[Congressional Record Volume 148, Number 107 (Wednesday, July 31, 2002)]
[Senate]
[Pages S7688-S7705]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                 RECESS

  Mr. REID. Mr. President, the staff of Senator Inouye and Senator 
Stevens are working on amendments that have been submitted to them. We 
have nothing that is imminent on which the committee can work.
  I ask unanimous consent that the Senate stand in recess until 3:30 
p.m.
  There being no objection, the Senate, at 2:52 p.m., recessed until 
3:30 p.m. and reassembled when called to order by the Presiding Officer 
(Mrs. Murray).
  Mr. INOUYE. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DODD. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. Madam President, I ask unanimous consent that I be 
permitted to speak as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. DODD are printed in today's Record under 
``Morning Business.'')
  Mr. INOUYE. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. INOUYE. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


               Amendment Nos. 4400 through 4411, en bloc

  Mr. INOUYE. Madam President, I will be sending to the desk shortly a 
set of amendments. None of these amendments would add any money to the 
bill. They are either earmarks or technical amendments. All of these 
amendments have been cleared by both managers.
  I will explain these amendments before I send the amendments to the 
desk. First, the Bingaman amendment is earmarking $2.5 million for the 
Maglev upgrade program. An amendment for Senator Dorgan is earmarking 
$10 million for the Chameleon miniaturized wireless systems; An 
amendment for Senator Murray is earmarking $7 million for short pulse 
laser development; An amendment for Senator Reid is earmarking $4 
million for clean-bio consequence management; An amendment for Senator 
Warner is earmarking $5 million for study of a roadway at Fort Belvoir; 
An amendment for Senator Dodd is earmarking $5 million for microfuel 
cell research; An amendment for Senator Nickles is earmarking $3 
million for supercritical water systems explosive demilitarization 
technology; An amendment for Senator Roberts is earmarking $1 million 
for agroterrorism research; An amendment for myself is for making a 
technical correction to the emergency supplemental to correct an 
editorial mistake; An amendment for Senator Collins makes a technical 
correction to the emergency supplemental; An amendment for Senator 
Carper is earmarking $8 million for biological warfare training; An 
amendment for Senator Biden is earmarking $5 million for multifuel 
auxiliary power units.
  I send to the desk these amendments and ask unanimous consent they be 
agreed to, en bloc.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendments (Nos. 4400 through 4411) were agreed to en bloc as 
follows:


                           amendment no. 4400

  (Purpose: To set aside from amounts available for the Air Force for 
 research, development, test, and evaluation for Major T&E Investment 
        (PE0604759F), $2,500,000 for the Maglev upgrade program)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title IV under the 
     heading ``Research, Development, Test, and Evaluation, Air 
     Force'' and available for Major T&E Investment up to 
     $2,500,000 may be available for the Maglev upgrade program.
                                  ____



                           amendment no. 4401

  (Purpose: To provide funds for the Chameleon Miniaturized Wireless 
                                System)

       At the appropriate place in the bill, insert the following:
       ``Of the funds appropriated under the heading `RDT&E, 
     Defense Wide', $10,000,000 may be made available for the 
     Chameleon Miniaturized Wireless System.''
                                  ____



                           AMENDMENT NO. 4402

  (Purpose: To make available from amounts available for the Army for 
research, development, test, and evaluation, $9,000,000 for continuing 
design and fabrication of the industrial short pulse laser development-
                           femtosecond laser)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. (a) Availability of Amount for Industrial Short 
     Pulse Laser Development.--Of the amount appropriated by title 
     IV under the heading ``Research, Development, Test, and 
     Evaluation, Army'', up to $7,000,000 may be available for 
     continuing design and fabrication of the industrial short 
     pulse laser development-femtosecond laser.
       (b) Supplement Not Supplant.--The amount available under 
     subsection (a) for the purpose specified in that subsection 
     is in addition to any other amounts available under this Act 
     for that purpose.

[[Page S7689]]

     
                                  ____
                           AMENDMENT NO. 4403

  (Purpose: To make available from amounts available to the Navy for 
research, development, test, and evaluation $4,000,000 for Marine Corps 
     program wide support (PE0605873M) for chemical and biological 
     consequence management for continuing biological and chemical 
decontamination technology research for the United States Marine Corps 
 Systems Command on a biological decontamination technology that uses 
            electro-chemically activated solution (ECASOL))

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. (a) Of the amount appropriated by title IV under 
     the heading ``Research, Development, Test, and Evaluation, 
     Navy'', up to $4,000,000 may be available for Marine Corps 
     program wide support for chemical and biological consequence 
     management for continuing biological and chemical 
     decontamination technology research for the United States 
     Marine Corps Systems Command on a biological decontamination 
     technology that uses electro-chemically activated solution 
     (ECASOL).
       (b) The amount available under subsection (a) for the 
     program element and purpose set forth in that subsection is 
     in addition to any other amounts available under this Act for 
     that program element and purpose.
                                  ____



                           AMENDMENT NO. 4404

(Purpose: To require a preliminary engineering study and environmental 
analysis of establishing a connector road between United States Route 1 
 and Telegraph Road in the vicinity of Fort Belvoir, Virginia, and to 
earmark $5,000,000 for the Army for operation and maintenance for that 
                    preliminary study and analysis)

       At the end of title VIII, add the following:
       Sec. 8124. (a) Preliminary Study and Analysis Required.--
     The Secretary of the Army shall carry out a preliminary 
     engineering study and environmental analysis regarding the 
     establishment of a connector road between United States Route 
     1 and Telegraph Road in the vicinity of Fort Belvoir, 
     Virginia.
       (b) Funding.--Of the amount appropriated by title II under 
     the heading ``Operation and Maintenance, Army'', up to 
     $5,000,000 may be available for the preliminary study and 
     analysis required by subsection (a).
                                  ____



                           AMENDMENT NO. 4405

  (Purpose: To make available from amounts available for the Army for 
research, development, test, and evaluation $5,000,000 for research on 
                 miniature and micro fuel cell systems)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title IV under the 
     heading ``Research, Development, Test, and Evaluation, 
     Army'', up to $5,000,000 may be available for research on 
     miniature and micro fuel cell systems.
                                  ____



                           amendment no. 4406

       At the appropriate place in the bill, insert the following:
       Of the funds appropriated in the Act under the heading 
     ``Research, Development, Test and Evaluation, Defense-Wide'' 
     up to $3,000,000 may be made available for the Supercritical 
     Water Systems Explosives Demilitarization Technology.
                                  ____



                           amendment no. 4407

  (Purpose: To appropriate, with an offset, $1,000,000 for research, 
   analysis, and assessment of federal, state, and local efforts to 
                counter potential agroterrorist attacks)

       At the end of Title IV, Research, Development, Test & 
     Evaluation, Defense Wide, add the following:

     SEC.  AGROTERRORIST ATTACK RESPONSE.

       (a) Availability.--(1) Of the amount appropriated under 
     Title IV for research, development, test, and evaluation, 
     defense-wide, the amount available for basic research, line 
     8, the Chemical and Biological Defense Program (PE 0601384BP) 
     is hereby increased by $1,000,000, with the amount of such 
     increase to be available for research, analysis, and 
     assessment of federal, state, and local efforts to counter 
     potential agroterrorist attacks.
       (2) The amount available under paragraph (1) for research, 
     analysis, and assessment described in that paragraph is in 
     addition to any other amounts available in this Act for such 
     research, analysis, and assessment.
       (b) Offset.--Of the amount appropriated under Title IV for 
     research, development, test, and evaluation, Defense-wide, 
     the amount available for Agroterror prediction and risk 
     assessment, line 37, Chemical and Biological Defense Program 
     (PE 0603384BO), is hereby reduced by $1,000,000.


amendment no. 4408
                                  ____


     (Purpose: To make a technical correction to the supplemental 
                  appropriation for fiscal year 2002)

       On page 223, between lines 20 and 21, insert the following:
       Effective upon the enactment of the Act entitled ``An Act 
     making supplemental appropriations for further recovery from 
     and response to terrorist attacks on the United States for 
     the fiscal year ending September 30, 2002, and for other 
     purposes'', section 309 of such Act is amended by striking 
     ``of'' after the word ``instead''.
                                  ____



                           AMENDMENT NO. 4409

 (Purpose: To provide for the transition of the naval base on Schoodic 
Peninsula, Maine, to utilization as a research and education center for 
                         Acadia National Park)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. The Secretary of Defense may modify the grant 
     made to the State of Maine pursuant to section 310 of the 
     2002 Supplemental Appropriations Act for Further Recovery 
     From and Response To Terrorist Attacks on the United States 
     (Public Law 107-__) such that the modified grant is for 
     purposes of supporting community adjustment activities 
     relating to the closure of the Naval Security Group Activity, 
     Winter Harbor, Maine (the naval base on Schoodic Point, 
     within Acadia National Park), and the reuse of such Activity, 
     including reuse as a research and education center the 
     activities of which may be consistent with the purposes of 
     Acadia National Park, as determined by the Secretary of the 
     Interior. The grant may be so modified not later than 60 days 
     after the date of the enactment of this Act.
                                  ____



                           AMENDMENT NO. 4410

  (Purpose: To make available from amounts available for the Navy for 
     research, development, test, and evaluation $8,00,000 for the 
           Integrated Biological Warfare Technology Platform)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title IV under the 
     heading ``Research, Development, Test, and Evaluation, 
     Navy'', up to $8,000,000 may be available for the Integrated 
     Biological Warfare Technology Platform.


                           AMENDMENT NO. 4411

  (Purpose: To make available from amounts available for the Army for 
research, development, test, and evaluation $5,000,000 for the Rotary, 
                   Multi-Fuel, Auxiliary Power Unit)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title IV under the 
     heading ``Research, Development, Test, and Evaluation, 
     Army'', up to $5,000,000 may be available for the Rotary, 
     Multi-Fuel, Auxiliary Power Unit.
                                  ____

  Mr. INOUYE. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. WELLSTONE. Madam President, I ask unanimous consent the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 4364

  Mr. WELLSTONE. Madam President, I am not going to call up the 
amendment yet, unless the managers are ready to do so. If they are, I 
will. I call up amendment No. 4364.
  Madam President, I have spoken on this amendment and I wait for other 
Senators to come to the floor. It is a very simple amendment. What it 
would do is bar the funds in this bill from being used to enter into 
contracts with U.S. companies who incorporate overseas to avoid U.S. 
taxes. Madam President, I went over this amendment before.
  Let me add a couple of points so my colleagues know what my thinking 
is.
  As I said, I wanted to keep it very simple. I want to keep it very 
basic and very straightforward, and I think very fair.
  I think there are two issues here. One of them has to do with tax 
fairness or tax unfairness. I think it is absolutely maddening when 
people in our country see U.S. corporations using creative paperwork 
and then transforming themselves into Bermuda corporations so they do 
not have to pay their fair share of U.S. taxes.
  What I am saying is if these companies, post-December 31, 2001, have 
engaged in such a practice, and they no longer call themselves U.S. 
citizens, then they are not beneficiaries of U.S. defense contracts. My 
thinking about this is as follows: I am thinking to myself, we are all 
aware of 9/11 and what it meant to our country. I have given companies 
time to respond in the positive to 9/11 and be the best of good 
corporate citizens, be the best of good, patriotic corporate citizens. 
I even allowed some lag time after 9/11. But what I am saying is 
starting the beginning of this year, if any of these companies have 
engaged in the same sham practices so they do not have to pay U.S. 
taxes, they are not going to be the

[[Page S7690]]

beneficiary of the public contracts. It really is that simple.

