corporate taxes in 2009. the oil and gas industry since -- sends $86 million per day-day to federal and state governments and their effective income rate is over 61 -- 41%,

which may be the highest of any industry in america. but the president and congressional democrats want them to pay more. in addition to these tax increases, secretary salazar recently told congress his department is planning to raise the onshore royalty rate by 50%. these are the royalty owners. to ensure taxpayers get a fair return on the development of oil and gas leases on public lands. if what we're trying to do is raise more revenue, we should get it by growing the economy. you know, we've used the figure over and over again by each 1% increase in economic activity that translates into about $50 billion in new revenue. and we can do that by unlocking more domestic supply for development. and this will lower prices at the same time, we have plenty. it, the c.r.s. report recently stated we have the largest combined oil and natural gas and coal recoverable reserves on earth. more than any other country, more than saudi arabia, more than any other country. this means that we have 50

years' supply of oil at the present consumption. here in the united states for 50 years. just exploiting our own -- our own development. over 90 years supply of gallon nal gas. at the end of the day this bill and the rest of the president's proposals will only make u.s. oil firms less competitive compared to their international peers. it will raise the cost of energy by restricting global prices, force us to become more reliant upon others which will make us more vulnerable from the defense and economic security perspective. the only way to solve this is to -- and to do something about reducing price at the pumps is to start developing our own resources. a minute ago i talked about the -- what's happening in midland, texas, what's happening in north dakota, what's happening in some areas in oklahoma and i can remember when i was a little kid i worked on cable rigs, a very difficult thing. a man named a.w. swift had 18

cable rigs. at that time they would pound down, and we would go several times i'd work two smifts one night i was working the second shift. the well blew. his son bert was killed. i wasn't. when i think about the prosperity in those days of the oil and gas industry in oklahoma and the nearby town of pahuska you had to wait in line to pay your lunch bill. full employment. not an empty storefront. up until we started producing again in oklahoma it was very much almost a ghost town. now things are coming back. and we can take advantage of this. it is in spite of the tax policies of president obama, we are coming back and we can do this throughout the -- throughout the united states. the most important thing we can do is to make sure that the menendez-obama bill, to increase taxes on the oil and gas companies in the united states, is defeated, and we

hope we have the opportunity to do that. with that, i yield the floor. the presiding officer: morning business -- mr. inhofe: i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: mr. inhofe: i ask unanimous consent to -- the presiding officer: without objection. morning business is closed. under the previous order, the senate will resume consideration of the motion to proceed to s. 2240 which the clerk will report. the clerk: motion to proceed to calendar number 337, s. 2204, a bill to eliminate unsevers tax subsidies. the presiding officer: under the previous order, the time will be equally divided between the two leaders or their designees.

the presiding officer: the senator from oklahoma. mr. inhofe: i ask unanimous consent the quorum calls be equally divided in the time of each side. the presiding officer: without objection. mr. inhofe: i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

the presiding officer: the senator from texas. mr. cornyn: mr. president, i come to the floor today -- the presiding officer: we're in a quorum call.

mr. cornyn: i ask unanimous consent the quorum call be rescinded. the presiding officer: without objection. mr. cornyn: i appreciate. thank you. i come to the floor today to express concerns about the rising cost of gasoline and the obama administration's efforts to further increase the american consumers' pain at the pump. as we all know the average price of gasoline has now more than doubled since the first week of the president's inauguration in january, 2009, from $1.84 to $3.86. furthermore, the associated press says -- reported that the typical american household spends about $4,155 a year filling up at the pump, an all-time high. 8.4% of the median household income, and the highest percentage spent for gasoline since 1981 when oil prices soared due to the crisis in the middle east.

the energy information administration estimates 72% of the cost of gasoline is crude oil which is a globally traded commodity. although some would like to distract from the fundamentals, congress cannot repeal the law of supply and demand. indeed president obama used to agree with us. last march he said producing more oil in america will help lower oil prices, close quote. however, his administration has adopted policies that directly conflict with our goal of lowering gasoline prices, and to add insult to injury, and the public outcry the president is out to confuse if facts and take credit for increasing production when those increases have been on private lands outside of his control and while opposing greater exploration for oil and gas on federal lands. under his purview.