  We all make sacrifices. God knows, many Americans are making 
sacrifices today. The only sacrifice this amendment asks of Federal 
contractors is they pay their fair share of taxes like everybody else, 
and at the very minimum, given 9/11 and how strongly our country feels, 
no corporation from the beginning of the year on, engage in this kind 
of deceitful practice.
  This is a narrowly tailored amendment; this is not a tax bill. Not in 
the spirit of bragging but I will just say it, I know at least the 
first piece of legislation that eliminated this tax loophole I wrote, 
and we sent it to the Finance Committee. They did good work. The have 
done great work. They reported out a bill that basically eliminates 
this egregious loophole.
  But what I am saying is until that loophole is eliminated, and no 
company is able to engage in this practice, what a great message for 
the Senate to send.
  When the homeland defense bill comes to the floor, I will join forces 
with other colleagues--I am sure Senator Lieberman and others--and we 
will do something parallel to what was done, to my understanding, in 
the House of Representatives. But right now on this appropriations 
bill, knowing full well the House did not take any action, I am trying 
to be a legislator here. I thought to myself: I will narrowly tailor 
it. I will have it speak specifically to this 1-year appropriations 
bill. It will send a very unmistakable message. And I believe this 
amendment will command widespread support.
  I do not know whether we will have unanimous consent. The 
distinguished chair of the Defense Appropriations Committee tells me 
there is some opposition, in which case I am pleased to have the 
debate. Then we will have a vote after the debate.

  Again, this is the second time I have come to the floor. I want to be 
clear what this amendment is about and what it is not about. I hope 
there will be very strong support on both sides of the aisle for this 
amendment.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Hawaii.
  Mr. INOUYE. Madam President, in order to expedite the consideration 
of this amendment, a call has been placed for Senators interested in 
this matter to report to the floor to carry out the debate.
  May I ask a question of the sponsor of this measure? By ``tax haven 
country,'' does the Senator mean countries such as Barbados, Bermuda, 
British Virgin Islands, Cayman Islands, Commonwealth of the Bahamas, 
Cyprus, Gibralter, Isle of Man, the Principality of Liechtenstein, the 
Principality of Monaco, the Republic of Seychelles, and any other 
country that the Secretary of the Treasury determines is used as a site 
of incorporation, primarily for the purpose of avoiding U.S. taxation?
  Mr. WELLSTONE. I say to the chairman, that is correct. I make it 
clear the Secretary of the Treasury, in addition to listing those 
countries, if there is another country that he determines is using this 
site of incorporation primarily to avoid U.S. taxation, that is 
included.
  Mr. INOUYE. The Senator's amendment also provides if the President of 
the United States should consider that the interests of national 
security would require it, notwithstanding this designation, they may 
do business?
  Mr. WELLSTONE. That is correct. I thank the chairman.
  Mr. INOUYE. How many companies are involved?
  Mr. WELLSTONE. I say to the distinguished chair, I do not really 
know. Since I am talking about from the beginning of this year on, I do 
not know how many companies are actually going to be affected by this. 
I do not reach back. I just simply say, post beginning of this year, it 
is completely inappropriate, given 9/11, given how everybody feels in 
the country. I don't know how many companies are affected. I want to 
put every company on notice if they continue in this practice they are 
not going to get the contracts.
  Mr. INOUYE. May I ask another question.
  Mr. WELLSTONE. Please.
  Mr. INOUYE. Am I correct, in the last fiscal year, approximately $2 
billion worth of contracts were awarded to companies incorporated in 
these countries?
  Mr. WELLSTONE. The Senator is correct.
  Mr. INOUYE. I thank the Senator.
  Mr. WELLSTONE. Madam President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? At the moment 
there is not.
  Mr. INOUYE. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Madam President, it is my understanding that the Senate is 
considering the Wellstone amendment. Is that true?
  The PRESIDING OFFICER. The Senator is correct.


                Amendment No. 4412 to Amendment No. 4364

  Mr. WELLSTONE. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Minnesota [Mr. Wellstone] proposes an 
     amendment numbered 4412 to amendment No. 4364.

  Mr. REID. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:


                           amendment no. 4412

 (Purpose: To prohibit the use of funds made available in this Act for 
        payment on any new contract to any corporate expatriate)

       Strike all after the first word:
       Sec. 8124. Corporate Expatriates. (a) Limitation.--None of 
     the funds made available in this Act may be obligated for 
     payment on any new contract to a subsidiary of a publicly 
     traded corporation if the corporation is incorporated after 
     December 31, 2002 in a tax haven country but the United 
     States is the principal market for the public trading of the 
     corporation's stock.
       (b) Definition.--For purposes of subsection (a), the term 
     ``tax haven country'' means each of the following: Barbados, 
     Bermuda, British Virgin Islands, Cayman Islands, Commonwealth 
     of the Bahamas, Cyprus, Gibraltar, Isle of Man, the 
     Principality of Liechtenstein, the Principality of Monaco, 
     the Republic of the Seychelles, and any other country that 
     the Secretary of the Treasury determines is used as a site of 
     incorporation primarily for the purpose of avoiding United 
     States taxation.
       (c) Waiver.--The President may waive subsection (a) with 
     respect to any specific contract if the President certifies 
     to the Appropriations Committees of the House of 
     Representatives and the Senate that the waiver is required in 
     the interest of national security.
       (d) Effective one day after enactment.
  Mr. REID. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. WELLSTONE. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WELLSTONE. Mr. President, there are colleagues who may very well 
have some technical suggestions that don't change the import of this 
amendment one bit. I certainly invite their consultation and their 
support which would help strengthen the amendment.
  My understanding is that there may eventually be a vote to table the 
amendment. I do not know. If so, I want to make sure one more time that 
I am crystal clear about what this amendment does and what it doesn't 
do.
  It is a simple amendment. It bars any funds in this bill from being 
used to enter into contracts with U.S. companies that incorporate 
overseas to avoid U.S. taxes. It is really simple.
  Former U.S. companies that have renounced their citizenship--and 
Senator Inouye asked me about this--currently hold at least $2 billion 
worth of contracts with the Federal Government.
  It seems to me the companies that play by the rules and that pay 
their fair share of taxes should not be forced to compete with the bad 
actors that undercut the bids through a tax loophole. I am saying, put 
on notice all U.S. companies post-January 1: If you engage in this 
egregious practice post-9/11 and you set up some sham business

[[Page S7691]]

in Bermuda, et al, and therefore you don't pay any U.S. taxes, you 
don't get any defense contracts.
  I do not know. Maybe Senators want to vote against this proposition. 
But I will tell you that this is pretty simple and it is pretty 
straightforward.
  These companies--and we know all about it--transform themselves into 
Bermuda companies, which are basically shell corporations. They don't 
have any staff. They don't have any offices. They don't have any 
business activity. They exist for the sole purpose of shielding income 
from the IRS.
  What these bad corporate former citizens do is exploit a specific 
loophole in current law so that the company is treated as a foreign 
company for tax purposes, and therefore they do not pay any U.S. taxes 
on the foreign income. This loophole gives tens of millions of dollars 
in tax breaks to major multinational companies with significant non-
U.S. business.
  It also puts other companies that play by the rules at a complete 
disadvantage. No American company, colleagues, should be penalized by 
staying put. For now on--reaching back to the beginning of this year--
no American company should be penalized for staying put in our country 
while others decide they are going to renounce U.S. citizenship for a 
tax break. It is just simply unacceptable.
  I said it before, and I will say it again, there are a heck of a lot 
of businesses in Minnesota--small businesses and otherwise--that, No. 
1, wouldn't do it even if they could; and, No. 2, surely they do not 
have all of the lawyers and accountants to show them how to do their 
books Enron-style and get away with not paying their fair share of 
taxes. So the only price all the good corporate citizens pay--of which 
there are many--is a higher tax bill.

  I think we should close this loophole this year. I think we should 
close the tax loophole this year. As I said before, I wrote a piece of 
legislation to do that. I have worked with the Finance Committee. The 
Finance Committee, through the bipartisan work of Senator Baucus and 
Senator Grassley, has reported out a good piece of legislation. And 
assuming it passes, this tax loophole will be gone.
  But it seems to me, while this piece of legislation is on the floor, 
for this 1 year, what a powerful and positive message for us to send 
which is, again, post-December 31, 2001--I don't even reach back--I 
give companies enough time to respond to 9/11, and say: Wait a minute, 
this is not the right thing to do or patriotic thing to do. But I will 
tell you something, post-December 31st of last year, if a U.S. company 
has set up a sham corporation, so it does not have to pay part of its 
fair share of taxes, it is not going to be eligible for defense 
contracts. It is really that simple.
  So, again, I don't see colleagues out here to debate this. I 
understand there is opposition. I say to both of my colleagues, Senator 
Inouye and Senator Stevens, I am certainly not trying to delay the 
passage of this overall Defense appropriations bill.
  I think I have a good amendment on the floor, and I look forward to 
debate or I would look forward to constructive suggestions from other 
Senators if they think there is a way to strengthen this amendment.
  I am not backing off on the basic proposition here. I am not backing 
off on the basic proposition. And the basic proposition, again--and I 
think we are going to do the same thing on the homeland defense bill. 
It was done in the House. In fact, it was broader, more sweeping on the 
House side on homeland defense.
  This is 1 year. This is Department of Defense appropriations. This is 
not a tax amendment that I have offered to this piece of legislation. 
That would not be appropriate. But I do think it is appropriate to put 
every single U.S. corporation on notice, forthwith, reaching back to 
the beginning of this year, given the unfairness of this, given the 
obviousness of the ways in which companies are not paying their fair 
share of taxes, and, more importantly, given all that has happened to 
our country post 9/11: You are not going to be able to do this any 
longer. And if you do, you are not going to then be able to come to the 
U.S. Department of Defense and get defense contracts.
  That is what this amendment says. It is simple. It is 
straightforward. I am, frankly, at a loss to understand the opposition.
  Senator Inouye asked me an important question. He wanted to go over 
some of the countries, some of the tax-haven countries that were listed 
here. And we went through them.
  But there is also additional language that says there could be other 
countries that the Secretary of Treasury determines have been used as a 
site of a corporation primarily for the purpose of avoiding U.S. 
taxation. So we really write it the right way.
  Then, of course, there is the waiver where the President may waive 
this with respect to any specific contract if the President certifies 
to the Appropriations Committees of the House and the Senate that the 
waiver is required in the interest of national security.
  I will tell you something: This is very straightforward. I thank my 
colleague from Hawaii for asking me these questions. I would love to 
adopt this on a 100-to-0 vote or to have a debate if colleagues want to 
come out here and speak against this amendment.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, I would like to ask some questions to my 
friend, the distinguished Senator from Minnesota.
  Are you aware of some of the Federal contracts that corporate 
runaways now hold? Let me give an example. Are you aware that Foster 
Wheeler, who was reincorporated in Bermuda about a year ago, has 
Federal contracts amounting to $286,253,000?
  Mr. WELLSTONE. Mr. President, I would say to the whip that I have 
here a list of corporate runaways, and I am aware of this one of many 
egregious examples.
  Mr. REID. To run through some of these to kind of get a picture of 
the substance of the Senator's amendment, is the Senator aware that 
Tyco Company reincorporated in Bermuda and has Federal contracts of 
$224 million-plus in Fiscal Year 2001 alone?
  Mr. WELLSTONE. I am aware of that.
  Mr. REID. Is the Senator aware that PricewaterhouseCoopers Monday, 
who spun off of PricewaterhouseCoopers of New York and incorporated in 
Bermuda a couple of months ago, has Fiscal Year 2001 Federal contracts 
of almost $221 million? Is the Senator aware of that?
  Mr. WELLSTONE. I say to my colleague, unfortunately, I have the same 
list with many egregious examples.
  Mr. REID. I would like the Senator to acknowledge if we have the same 
list; for example, Ingersoll-Rand, which reincorporated 6, 7 months ago 
in Bermuda, has Fiscal Year 2001 Federal contracts of over $40 million?
  Mr. WELLSTONE. I am aware of this. Could I just add, I am aware of 
this, but more importantly, the American citizens are aware of this, 
and people don't like it one bit. People feel as if, first of all, it 
is just outrageous in terms of tax evasion. And, second of all, it is a 
loophole that should not be about. People say, look, boy, this is the 
opposite of the right and patriotic thing to do.
  Mr. REID. I will not go through the entire list because the Senator 
and I both have the same list. It was compiled by the Federal 
Procurement and Data Center off their Web site. The amounts are over $1 
billion, just on this short list we have, of companies that go to 
Bermuda and avoid paying taxes like other companies that are 
incorporated in the United States and work hard and pay their fair 
share of taxes. I certainly applaud the Senator's amendment. I hope we 
can dispose of this quickly. I think the debate has been good and 
directly to the point. I would really think it would be hard to oppose 
this amendment.
  Mr. WELLSTONE. I say to my colleague and whip that I appreciate his 
questions. If there is going to be agreement, we are going to pass this 
amendment on the floor of the Senate. I say great. The summary of this 
amendment is that it is appropriate for the Senate, Democrats and 
Republicans, to say today that if a U.S. company wants

[[Page S7692]]

to bid for a contract for U.S. defense work, then it should not 
renounce its U.S. citizenship for a tax break. It is that simple. We 
are just putting everybody on notice: You are no longer going to be 
able to do that. You will not be able to make a bid for a contract for 
U.S. defense work if you are going to go out and renounce your 
citizenship for the purposes of getting a tax break. It couldn't be 
simpler.
  I am going to stay on the floor of the Senate or stand on the floor 
of the Senate and keep talking about this until we get a vote or until 
we get acceptance of this amendment.
  I ask unanimous consent to print in the Record a list of corporate 
runaways and fiscal year 2001 Federal contracts.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

            Corporate Runaways and FY2001 Federal Contracts

       Foster Wheeler: Clinton, N.J. engineering, environmental 
     and construction company re-incorporated in Bermuda on May 
     25, 2001.
       Total FY2001 Federal Contracts: $286,253,000.
       Defense and Homeland Security related: $248,835,000.
       accenture: Consulting firm spun off of Arthur Anderson of 
     Chicago and incorporated in Bermuda in July, 2001.
       Total FY2001 Federal Contracts: $281,904,000.
       Defense and Homeland Security related: $144,834,000.
       tyco: Exeter, N.H. electronics, security, healthcare and 
     engineering conglomerate reincorporated in Bermuda in March, 
     1997.
       Total FY2001 Federal Contracts: $224,171,000.
       Defense and Homeland Security related: $182,453,000.
       PricewaterhouseCoopers Monday: Consulting firm spun off of 
     PricewaterhouseCoopers of New York and incorporated in 
     Bermuda on March 27, 2002.
       Total FY2001 Federal Contracts: $220,801,000.
       Defense and Homeland Security related: $129,073,000.
       Ingersoll-Rand: Woodcliff Lake, N.J. industrial equipment, 
     construction and security company reincorporated in Bermuda 
     on December 31, 2001.
       Total FY2001 Federal Contracts: $40,289,000.
       Defense and Homeland Security related: $39,328,000.
       apw: Waukesha, Wisconsin electronics and technology 
     products reincorporated in Bermuda in July 2000.
       Total FY2001 Federal Contracts: $7,077,000
       Defense and Homeland Security related: $4,912,000.
       Cooper Industries: Houston electrical equipment tool and 
     hardware company reincorporated in Bermuda on May 21, 2002.
       Total FY2001 Federal Contracts: $6,357,000.
       Defense and Homeland Security related: $5,954,000.
       Stanley: New Britain, Connecticut tool maker voted to 
     reincorporate in Bermuda on May 9, 2002. The vote was 
     disputed and the Stanley Board of Directors has authorized a 
     re-vote.
       Total FY 2001 Federal Contracts: $5,660,000.
       Defense and Homeland Security related: $5,298,000.
       Fruit of the Loom: Bowling Green, Kentucky apparel company 
     reincorporated in Bermuda on March 4, 1999.
       Total FY 2001 Federal Contracts: $2,389,000.
       Defense and Homeland Security related: $2,389,000.
       Weatherford: Houston drilling, oil and gas technology and 
     services company reincorporated in Bermuda on June 26, 2002.
       Total FY 2001 Federal Contracts: $234,000.
       Defense and Homeland Security related: $234,000.
       Noble: Sugar Land, Texas drilling contractor reincorporated 
     in the Cayman Islands on May 1, 2002.
       Total FY 2001 Federal Contracts: $50,000.
       Defense and Homeland Security related: $0.
       Total Value--known FY2001 Federal contracts to corporate 
     runaways: $1,075,185,000.
       Defense and Homeland Security related: $763,310,000.

  Mr. WELLSTONE. I thank the Senator.
  Mr. NICKLES. Will my colleague and friend yield for a question?
  Mr. WELLSTONE. I am pleased to.
  Mr. NICKLES. Mr. President, I haven't seen a list. I am trying to 
figure out what companies would be impacted by that. Do you have a copy 
that maybe you might share with other Senators?
  Mr. WELLSTONE. Let me say to my colleague that there are two parts to 
this equation. The first part is the definition of ``tax haven 
countries.'' There is Barbados, Bermuda, British Virgin Islands, Cayman 
Islands, British Commonwealth of the Bahamas, Cyprus, Gibraltar, and so 
on. Then the additional language where, because we want to have 
flexibility, we also say: or any other country that the Secretary of 
Treasury--these countries listed in the amendment--are the main tax 
haven countries.
  In addition, the Secretary of the Treasury could determine that there 
is another country that has been used at the site of incorporation for 
the purpose of avoiding U.S. taxation. That is No. 1.
  The second part of this--to give the operational definition--is that 
this would be any U.S. company that set up this phony citizenship 
post--actually, December 31.
  Mr. NICKLES. If the Senator will yield, I am asking for a list of 
companies--not countries--that have done this egregious deed of 
reincorporating in some other country.
  Mr. WELLSTONE. I sent the list over to you. I think you have a list 
that lists some of the companies that would be affected by this.
  Mr. NICKLES. Let me get that in question----
  Mr. WELLSTONE. These are the countries that reincorporated.
  Mr. NICKLES. Accenture reincorporated in July of 2001. Your deadline 
is January 1, so it would not apply.
  Mr. WELLSTONE. It would apply to only those companies--what I am 
trying to do----
  Mr. NICKLES. I found one. PricewaterhouseCoopers evidently 
reincorporated in Bermuda on March 27, 2002; is that correct, according 
to your sheet?
  Mr. WELLSTONE. That is correct.
  Mr. NICKLES. They do defense contracts of $220 million and total 
Federal contracts in defense and homeland security-related, $129 
million; is that correct?
  Mr. WELLSTONE. I am trying to follow the list and where the Senator 
is.
  Mr. NICKLES. I got this from you.
  Mr. WELLSTONE. That is right. You mentioned it, but I have to go down 
and find it in the column.
  Mr. NICKLES. I am trying to figure out who we are trying to punish 
here.
  Mr. WELLSTONE. I say to my colleague, if I could, since he asked the 
question--let me say this and be real clear about it. I wrote probably 
the first legislation here eliminating this action and that is moving 
through the Finance Committee and it will come to the floor. I hope in 
the future all these companies will be covered, period.
  Second, if you want to reach back, you can do so and that would be 
just fine with me. My thinking is that I took a look at--I am thinking 
of two issues. No. 1, just sort of this loophole and, No. 2, I think of 
9/11 and I say, look, given 9/11, you can give companies some 
flexibility to understand that it doesn't seem very patriotic to 
continue to do this.
  For God's sake, from the beginning of this year on, all companies--
anybody that does this in the future is in trouble.
  Mr. NICKLES. If the Senator will yield further, I found a guilty 
party--PricewaterhouseCoopers. I will say I had no idea--I have read in 
the paper, and I heard about Stanley and Ingersoll-Rand. I didn't find 
somebody--
  Mr. WELLSTONE. You will find a number of them.
  Mr. NICKLES.--guilty as under your provision. PricewaterhouseCoopers 
is a $220 million contractor. That is pretty significant.

  Let me ask you a question. PricewaterhouseCoopers does a lot of 
business, evidently, with the Department of Defense, homeland security, 
and other Federal contractors. They would be banned from all Federal 
contracts--or only Federal contracts dealing with Department of 
Defense?
  Mr. WELLSTONE. Department of Defense.
  Mr. NICKLES. So now we are down to $129 million worth of contracts. 
If they do those contracts with U.S. employees, do they pay taxes on 
their U.S. contracts if they make income--I mean, if they make income, 
don't they pay corporate income tax on the contracts they have in the 
United States?
  Mr. WELLSTONE. That is correct.
  Mr. NICKLES. So they do pay income tax?
  Mr. WELLSTONE. That is right. But there is a portion of the tax that 
they should be paying that they are deliberately evading. That is 
unacceptable. If that is their practice--and that is what this 
amendment does--don't expect to be getting these contracts any longer.
  Mr. NICKLES. Let me make sure I understand. So this company, which 
does a lot of work--they do software,

[[Page S7693]]

management, and a lot of different things--is doing $129 million worth 
of defense-related contracts, they would be banned from any of those 
contracts; is that correct?
  Mr. WELLSTONE. That is correct.
  Mr. NICKLES. Under the Senator's amendment.
  Mr. WELLSTONE. That is correct if, but only if, after all we have 
been through as a country, they basically renounce their citizenship 
and set up some sham/dummy corporation in Bermuda to avoid taxes--only 
if they do that.
  Mr. NICKLES. Whoa, whoa.
  Mr. WELLSTONE. They are welcome to come back home, in which case they 
are eligible for all of this.
  Mr. NICKLES. Correct me if I am wrong, but don't they pay U.S. income 
taxes on every penny of the contract they have with the Department of 
Defense?
  Mr. WELLSTONE. That is correct.
  Mr. NICKLES. They do. So if they incorporate in Bermuda, or Barbados, 
or someplace else, they might try to not pay U.S. taxes on foreign 
income, but they are already required, under present law, to pay U.S. 
taxes on U.S. income; isn't that correct?
  Mr. WELLSTONE. I am told--I say to my colleague, I am not a tax 
expert--they may not actually pay all their taxes on U.S. contracts. 
But, in addition, what is egregious about this--and I say to my 
colleague from Oklahoma, if he wants to vote no, he can vote no. This 
is a pretty simple proposition, which is, if you are going to renounce 
your U.S. citizenship so you can locate in some other country where you 
don't do business so you can avoid paying part of the taxes you should 
be paying so that other businesses and other companies and other 
Americans have to pay those taxes, you renounce your citizenship and 
you will not be eligible for these defense contracts. It is that 
simple.
  Mr. NICKLES. There are 200-some-odd-million-dollars' worth of 
contracts. There is no prohibition right now that I know of that would 
keep a foreign company from doing the same work that 
PricewaterhouseCoopers is doing, or some other company, so a French 
company or a German company could pick up this contract that we are 
going to foreclose from PricewaterhouseCoopers, or somebody else and, 
correct me if I am wrong, under the Senator's amendment a German 
company could do it, and 100 percent of those employees could be in 
Germany and do 100 percent of this work and there would be no U.S. 
income tax--I take that back. I will rephrase this. This is a $129 
million PricewaterhouseCoopers contract and they would be barred, so 
now those contracts would be open. There is nothing to prohibit a Swiss 
company, a German company, a French company, Israeli company, or any 
other company worldwide from doing that work, and those jobs might be 
domiciled someplace else in the U.S.; isn't that correct?