at the same time, he's even seeking now to push prices even higher by raising taxes in his fy 13 budget. this week the senate will be debating a bill by senator menendez from new jersey to increase taxes on oil producers. i don't know how anyone could reach the conclusion except that by raising taxes on the people who produce oil and gas, it will raise, not lower, the cost of oil and thus refined petroleum product known as gasoline. so actually by putatively -- punitively and in a discriminatory way raising prices on an unpopular sector of the economy, it will actually make matters worse, not better. now, the tax code supports the energy sector by providing a number of targeted tax incentives, tax incentives only available to the energy industry. in addition to targeted incentives there are a number of

broader tax provisions available for energy and nonenergy related industries. for example, section 199 domestic production deduction incentive is available to most domestic manufacturers with income derived from production property that was manufactured, produced, grown, or extracted in the united states. so this section 199 provision applies to a whole host of american businesses and not just the oil and gas business. yet the menendez bill and the amongst continue -- obama administration continue to single out, even though they're already limited compared to other industries. analysis by the congressional research service for the energy targeted tax incentives show while the majority of u.s. primary energy production comes from fossil fuels, the majority of energy tax-related revenue losses are be associated with

provisions designed to sphoart support renewables. 77.9% of u.s. energy production is attributed to fossil fuels, 77.9% in 2009. of the federal tax support, targeted to energy in 2009, an estimated 12.6% went toward fossil fuels. in contrast, in that same year, more than 10% of u.s. primary energy sources came from renewable fuels. in other words, just just to repeat, 10.6% from renewable, 77.9% in that same year from oil and gas. but notwithstanding the fact that only 10% of energy produced came from renewable fuels, 77.4% of energy targeted federal tax support went towards supporting renewable fuels. if we want to put all of these tax provisions on the table, i think we should do that. as a matter of fact,

simpson-bowles identified more than a trillion dollars of tax expenditures but let's not just pick out one sector of the economy and in the process raise taxes and increase the price of gasoline at the pump as an unintended but clearly likely outcome. we know that the menendez bill is not about tax reform. this is about mixing the message, trying to drive a wedge between the american people and the people who actually create jobs. unfortunately, for the administration, raising taxes will, in fact, translate into higher prices. it's a fair question to ask whether the administration can defend its policies such as their budget proposal to raise taxes while they argue these tax provisions should be repealed because they -- quote -- "encourage overproduction of oil and are thereby quote detrimental to long-term energy security." i'm not sure most americans understand the official policy of this administration is that

tax deductions should be removed because they encourage overproduction of oil here in america. when i thought the goal, one of our goals, was to produce more here at home so we boo would depend less on imported energy from abroad. then there's the keystone pipeline which is well known. the president is the primary obstacle to the completion of that pipeline which will create more than 20,000 new jobs and produce 700,000 barrels of oil at refineries in the united states from a safe and friendly source, the nation of canada. because of the president's blocking this completion of the keystone x.l. pipeline, they're looking for alternative customers and the prime minister of canada has visited china to prospect that potential purchase. what's worse, it's not just the president hasn't acted, it's the president has actually lobbied here in the senate to defeat efforts to bypass his

obstruction to the completion of the keystone x.l. pipeline. well, the president must be feeling the heat because he showed up in curbing, oklahoma to -- cushing, oklahoma, to celebrate and say we spliet about a -- ex ex pedestrian item. it doesn't turn on the spigot to get that pipeline from canada to the united states. so we see that our nation has no coherent energy policy. we see that not only is this an area that's been neglected to the detriment of the american consumer but actually the source of policies being pursued by the administration particularly with regard to keystone x.l. pipeline and raising taxes on domestic oil producers are designed to make matters worse for the american consumer. struggling at a time