  Mr. WELLSTONE. That is correct.
  But I say to my colleague, this is about American companies. I am 
going to be clear about that. This is about an egregious practice. This 
is about good corporate citizenship. This is about being patriotic and 
about saying to these companies, in all due respect, you can come back 
home. You don't need to renounce your citizenship, in which case you 
are eligible. But if you continue to exploit this egregious tax 
loophole, then you are not going to be eligible. It is that simple.
  Mr. NICKLES. Mr. President, I want to make a couple of comments on 
the legislation. My colleague mentioned that he is not on the Finance 
Committee. This is an item that has jurisdiction in the Finance 
Committee. Of late, I think maybe we don't use the committees anymore. 
I am kind of shocked that the chairman and ranking member of the 
Finance Committee are not here saying, wait a minute, we are dealing 
with this issue. Actually, I believe an amendment has been reported out 
on this issue, but it is a different amendment.
  We are dealing with taxation issues. My colleague from Minnesota 
already admitted--and it happens to be factual--if you do business in 
the United States and you are a U.S. company, at 100 percent you pay 
taxes on that contract, period. And if you are domiciled in Bermuda and 
you do a U.S. contract, you pay 100-percent corporate taxes. What we 
are talking about is a differential of taxes of international taxation 
of foreign source income, not U.S. contracts.
  We are using U.S. contracts and threatening thousands of U.S. jobs 
that, if this amendment is adopted--and I hope it is not--these jobs 
may be done elsewhere because there is nothing in this amendment that 
says other companies in other countries need not apply. They are not 
going to be prohibited.
  We may well have a situation, as absurd as it sounds, of: Oh, we are 
sorry, you do not pay enough in foreign taxes on foreign source income; 
therefore, we are going to deny you U.S. contracts. And now we are 
going to export U.S. jobs.
  I am not sure that makes sense. Let me be very clear. My colleague 
from Minnesota agreed with me, U.S. companies, whether domiciled in 
Bermuda or not, if they do U.S. contracts with the Department of 
Defense or any U.S. contracts, they pay U.S. corporate income taxes, 
period. They pay U.S. taxes, period. There would be U.S. taxes paid on 
every dime of this contract.
  We are really dealing with foreign international taxes, a very 
complicated issue, one that should be dealt with appropriately in the 
taxation committee, not on the Department of Defense appropriations 
bill, not where people do not know what we are talking about when we 
talk about foreign source income.
  On occasion, this Senate should rise and say this is not the way to 
legislate. I understand the beautiful demagoguery that somebody is able 
to say--and I have read in the papers--look at those companies, they 
are leaving the country, turning their backs. I do not know I agree 
with that statement.
  I will give an example. I do not know that much about Stanley. It is 
a Connecticut-based toolmaker. They took a lot of flack. Stanley 
decided they got enough pressure, and they rescinded their corporate 
move, or they were contemplating going to Bermuda, and they rescinded 
it. PR-wise, this is bad news if a company tries to reincorporate in 
Bermuda or anyplace else--I do not know why my colleague included 
Cyprus. I never considered Cyprus a tax haven.
  Stanley decided not to reincorporate in Bermuda. I do know that if 
they did incorporate in Bermuda, for every contract they had with the 
Department of Defense, they would pay 100 percent U.S. corporate income 
taxes--100 percent. They would pay as much as Nickles Machine 
Corporation would.
  This is an easy issue to demagog, but it is a complicated issue in 
tax policy. The Finance Committee, of which I happen to be a member, 
and Senator Grassley and Senator Baucus have worked on a bill. It is 
not perfect, but it is a much better approach than what we have before 
the Senate today.
  To say you cannot get the jobs--I do not know, I am sure 
PricewaterhouseCoopers has thousands of employees. I am sure they have 
some employees my State. I am not sure they have employees in every 
State, but they have a lot of employees, and those are employees in the 
United States. They pay U.S. taxes.
  Should we say they should be denied any Federal contract or any 
Department of Defense contract? I am not ready to say that. They may 
well be providing goods and services--$129 million to DOD or $220 
million--that are very much needed. As a matter of fact, they are 
probably doing jobs that Arthur Andersen used to do. So we need more 
accounting consulting companies.
  Should they be totally debarred? That is a pretty serious penalty. 
Debarment is usually a penalty for pretty egregious conduct such as 
fraud or criminal liability, not necessarily moving a headquarters.
  I know a lot of companies incorporate in the State of Delaware. All 
across the country companies incorporate in the State of Delaware. 
There must be some advantage in incorporating in the State of Delaware. 
I am amazed at the number of corporate headquarters in Delaware. Is 
that for income tax evasion? I do not know. I do not think so. But 
should we deny them contracts? I am not sure. I darn sure question the 
wisdom of saying all Government contracts will be banned.

  Maybe there should be a penalty if people reincorporate in Bermuda to

[[Page S7694]]

avoid foreign taxes. Should that penalty be taxation? Right now this 
penalty is total debarment from Federal contracts. I question that 
penalty. I am not sure that is the right penalty. Maybe there should be 
a better way. Maybe we should reconsider foreign taxation and make sure 
we are competitive.
  I know in some countries they are growing, and growing dramatically 
because their international taxation picture is much better than ours. 
Take, for example, Ireland. They have reduced their international 
taxation, and they happen to be growing. There are other countries that 
have done quite well because they have a low tax structure. God bless 
them. I am proud of them.
  Should we say that anybody who happens to have a headquarters in 
those facilities, but also has a branch in the United States, should be 
denied any business in the United States and automatically export those 
jobs to other countries? I do not think so. I just question the wisdom 
of the amendment.
  I know the amendment is well intended. I know it is populist. I know 
it is very comfortable to beat these companies up, and maybe some 
rightfully so. But I am not sure that total debarment from any Federal 
contract of those employees who work for those companies and are going 
to find themselves unemployed because we just said they cannot do 
Government work, when they pay taxes on that Government work, I am not 
so sure that is the right penalty.
  I have serious reservations about my colleague's amendment. I am not 
so sure that we should adopt it. I am sure it does not belong on this 
bill. If we are going to deal with taxation issues, I think it should 
come out of the Finance Committee and be dealt with on a tax bill, not 
on a Federal procurement bill.
  The amendment reaches pretty far. I hope people will start taking a 
look at it. I am trying to see who is covered by this. Let me find 
another company. I do not want to mention just one company.
  Ingersoll-Rand, I noticed, incorporated in Bermuda on December 31. 
That happens to fall on the Senator's date. I read his language.
  Mr. WELLSTONE. I say to my colleague, maybe they should be, but they 
are not. It is after December 31.
  Mr. NICKLES. They made it by 1 day.
  Mr. WELLSTONE. If the Senator wants to make it tougher, we will make 
it tougher.
  Mr. NICKLES. I am trying to figure out what we are doing. Let's take 
Ingersoll-Rand. Ingersoll-Rand will not be covered. They would not be 
debarred. This is very interesting. Ingersoll-Rand makes heavy 
industrial equipment. I know that because I used to be in the heavy 
industrial equipment business. Actually, I was a competitor with 
Ingersoll-Rand at one time.
  Ingersoll-Rand does about $40 million worth of contracts. They have a 
lot of employees in the United States. They have employees in my State 
of Oklahoma. Ingersoll-Rand has a plant in Tulsa, OK. They would be 
debarred from doing any work with the Federal Government. No, they 
would not because they incorporated on December 31. Cooper Industries 
competes with Ingersoll-Rand. They reincorporated in Bermuda on May 21. 
They probably did it because Ingersoll-Rand did it. They compete. They 
are competitors. So one company got in and will not be affected by 
debarment; they would not lose $40 million worth of contracts.

  Cooper Industries, on the other hand, is doing about $6 million worth 
of contracts. They would be debarred because they reincorporated on May 
21. So here we have two competing industries, one of which made it in 
under the wire, and so they are not denied $40 million worth of 
contracts, but their competitor--I believe their principal competitor--
would be debarred for $6 million.
  That is a little troublesome. Both have a lot of employees in the 
United States. I notice Cooper Industries--I know my colleague from 
Texas is here--is headquartered in Texas. I know they have thousands of 
employees in the United States. I know they pay Federal income taxes on 
every single dime of these contracts.
  I guess that is what bothers me. I believe there is a 
misunderstanding that if somebody reincorporates in Bermuda they will 
not pay U.S. taxes on U.S. contracts, and that is false. They will pay 
U.S. taxes on U.S. contracts. To have a penalty that says if they 
reincorporate in Bermuda because they want to avoid taxation on foreign 
source income and we are going to debar them from U.S. contracts and 
maybe cost thousands of jobs domestically, that is very shortsighted 
and probably not the right solution.
  Maybe the right solution would be we would work through the 
appropriate committees and try to discourage people from relocating in 
Bermuda. Maybe we can make our tax structure more competitive 
internationally.
  I have been on the Finance Committee for a long time. Those of us who 
have looked at it for years have said we need to relook at 
international taxation.
  We are not competitive internationally. We encourage jobs to go 
overseas because of our international posture. If we do not fix it, we 
are going to continue encouraging people to relocate. The amendment of 
my colleague from Minnesota is going to exacerbate that problem. He 
will, in effect, be denying contracts to a lot of U.S. firms that have 
jobs in the United States that pay taxes on these contracts.
  I am afraid the net result is competitors from other countries, with 
employees in other countries, are going to be competitive and win these 
contracts, and the net loss is we are not only not going to get U.S. 
taxes on these contracts, we are going to have employees go overseas.
  The amendment may be very well intended politically, and my 
compliments to my colleague from Minnesota. It is a very popular 
amendment. It looks good, it is populist, but I think it is bad tax 
policy. I think tax policy should be done in the Finance Committee, not 
on the floor of the Senate on a Department of Defense bill.
  I urge my colleagues to oppose this amendment.
  The PRESIDING OFFICER. The deputy majority leader.
  Mr. REID. Mr. President, I say to the Senator from Minnesota that 
this amendment is a good amendment. U.S. corporations have to pay 
corporate taxes on what they earn here in the United States and on what 
they earn in other countries. But foreign corporations only have to pay 
taxes on what they earn in the U.S. So a lot of U.S. companies figured 
out that if they move their corporate papers overseas but leave their 
operations and employees and everything else here in the United States, 
they can get off the hook for most of their taxes.
  Tyco did that. It incorporated in Bermuda in 1997 and saved $400 
million a year in taxes. Just by going across the water to file 
reincorporation papers. Stanley Works did the same thing and saved $30 
million annually; Cooper Industries, $55 million, Ingersoll Rand, $440 
million annually.
  These companies get all the benefits of being U.S. corporations, and 
their stocks are mostly traded on the New York Stock Exchange, but they 
are escaping U.S. taxes. That means that you and I have to make up the 
difference. I think the Senator from Minnesota is on the right track.
  To show this is not some bizarre, ridiculous amendment, look at what 
the State of California did. The State of California is usually on the 
cutting edge of what is going on in this country because they are 
almost a country unto themselves. Thirty-five million people live in 
California. The State of California announced last week that corporate 
expatriates are no longer eligible to hold State government contracts. 
That is California, where over 10 percent of the people in this country 
live. It is one State, and that State recognizes what is being done is 
wrong.

  Also, in the House of Representatives, which is evenly divided 
basically between the Republicans and Democrats, 318 Members voted for 
an amendment that is substantially similar to Senator Wellstone's 
amendment.
  Another thing. This amendment does not absolutely bar these companies 
from holding government contracts, as my very good friend from Oklahoma 
said. These companies can change this in a matter of a couple of hours. 
All they have to do is come back to the U.S., where they came from, and 
reincorporate again in America. That is

[[Page S7695]]

the patriotic thing to do. That is the right thing to do. They cannot 
have it both ways.
  Why do they do this?
  Mr. NICKLES. Will the Senator yield?
  Mr. REID. I will yield in a little bit.
  They do it because turning their back on their country in their 
country's hour of need makes their profit margins look better. The 
process they use is complicated. As I said before, the foreign 
corporations, the expatriates, only owe taxes on their U.S. income. But 
companies that never left the U.S. owe taxes on both their U.S. income 
and their foreign income. Although the U.S. government does give them a 
tax credit in the amount of any foreign tax on the profits, which 
prevents double taxation. So incorporating outside the United States 
eases--and I have gone through the list of how it eases--a 
corporation's tax liability.
  Expatriates also often engage in earnings stripping, it is called. 
Earnings stripping occurs when a foreign corporation legally funnels 
its U.S. earnings outside the United States without paying taxes in the 
United States. The two main avenues they do this with are: First, a 
U.S. subsidiary can borrow a substantial amount of money from the 
foreign parent corporation and make large interest payments to the 
foreign parent. The interest is considered a business expense and is 
then not taxable under the United States Code.
  What else can they do? The U.S. subsidiary may make other payments to 
the foreign corporation for royalties or intellectual property payments 
or for other purposes. These payments many times seem grossly out of 
proportion to the service that foreign corporation actually renders.
  For instance, the U.S. branch of one expatriate company paid its 
parent company royalties in an amount of about 4 percent of its total 
revenue just for the right to use the company's name. That is a little 
out of line, I would think. The payment got routed through the Swiss 
branch of the company's Luxembourg holding corporation, which is a 
wholly-owned subsidiary of the Bermuda parent company. All to ensure 
that the company takes advantage of every conceivable tax break 
possible. Under the current Tax Code, that is a business expense and is 
nontaxable under the United States Code. And because of an existing tax 
treaty between the United States and Switzerland, the payments are not 
subject to Swiss taxes either. So they got to move that 4 percent of 
their total revenues out of the U.S. without incurring any U.S. 
corporate taxes on it. That's a relatively tame example of how earnings 
stripping works.
  So I say to my friend from Minnesota, these companies that run 
offshore to tax havens get all the benefits of doing business in the 
United States, and they do not have to pay like other corporations.
  I also say that every time a bill comes up, they say it should be 
under the jurisdiction of the Finance Committee. We should have a 
committee of the whole, and we should all become members of the Finance 
Committee. It seems, they say, everything should be taken through that.

  I do not believe that is proper. The jurisdiction of the Finance 
Committee is fairly well restricted. I say to anyone within the sound 
of my voice, we have a committee system and we do our very best to 
follow it, but there are certain things that come up as we do 
legislation that demand not a lot of committee hearings. This is one of 
those instances.
  The Senator from Minnesota is on the cutting edge of what we should 
be doing legislatively. It is important we are doing this. And the talk 
about how it's too bad that we're barring this poor company from 
holding government contracts. If it is so bad for them, let them come 
back to the United States and reincorporate, and they will have all the 
benefits they did before. But they cannot have it both ways. They 
cannot have all of these--I refer to them as shady deals. I have gone 
over a couple that I pinpointed, and I think they are significant.
  I also say to those who were listening to the prior debate, they are 
really feeling bad about the consulting branch of 
PricewaterhouseCoopers. They shouldn't worry. PwC announced today that 
it was being sold to IBM, which is a U.S. corporation. IBM, the new 
parent company, is a U.S. corporation. That takes care of the problem, 
as far as I understand it. I think that solves the big problem there.
  So we have, as far as I am concerned, a very valid amendment. I 
understand my friend from Oklahoma. He is someone for whom I have the 
deepest respect, and he is always in tune with the business community's 
needs and wants. And I do not say that in any negative way. He was a 
businessman before he came to the Senate, and he has not lost that. I 
understand how he believes they should always be given a fair shot, and 
I believe they are in this instance. The business community is being 
given a fair shot. In fact, I think this is a gunshot across their bow 
that they should come back to this country again. This is what they 
should do, and I think they should plug these tax loopholes and end 
these tax havens. If the Finance Committee wants to do more, let them 
do more.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. Mr. President, I will take 10 seconds because I know 
the Senator from Texas wants to speak, and then I will respond later 
before the vote. I first want to thank the whip and make a technical 
point.
  Actually, contracts are not----
  Mr. REID. Will the Senator yield for a brief question without his 
losing the floor?
  Mr. WELLSTONE. I would be pleased to.
  Mr. REID. Would the Senator agree that these monies that they are not 
paying, avoiding taxes in this country, are going in many instances to 
line the pockets of its fat cat corporate executives?
  Mr. WELLSTONE. I would say to the whip, I am trying to be a moderate 
today. I do not know whether I want to respond to that question, but it 
sounds to me as if the question is going in the right direction.
  I point out that I do not really think this is a big issue, but 
technically--I have already thanked about four or five times both 
Senator Baucus and Senator Grassley for moving this bill. I introduced 
the bill that says we ought to eliminate this egregious tax loophole. 
Technically, the Finance Committee does not have jurisdiction over 
contracts. Let me make that clear.
  Second, let me also make one other thing clear: That to the people in 
the coffee shops in Minnesota and the coffee shops in all of our 
States, American citizens, this whole jurisdictional battle is not 
really all that important to them. They believe if these companies are 
going to renounce their citizenship, go abroad, set up these dummy 
corporations--and by the way, quite often they use those new structures 
to shift earnings from the U.S. branch to the foreign branch so they do 
not have to pay their fair share of taxes--and that could include 
earnings from Government contracts--that they do not pay their fair 
share of taxes. Frankly, most people in the country say: Come home, 
declare your American citizenship, then you are eligible. If not, you 
are not. It is that simple.
  I hope this amendment will have a strong vote. I can talk a lot more 
about it, but I know my colleague from Texas is in the Chamber, and I 
always look forward to what he has to say.
  The PRESIDING OFFICER (Mr. Miller). The Senator from Texas.
  Mr. GRAMM. Mr. President, if you are trying to get cheers in coffee 
shops, this is an excellent amendment. If you are trying to make law in 
the greatest capitalistic country in the history of the world, a 
country that more than any other country on Earth has had companies 
operating in other countries, come to America and gradually move the 
bulk of their business to our country over the years in order to 
benefit from the fact we have better laws and lower tax rates, then 
this is a very bad amendment.
  Let me make it clear. I don't have any sympathy for people who are 
transferring where their company is domiciled to try to get a tax 
advantage. But I would make the following points. Whether a company is 
domiciled in Barbados, Germany, Ireland, or Saudi Arabia, the IRS Code 
is very clear on one thing. Section 881 of the IRS Code says any income 
effectively connected with the United States is taxed in the United 
States of America.
  When companies are relocating--and I noticed Ireland is not listed 
here even

[[Page S7696]]

though Ireland is a major relocation center for companies all over 
America because they have very low tax rates on business, and I 
congratulate them for being smart enough to do that--we double tax 
dividend income, we double tax the income on corporate America. It is 
not an enlightened policy, and in my opinion, we should not do it.
  This is the point. Under section 881 of the IRS Code, if you earn 
income in America, you are taxed here. Companies are seeking 
jurisdictions where they get more favorable overall tax treatment, 
including tax treatment on their foreign earnings. I don't have 
sympathy for companies that do this, but the plain truth is they are 
doing it. The plain truth is by affecting Government procurement, this 
amendment is GATT illegal and violates GATT.
  Also, it is astounding to me that we would want to give one 
individual, the Secretary of the Treasury, the power to unilaterally 
disbar any company that is domiciled in a foreign country. Under this 
amendment, we outline all these countries that we are saying are tax 
havens, and then we add any other country that the Secretary of the 
Treasury determines is used as a site of a corporation primarily for 
the purpose of avoiding U.S. taxation.
  As I pointed out, you do not avoid U.S. tax by changing where your 
company is domiciled because the IRS Code requires income earned in the 
United States is taxed here.
  What companies do, however, is they get a more favorable environment. 
What we should be doing is looking at our corporate tax structure and 
trying to become more competitive.
  The amendment gives the Secretary of the Treasury unilateral power to 
disbar any company that is domiciled in a foreign country from selling 
goods to the Defense Department.
  I understand politics. I once was engaged in it. I have now given it 
up. But I understand it is very good politics to basically attack 
people who are operating in foreign countries that have low tax rates, 
that we choose to call tax havens. I long for America to be a tax 
haven. I long for us to get back to the situation we once had where 
companies were moving out of Germany, Italy, and Britain to domicile in 
the United States of America because we had favorable tax treatment. I 
don't remember us thinking it was a bad deal then. We thought it was a 
good deal.
  I had not heard the business about giving up your citizenship. This 
thing has nothing to do with citizenship. If Stanley Works changes 
their domicile, the people who own Stanley Works do not change their 
citizenship. The people that run Stanley Works do not change their 
citizenship. I don't know from where that comes from. That has nothing 
to do with this debate.

  Now, we had a debate once where people were giving up their American 
citizenship to avoid death taxes. Fortunately, we have passed a tax cut 
that eliminates death taxes and some of us want to make that 
elimination permanent. You can be guaranteed that will never happen 
again if our elimination of the death tax becomes permanent.
  Now, I conclude by saying I don't have any doubt about the fact that 
if this is brought to a vote it will pass. We are in an environment 
where slapping businesses around is good politics. Talking about 
denying procurement opportunities to companies domiciled in other 
countries is always popular until you remember that we sell more 
military equipment to foreign countries than any other country in the 
world--and more than every other country in the world combined.
  Under the IRS Code, you have to pay American income taxes on income 
earned in America. If you are domiciled somewhere else, you do not have 
to pay American taxes on income earned in another country.
  This amendment is not good public policy. I hope we can find a way of 
dealing with this. I am very reluctant to see this amendment pass. On 
the other hand, if this amendment had to be clotured, we would be 
talking about 2 days before we would have an opportunity to do it. I 
hope people who are managing the bill can find some way out of this. I 
don't think anyone really believes this issue belongs on this Defense 
bill. I think this is something we ought to be discussing at the 
authorization level. This is an appropriations bill.
  Our goal as taxpayers is to procure the best stuff we can for 
military use at the lowest possible price. I know that is not a popular 
view, but it is a rational view, whether it is popular or not.
  This amendment is GATT illegal. It will be subject to retaliation if 
it actually becomes law. I don't know that anyone here is serious about 
it becoming law.
  In any case, if you want to pick a debating point for the local high 
school and you get to pick which side you will be on, you want to pick 
this topic, and you want to pick Senator Wellstone's side.
  But in terms of public policy, this is an amendment that is bad 
public policy. While it is easy to attack companies that are domiciled 
in other countries, especially countries with low tax rates, the bottom 
line is, for most of the 220-odd-year history of America, we have been 
the tax haven. We have had companies move from other countries to 
America seeking lower taxes and better opportunity.
  How much better our time would be spent if we were debating ways to 
make America more competitive rather than trying to build walls around 
our country to try to keep capital in. What a far cry this is from the 
basic American approach, which has been to have an environment that is 
so favorable to investment and capital creation and wealth that other 
countries have to try to build walls around themselves to keep their 
capital in. Now we are talking about building walls around America to 
keep people from taking capital out.
  I understand it is easy for us to say: Look, we think you should not 
use your money in a way that you view as most efficient. We know more 
about your money than you do. We did not invest it, we did not save it, 
we did not risk it, but we are perfectly capable of telling you how to 
do it.
  I think, again, if we are debating this in terms of popular hoorah, 
we are basically saying that in a free country someone who owns wealth 
cannot take that wealth out of the country and invest it and still have 
the right to engage in commerce--which we grant to companies in Germany 
and Ireland and Czechoslovakia. We are going to take that position 
because right now slapping around people who are trying to engage in 
business is popular. It may be popular, but I do not think it is good 
public policy. We should be debating how we can change our laws so that 
no company would ever want to move out of the United States. But if 
they want to move out of the United States, you either believe in 
freedom or you do not--and I do.
  So I wish they did not find it desirable to do it. I wish Stanley 
Works would keep their headquarters in America. But I have to say I am 
not an investor in Stanley Works. Now TIAA-CREF, my teacher retirement, 
may invest in Stanley Works. But so far as I know, I do not own any 
Stanley Works stock. So who am I to be trying to tell them where they 
put their money? I may not like how they do it, just like I do not like 
it when people waste their money. I have never understood why people 
buy lottery tickets. But I know it sends some people to college and it 
is a free country. If they want to do it, let them do it.
  I never understood why people go out and spend their money buying a 
lot of different things that I do not value. People might not 
understand why I want to own a whole bunch of shotguns, more than I 
will ever pull the trigger on, but it is a free country and you either 
believe in freedom or you do not.
  Now, some freedom is not popular. Here today on the floor of the 
Senate, the freedom to take your wealth that you created and put at 
risk and invest it in any one of the following countries--Gibralter, 
Cyprus, and others. I don't know why we are picking on Cyprus. I 
thought we were trying to make peace there. I thought we were trying to 
create jobs for both the Greeks and the Turks. But it is popular to 
say, today: It is your money, you earned it, you put it at risk, but 
you can't invest it in Cyprus and have the freedom to engage in 
international commerce and sell to the U.S. Government.
  I know that is popular today, but the question is, Is it right? What 
if it were our money, if we owned these companies as public companies, 
and if this were really a socialistic country? I

[[Page S7697]]

know some dream of it being that, but it is not. Thank God. Thank you, 
sweet Jesus, it is not. The commanding heights of the world are 
dominated by capitalism. The Berlin Wall has collapsed. Tears are still 
shed about it, not just in East Germany, either.
  But freedom is tested when it is unpopular, not when it is popular. 
Standing up and cheering for the team that wins the Super Bowl is an 
exercise in freedom of speech, but that is not where you measure 
freedom of speech. You measure it when somebody is saying something you 
do not agree with, something that is not popular. I would say that I do 
not own any Stanley Works stock. I did not invest in Stanley Works. Who 
am I to be telling them they can't have the rights that we give to 
every other company in the world that is domiciled in Germany or in 
Taiwan or Korea or the Philippines or Morocco or wherever? They can 
produce things and sell to the Defense Department, but Stanley Works, 
domiciled in Cyprus or elsewhere, they are not going to sell to the 
United States.

  Mr. GREGG. Will the Senator yield for a question?
  Mr. GRAMM. I am happy to yield.
  Mr. GREGG. You made some excellent points. The point that the company 
that invests overseas, if it is a foreign company, it has the right to 
do that, but under this rule, if it is an American company, it would 
not have that right if it were domiciled outside the United States--
  Mr. GRAMM. That is exactly right. Had they invested their money in a 
company domiciled in Germany, which competes with Stanley Works, they 
could have sold products to the Defense Department. But under this 
amendment, a company operating in Germany, making drills that might be 
bought by the Defense Department, having not one American employee, can 
sell to the Defense Department. Under this amendment, Stanley Works, 
which may have 40 percent of its employees in this country, many of 
them in the Northeast, as the Senator is aware, is not allowed to sell 
in this country if they choose to domicile in Cyprus or Gibraltar.
  Mr. GREGG. Will the Senator yield for another question on that point. 
Aren't we talking about aftertax dollars? I mean basically what we are 
saying is if an American company generates American revenues, it has to 
pay taxes on those American revenues. When an international company 
generates American revenues, it has to pay taxes on those revenues. The 
United States Treasury has taken in dollars from American-generated 
income from an American or international company.
  Mr. GRAMM. As I said earlier, every penny of American income is taxed 
under IRS code 881. But the point you are making is, the money they are 
investing abroad is after tax money, which belongs to them.
  Mr. GREGG. Right.
  Mr. GRAMM. Which gets back to my point: You either believe in freedom 
or you do not. If you believe in freedom, you have to believe if it is 
somebody's money--they have earned it, they pay taxes on it--and if 
they want to invest it in Cyprus. You may not like it, and you might 
get big cheers at the local coffee bar by saying we are not going to 
let people invest in Cyprus and sell to the United States. That is just 
wildly popular, but the point is it violates our basic precept of the 
right of people to use their own money for their own purposes, to 
promote their own goals.
  Mr. GREGG. After they pay taxes on them.
  Mr. GRAMM. And they pay taxes on that money. And it may not be the 
goal of the Members of the United States Senate, but the point is this: 
In a very real sense, when you cut through all the ability to make this 
a popular issue--when you cut through to the bottom line, it is about 
freedom; freedom to do something that is very unpopular. It is very 
unpopular. We all hate it. When there is a company operating in our 
State and they decide it is to their advantage to move their corporate 
headquarters to Ireland, we decide we do not want them to do it. We 
hate them doing it. They do it, not because it changes their taxes on 
their American-earned income but because it changes their taxes on 
money they make in Europe and Asia and because they can have a better 
business climate. We hate that they do it, but it is their money and 
they have a right to do it. They have a right to do what we think is 
wrong.
  Now to come in through the back door and try to limit their right 
because they are doing something we do not like, we are saying: You 
can't do the same thing that a German company that never invested in 
America and that has no employees in America can do. So it is popular, 
it gets you applause, but it is fundamentally wrong.
  I yield to the Senator.
  Mr. NICKLES. Mr. President, I tell my friend and colleague that one 
Oklahoma-headquartered company relocated in Texas called Phillips 
Petroleum. I wasn't very happy about that, but they had the right to do 
that.
  Let me make it clear. My friend and colleague from Texas read the 
statute that says you pay taxes on all American-source income. Isn't 
that correct?
  Mr. GRAMM. That is correct.
  Mr. NICKLES. Corporate income tax--not just payroll tax.
  Mr. GRAMM. Section 881 of the IRS Code.
  Mr. NICKLES. Really, the difference we are talking about is income 
generated in other countries.
  Mr. GRAMM. And the greater flexibility they have in their tax 
treatment in those countries. But they still have to pay American taxes 
on American income. In fact, the language of art is ``any income 
effectively connected with the United States.''
  Mr. NICKLES. Any contract with the Department of Defense--and any 
company doing that has to pay U.S. corporate income taxes if they 
generate income off those contracts.
  Mr. GRAMM. That is right.
  Mr. NICKLES. I appreciate the clarification.
  Mr. GRAMM. I conclude by noting that with the adoption of this 
amendment, it will say to companies that pay half of their employees in 
America that we are not going to let you sell to the American 
Government, but to foreign companies that have no employees in America 
and have never invested a penny in America, we are going to let you 
sell to the U.S. Government.
  Again, it is popular. It will get you a big hurrah anywhere in the 
country, but it is not good public policy.
  Mr. NICKLES. Will the Senator yield for an additional question?
  Mr. GRAMM. Yes.
  Mr. NICKLES. There is a major automotive company called Chrysler that 
recently merged--or you could say was acquired by Daimler, a German 
company. They are headquartered now in Germany and domiciled in 
Bermuda. I am guessing; I don't know. If my memory serves me correctly, 
Chrysler used to make tanks, or used to make military equipment. They 
wouldn't be covered by this because the effective date is beginning 
January 1. But the theory is, if the effective date was earlier, they 
would be prohibited from making tanks or providing goods and services 
that maybe they provided for a long time. In other words, they might be 
providing an essential component to our national defense, and those 
thousands of employees who might be employed making products for 
national defense would find themselves unemployed.
  Mr. GRAMM. They would be in Detroit, MI. That is the point.
  We basically come down to the question as to whether or not this is 
good public policy. It is popular policy. It will always get applause. 
But the question is, Is it good public policy? I would answer no.
  Should we be building walls around America? Can you imagine the 
United States of America trying to penalize people who want to transfer 
their wealth somewhere else? We are the country where people from all 
over the world send wealth here. This is a role reversal, if I have 
ever seen it. These are games that other countries play.
  This is GATT-illegal. This has no redeeming virtue, other than it is 
momentarily popular and it will get you a rousing applause.
  I yield the floor.
  Mr. GRASSLEY. Mr. President, I want to make a few comments about 
Senator Wellstone's amendment.
  Ironically, I agree with Senator Wellstone's amendment, but also 
agree with some of the points made by my distinguished friends from 
Oklahoma and Texas.
  First of all, I want to be clear that I agree with Senator 
Wellstone's purpose. As I have said repeatedly in public, companies 
should have their hearts

[[Page S7698]]

in America. If they don't have their hearts in America, they ought to 
get their rear ends out of America. In my mind, this notion applies 
especially to Government contracts.
  Mr. President, when the Finance Committee marked up legislation to 
shutdown corporate expatriation, I considered adding this Government 
contracting ban to the tax legislation. However, out of deference to 
the Governmental Affairs Committee, the committee with jurisdiction 
over Government contracts, I withheld. So, let's be clear that this 
matter is not a Finance Committee matter. Chairman Baucus and I moved 
legislation on this matter out of committee. If Government contracting 
were within Finance Committee jurisdiction, we would've addressed it.
  Now, let me say that my friends from Oklahoma and Texas are correct 
in one respect. That is, the problem of corporate expatriation springs 
from our flawed international tax code. It needs to be reformed. I am 
committed to reform. In the meantime, we need to stop the bleeding of 
the U.S. tax base and not reward expatriate companies with Government 
contracts.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, I ask unanimous consent that the Senator 
from Illinois, Mr. Durbin, be recognized for up to 15 minutes; 
following that, Senator Wellstone be recognized for up to 4 minutes, 
and, following that, this matter be voted on. And we will do that by 
voice. We will announce that to the Members.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. DURBIN. Mr. President, thank you very much.
  I will probably not take the entire 15 minutes.
  I do concede the point made by the Senator from Texas that many of us 
come to this debate with a level of emotion. I am not happy to read in 
the newspaper that a company such as Stanley Tools has decided, for tax 
reasons, they are going to forsake their American citizenship and move 
to Bermuda. I will guarantee you, I will never knowingly buy one of 
their products again.
  I honestly believe the American corporations--proud to be in this 
country, proud to be part of this country, accepting their obligation 
to support this country, and paying taxes here--deserve my business 
before the folks at Stanley who decided it is much more fashionable to 
wear Bermuda shorts than to wear the red, white, blue.
  Let me address three specific elements that came out in debate.
  I have read, over the course of my education and my service in 
Congress, a lot of things relative to rights. I have read a great deal 
about the rights of individuals and the rights of others.
  We all know about the rights of life, liberty, and the pursuit of 
happiness. We have heard about those, and some trace them back to Plato 
and Aristotle. They go through all the great Renaissance thinkers, and 
certainly to the Founding Fathers and Mothers of America, who came to 
these concepts and fought for them.
  But I never read about the inalienable, immutable, nontransferable 
right of a business, wherever it is located, to bid on contracts at the 
U.S. Department of Defense. That does not exist. That is a creature of 
law and policy.
  We, in the United States, decide who will bid on Government 
contracts. We establish standards. We establish qualifications. And we 
establish disqualifications.
  Should Saddam Hussein's agent show up at the Pentagon tomorrow and 
suggest that the Iraqi National Business Corporation wants to start 
bidding on American defense contracts, you can imagine, we will laugh 
him out of town. We decide who will bid on our defense contracts, in 
the name of our national values and our national defense.
  What the Senator from Minnesota brings before us is a very basic 
challenge: If it is not an inalienable right to bid on contracts at the 
Department of Defense, are we going to offer that right to bid to a 
company which has forsaken and denounced its American citizenship in 
order to avoid paying taxes in the United States?
  I will go back to the point made earlier by the Senator from Texas. I 
do not think there is any right to that. And I do not think he can find 
it.
  The second point I would like to make is this: The argument that 
these poor companies go to Bermuda, the Virgin Islands, Barbados, and 
the Isle of Man in order to escape American taxes--our critics say it 
is really a condemnation as to the high tax rates in America. They 
argue that we should lower our corporate tax rates so they will not 
even consider going to a tax haven such as Bermuda.
  Trust me, no matter how low we bring our corporate taxes, some small 
country somewhere in the world will have a lower corporate tax rate. We 
cannot race to the bottom and expect to sustain the civilization we 
enjoy and the common defense which is funded under this bill if we do 
not have a tax base in America.
  These same people could argue, logically, that we should encourage 
companies to move overseas to the lowest possible wage rate where 
people are being paid 5 and 10 cents an hour because it is such a smart 
business decision. We do not encourage it. We discourage it. We should 
continue to.
  But to argue that somehow we are at fault as a nation because we ask 
businesses to pay their fair share of sustaining the strength and 
quality of life in America, I think is ludicrous.
  The third point I will make is this: This is a Defense bill. We talk 
about the Department of Defense, but we all know that within the pages 
of these bills, particularly this bill, we will find not just words, 
but we will find the support for the men and women in uniform in 
America.
  Think about what we ask of the men and women in uniform sustained by 
this Department of Defense appropriations.
  We ask these men and women, out of loyalty to America, to be willing 
to pay with their lives for the privilege to be an American citizen. 
And each and every one of us is so proud that young men and women come 
forth willing to do so, willing to give their careers, their lives, to 
their country.
  But think about what those who oppose this amendment are saying: That 
corporations with so little loyalty to the United States that they are 
unwilling to pay taxes to this country should somehow be honored with 
the right to bid on Department of Defense contracts.
  I disagree. I disagree. Let me hope that this amendment is adopted. 
Let me hope that after it is adopted, the next time a major corporation 
draws its board of directors together and brings in their shifty 
accountant, who says, ``I just came up with a great idea: We're moving 
to Bermuda, and we can save taxes, and you all can make more money,'' 
somebody will say, ``What impact is that going to have on our customer 
base in America? What impact is that going to have on our business in 
America? Shouldn't we think twice before we abandon this Nation because 
we want to save a few bucks on taxes?''
  My friends and colleagues in the Senate, I support this amendment by 
the Senator from Minnesota. I will concede that I come to it with some 
emotion when I consider these businesses that are moving overseas to 
avoid paying taxes to our Government. Businesses are moving their 
operations overseas to avoid hiring men and women in the United States. 
I do not think we should reward them or applaud them or say it is just 
an exercise of their freedom. They have the freedom to leave. We should 
have the freedom in the Senate to tell them that their departure is 
going to cost them an opportunity to bid on these contracts.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized.
  Mr. WELLSTONE. Mr. President, we had a long debate this afternoon. My 
understanding is that my colleagues are going to accept the amendment. 
I am appreciative of that. I think it is a very good amendment. I think 
it is important to have good, strong bipartisan support.
  I thank Senator Durbin and Senator Reid, our whip, for their help. 
And if it

[[Page S7699]]

is OK with them, I ask unanimous consent they be added as cosponsors to 
my amendment.
  Mr. DURBIN. Yes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WELLSTONE. I am looking at just a few editorials and op-ed 
pieces. I will quote from them and do it in 3 minutes so we can get on 
with this vote:

       The trouble is that hinting, even by silence, that it's 
     O.K. not to pay taxes is a dangerous game, because it can 
     quickly grow into a major revenue loss. Accountants and tax 
     planners have taken the hint; they now believe that it's safe 
     to push the envelope. . . . Furthermore, what does it say to 
     the nation when companies that are proud to stay American are 
     punished, while companies that are willing to fly a flag of 
     convenience are rewarded?

  That was from columnist Paul Krugman of the New York Times, May 14:

       Even more galling is the fact that many of the same 
     companies are giving the taxman the brushoff as they shield 
     themselves with their Bermuda ZIP codes think nothing of 
     holding out their hand when Uncle Sam is doling out 
     government contracts.

  That is from columnist Arianna Huffington, LA Times, May 15.
  I ask unanimous consent material from the New York Times to the 
Houston Chronicle, to the Springfield Union News editorial, to the 
Philadelphia Inquirer--there is a ring of editorials and opinions on 
this question, and I ask unanimous consent they be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         Editorials and Opinions Against Corporate Expatriation

       ``Tax policy of this sort is outrageously offensive, if not 
     masochistic. It penalizes businesses that behave ethically 
     and responsibly and rewards those that do not. It increases 
     the federal deficit and decreases the federal resources to 
     keep the country running and rivers clean. It extends 
     privileges to corporations that can afford the legal bills 
     which it won't extend to $20,000-a-year day-care workers. 
     Americans should be outraged, and so should Congress, which 
     should move quickly to pass pending legislation outlawing the 
     dodge.''--Peoria Journal Star editorial, May 12.
       ``The company has thumbed its nose at anyone who questioned 
     its plans. Stanley officials initially tried to bar reporters 
     from the annual meeting, despite high public interest in the 
     Bermuda vote. They also mailed confusing shareholder 
     information about how the vote would be tabulated. Businesses 
     that want to enjoy the benefits and protections provided by 
     this country should pay their fair share of taxes. Guess who 
     will wind up picking up the tab as a result of Stanley's tax 
     avoidance? Other American taxpayers, of course.''--Hartford 
     Courant editorial, May 14.
       ``Even in the best of times, it is outrageous for companies 
     to engage in offshore shenanigans to avoid paying their fair 
     share of taxes. Doing so after the Enron scandal, in dire 
     fiscal times and when the nation is at war is 
     unconscionable.''--New York Times editorial, May 13.
       ``American companies that have no headquarters, no 
     employees or operations in foreign tax havens should not be 
     able to lower their taxes by, in essence, acquiring an island 
     post office box. Basic fairness to American companies that 
     remain incorporated in the United States is at stake.''--
     Houston Chronicle editorial, May 9.
       ``When a U.S.-based corporation decides to reincorporate, 
     basing its operations in, say, the Cayman Islands when the 
     company has little more than a mailbox there, it can legally 
     avoid millions of dollars in taxes. . . . there will come no 
     better moment than this one to right that wrong. We look 
     forward to the floor vote.''--Springfield Union News 
     editorial, May 7.
       ``Even more galling is the fact that many of the same 
     companies are giving the taxman the brushoff as they shield 
     themselves with their Bermuda ZIP codes think nothing of 
     holding out their hand when Uncle Sam is doling out 
     government contracts.''--Columnist Arianna Huffington, Los 
     Angeles Times, May 15.
       ``The trouble is that hinting, even by silence, that it's 
     O.K. not to pay taxes is a dangerous game, because it can 
     quickly grow into a major revenue loss. Accountants and tax 
     planners have taken the hint; they now believe that it's safe 
     to push the envelope. . . . Furthermore, what does it say to 
     the nation when companies that are proud to stay American are 
     punished, while companies that are willing to fly a flag of 
     convenience are rewarded?''--Columnist Paul Krugman, New York 
     Times, May 14.
       ``Yet it [Stanley] won't have to pay its fair share for the 
     good life and safe business climate we have created here. It 
     shouldn't be allowed to get away with this. It's time to slam 
     this loophole shut--for Stanley and other companies that have 
     the so-called inversion strategy.''--Columnist Jeff Brown, 
     Philadelphia Inquirer, May 12.

  Mr. DODD. Will my colleague yield for a second?
  Mr. WELLSTONE. I am pleased to yield.
  Mr. DODD. I thank our colleague from Minnesota.
  A lot of people are talking about Stanley Works. I represent the 
State where that company was located, with a wonderful history and 
tradition for many years of the Stanley Works Company, with the 
contribution of employment in my State.
  It is a source of great disappointment to many of us that they have 
taken this position of setting up a shell operation, in this case in 
Bermuda, with no people there at all--nothing--to avoid taxes. That is 
deeply disturbing to people in my State. And we are embarrassed, in a 
sense, that this has become the poster child, if you will, on this 
issue.
  But the Senator from Minnesota has raised a very important point, one 
that all of us here, in a time such as this, over the last 10 months, 
after 9/11 understand taxes may be too high. We need to work at that. 
We need to improve the situation. But to have people stand up in a 
company and say that, right now, we are going to have profits trump 
patriotism, that we are going to worry about our pocketbook before we 
worry about what is best for America, is something over which all of us 
ought to be outraged.
  So I thank the Senator for raising this issue. We are going to have a 
vote shortly. I believe it is going to carry overwhelmingly, and it 
should. The other body has voted similarly on a different bill. 
Nonetheless, I suspect they may on this as well. We need to send a 
united message that this kind of behavior we do not like to see in 
individual citizens, who would trade their citizenship, and we do not 
want to see it in corporations either.
  I thank the Senator for the amendment.
  Mr. WELLSTONE. I thank the Senator from Connecticut.
  Mr. President, I just want to also, for the record, say I have spoken 
to Senator Grassley, who said he would be very proud to be a supporter. 
And I talked with the staff of both Senator Grassley and Senator 
Baucus, and we want to work together on exactly what the reach of this 
is. We will work hard on that in conference.

  The date of 9/11 has been mentioned more than once. The truth is, it 
also ties into Enron and WorldCom and all the rest. Frankly, people are 
tired. Thank goodness there are many corporations and businesses that 
are very good corporate citizens, but people are really tired of this. 
This is an egregious practice.
  Again, this amendment puts everybody on notice, forthwith, actually 
reaching back to January 1 of this year, if you are going to go to 
another country and set up a dummy corporation and then shift some of 
your profits to that corporation and not pay taxes, you are not going 
to be eligible for any of the defense contracts.
  The PRESIDING OFFICER. The Senator's time has expired.
  The Republican leader.
  Mr. LOTT. Mr. President, I believe in short order the Senate will be 
prepared to dispose of this amendment. I wish to take a minute at this 
time to express my appreciation and the appreciation of the entire 
Senate and I think a grateful country for the outstanding work that is 
done year in and year out by these two Senators managing this 
legislation.
  Senator Inouye and Senator Stevens are two unique personalities, 
first of all. The service they gave to their country and the military 
during World War II would be enough by itself to cause us to want to 
express our appreciation to them. But their service in this institution 
and their leadership in these Defense bills year after year is really 
outstanding. They have done a tremendous job. They have helped keep 
America strong. They have helped make sure we have the facilities and 
the equipment our men and women need to do the job.
  That is why when we made the decision to go to war against terrorism 
and put our men and women into a situation in Afghanistan to deal with 
al-Qaida, the terrorists, we had some incredible equipment. The 
American people got glimpses of some of the tremendous things that have 
been done.
  Once again this year they have done a fantastic job. Unless I am 
mistaken,

[[Page S7700]]

this is the largest Defense bill in the history of the country. It was 
asked for by the President. They have been very careful to be judicious 
in how they have handled it. But they have brought it to the floor in 
such a way that Senators on both sides of the aisle agree with their 
product, and I thought I should take a minute to tell them how much I 
appreciate it.
  Obviously, I am prejudiced. In my neck of the woods we build ships. 
We are very close to the Navy, but we also have Camp Shelby where 
Senator Inouye got his training at the beginning of World War II. They 
have made sure that we paid attention to what we needed for the future 
in ships, even though the Navy actually had a declining request in this 
area.
  On a personal basis and one based on knowledge of what would have 
been in the bill but what is in it, what needed to be done, I express 
my appreciation to the managers and thank them for what they have done 
here, in the past for the country, and what I know they will always do 
in their roles in the Senate.
  They and their staffs spent many long hours hammering out the details 
of what amounts to the largest defense budget in the history of our 
nation and they are to be commended for their hard work.
  I want to particularly thank Senators Inouye and Stevens for filling 
a major hole in the defense budget--the distinct lack of ship 
production for our Navy. During this time of war against terrorism, we 
need to maintain our ability to strike at the heart of our enemy far 
from American shores--namely, their training camps, intelligence 
centers, chemical/biological weapon production facilities, and 
conventional arms caches. Ships play a central role in our ability to 
project power and--before the actions of the Senate Appropriations Sub-
committee on Defense--it looked like we, as a nation, were close to 
losing a key pillar in our fight against global terrorism.
  Mr. President, the military budget as presented to this body earlier 
this year represented the largest increase in military spending that 
our country has seen in a long time, and yet the Navy's request for 
shipbuilding represented a decline in spending from the previous year. 
It certainly was difficult to understand and even more difficult to 
understand given that our forces are engaged in combat overseas. This 
spending profile not only threatened the capability of our Navy, but 
also threatened to severely dismantle our capability to produce ships 
in the United States. I don't need to spell out the dire implications 
of losing what little shipbuilding capacity that we have left in 
America.
  Thanks to Senators Inouye and Stevens and their staffs' hard work, we 
have made great strides in righting our ship that was about to sink. I 
want to applaud the foresight and efforts of committee staff, 
particularly Charlie Houy, Steve Cortese, Leslie Kalan, Menda Fife and 
Kraig Siracuse to correct this problem. They put a lot of hard work 
into this mark-up and I believe they hit a home run for shipbuilding. 
This SAC-D mark-up has set the vision for the future and will help the 
Pentagon as they develop the shipbuilding plan for POM '04.
  I also want to acknowledge the forward thinking of Pete Aldridge, 
John Young, and Dov Zakheim for identifying future funds in POM '04 
that will be leveraged into the fleet of tomorrow--a fleet that will be 
fully capable of addressing threats to our nation that we cannot yet 
envision. An early version of the ship building plan for POM '04 
includes laying the keel for a CVN in 2007; ramps up production of 
Virginia Class submarines from one ship per year in fiscal years 2004 
through 2006 to two ships in 2007 through 2009; production of three 
DDG-51 class ships per year in 2004 and 2005; commencement of DD(X) 
production in 2005 with continuation of that program well into 2020; 
steady-state production of LPD-17 class ships through 2009; and a 
three-year interval between production of LHA(R)/LHD class ships in 
2006 and 2009.
  Again, I thank Senators Inouye and Stevens for putting together a 
Defense Appropriations bill that makes sense for our Navy, our nation, 
and our ship building industry. Thank you. I commend you for the great 
service you have done for our Nation, our military, and our service 
members.
  The PRESIDING OFFICER. Is there further debate on the amendment? If 
not, the question is on agreeing to amendment No. 4412.
  The amendment (No. 4412) was agreed to.
  Mr. WELLSTONE. I move to reconsider the vote.
  Mr. REID. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. REID. Mr. President, the underlying Wellstone amendment was 
adopted; is that right?
  The PRESIDING OFFICER. That is not correct. The Wellstone amendment 
is now pending. Is there further debate on the amendment?
  Mr. STEVENS. I ask unanimous consent that the action on amendment 
4412 be vitiated and the amendment withdrawn.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Without objection, the amendment is agreed to.
  The amendment (No. 4364) was agreed to.
  Mr. INOUYE. I move to reconsider the vote.
  Mr. WELLSTONE. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. WELLSTONE. Mr. President, I have spoken with Senator Grassley and 
with his staff and the Staff of Senator Baucus about the definition of 
expatriating firms and tax havens in my amendment. It would be my hope 
that the conferees to the Defense Appropriations bill could conform the 
definition in my amendment with the definition in S. 2119, the 
Reversing the Expatriation of Profits Offshore Act.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. I thank my colleagues. I think this is an amendment of 
which we can be proud, and I am very proud that it passed.
  The PRESIDING OFFICER. The Senator from Hawaii is recognized.


          Amendments Nos. 4388 and 4422 Through 4434, En Bloc

  Mr. INOUYE. Mr. President, the managers of this bill, Senator Stevens 
and I, wish to submit several amendments for consideration. We ask 
unanimous consent that these amendments be considered en bloc and 
adopted en bloc. Before we do that, may I explain the amendments.
  They are; an amendment for Senator Akaka earmarking $6 million for 
critical infrastructure protection; an amendment for Senator Clinton 
earmarking $500,000 for renovation of a hangar at Griffiss Air Force 
Base; an amendment for Senator Inhofe earmarking $5 million for remote 
logistic network; an amendment for Senator Feinstein earmarking $5 
million for integrated chemical biological warfare detector chips; an 
amendment for Senator Hutchison earmarking $1 million for nanoenergetic 
material research; an amendment for Senator Frist and Senator Thompson 
earmarking $2 million for the Communicator force notification system; 
an amendment for Senator Landrieu earmarking $5 million for the D-Day 
museum; an amendment for Senator Nelson earmarking $6 million for the 
Center for Advanced Power Systems; an amendment for Senator Bunning 
earmarking $1 million for security locks; an amendment for Senator 
Kennedy earmarking $10 million for the Non-Self Deployable water craft 
study; an amendment for Senator Carnahan earmarking $850,000 for 
National Guard medical equipment; an amendment for Senators Smith, 
Wyden, and Murray to earmark $8 million for the Navy's Sealion program; 
an amendment for Senator Craig earmarking $3 million for foreign 
document digitization.
  May I advise the Chair that there is not a single dollar added to the 
appropriation. These are just earmarks. It has been cleared by both 
sides.
  I send the amendments to the desk. I ask that they be considered en 
bloc and approved en bloc.
  The PRESIDING OFFICER. Is there objection? The Senator from Indiana 
is recognized.
  Mr. LUGAR. Mr. President, reserving the right to object, in the list 
that the distinguished Senator just read, was there a Lugar amendment 
dealing with weapons of mass destruction?

[[Page S7701]]

  Mr. INOUYE. No.
  Mr. LUGAR. Mr. President, I will not object. I simply was hopeful 
that the amendment might be included at this point.
  Mr. INOUYE. It was objected to because it was not authorized.
  Mr. LUGAR. Reserving the right to object, I shall not object, a point 
of parliamentary procedure: When would be the appropriate time for this 
amendment to be considered or this Senator to offer the amendment or 
for the managers to offer the amendment?
  Mr. STEVENS. Mr. President, it is my understanding the bill is still 
open to amendment. The Senator still has his right to offer it at any 
time.
  Mr. LUGAR. Very well. So it would be appropriate, if I can gain the 
floor, to do so following the resolution of the amendments the Senator 
has offered. I thank the Chair.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. STEVENS. Mr. President, I ask to amend the request of the Senator 
from Hawaii and ask unanimous consent that the amendment I shall send 
to the desk for the Senator from Iowa, Mr. Grassley, be adopted. It 
deals with the awarding of a Medal of Honor flag to recipients of the 
Medal of Honor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendments (Nos. 4388 and 4422 through 4434) were agreed to en 
bloc, as follows:


                           amendment no. 4388

 (Purpose: To provide for the designation of a Medal of Honor Flag and 
   for presentation of that flag to recipients of the Medal of Honor)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. (a) Congress finds that--
       (1) the Medal of Honor is the highest award for valor in 
     action against an enemy force which can be bestowed upon an 
     individual serving in the Armed Forces of the United States;
       (2) the Medal of Honor was established by Congress during 
     the Civil War to recognize soldiers who had distinguished 
     themselves by gallantry in action;
       (3) the Medal of Honor was conceived by Senator James 
     Grimes of the State of Iowa in 1861; and
       (4) the Medal of Honor is the Nation's highest military 
     honor, awarded for acts of personal bravery or self-sacrifice 
     above and beyond the call of duty.
       (b)(1) Chapter 9 of title 36, United States Code, is 
     amended by adding at the end the following new section:

     ``Sec. 903. Designation of Medal of Honor Flag

       ``(a) Designation.--The Secretary of Defense shall design 
     and designate a flag as the Medal of Honor Flag. In selecting 
     the design for the flag, the Secretary shall consider designs 
     submitted by the general public.
       ``(b) Presentation.--The Medal of Honor Flag shall be 
     presented as specified in sections 3755, 6257, and 8755 of 
     title 10 and section 505 of title 14.''.
       (2) The table of sections at the beginning of such chapter 
     is amended by adding at the end the following new item:

``903. Designation of Medal of Honor Flag.''.
       (c)(1)(A) Chapter 357 of title 10, United States Code, is 
     amended by adding at the end the following new section:

     ``Sec. 3755. Medal of honor: presentation of Medal of Honor 
       Flag

       ``The President shall provide for the presentation of the 
     Medal of Honor Flag designated under section 903 of title 36 
     to each person to whom a medal of honor is awarded under 
     section 3741 of this title after the date of the enactment of 
     this section. Presentation of the flag shall be made at the 
     same time as the presentation of the medal under section 3741 
     or 3752(a) of this title.''.
       (B) The table of sections at the beginning of such chapter 
     is amended by adding at the end the following new item:

``3755. Medal of honor: presentation of Medal of Honor Flag.''.
       (2)(A) Chapter 567 of such title is amended by adding at 
     the end the following new section:

     ``Sec. 6257. Medal of honor: presentation of Medal of Honor 
       Flag

       ``The President shall provide for the presentation of the 
     Medal of Honor Flag designated under section 903 of title 36 
     to each person to whom a medal of honor is awarded under 
     section 6241 of this title after the date of the enactment of 
     this section. Presentation of the flag shall be made at the 
     same time as the presentation of the medal under section 6241 
     or 6250 of this title.''.
       (B) The table of sections at the beginning of such chapter 
     is amended by adding at the end the following new item:

``6257. Medal of honor: presentation of Medal of Honor Flag.''.
       (3)(A) Chapter 857 of title 10, United States Code, is 
     amended by adding at the end the following new section:

     ``Sec. 8755. Medal of honor: presentation of Medal of Honor 
       Flag

       ``The President shall provide for the presentation of the 
     Medal of Honor Flag designated under section 903 of title 36 
     to each person to whom a medal of honor is awarded under 
     section 8741 of this title after the date of the enactment of 
     this section. Presentation of the flag shall be made at the 
     same time as the presentation of the medal under section 8741 
     or 8752(a) of this title.''.
       (B) The table of sections at the beginning of such chapter 
     is amended by adding at the end the following new item:

``8755. Medal of honor: presentation of Medal of Honor Flag.''.
       (4)(A) Chapter 13 of title 14, United States Code, is 
     amended by inserting after section 504 the following new 
     section:

     ``Sec. 505. Medal of honor: presentation of Medal of Honor 
       Flag

       ``The President shall provide for the presentation of the 
     Medal of Honor Flag designated under section 903 of title 36 
     to each person to whom a medal of honor is awarded under 
     section 491 of this title after the date of the enactment of 
     this section. Presentation of the flag shall be made at the 
     same time as the presentation of the medal under section 491 
     or 498 of this title.''.
       (B) The table of sections at the beginning of such chapter 
     is amended by inserting after the item relating to section 
     504 the following new item:

``505. Medal of honor: presentation of Medal of Honor Flag.''.
       (d) The President shall provide for the presentation of the 
     Medal of Honor Flag designated under section 903 of title 36, 
     United States Code, as added by subsection (b), to each 
     person awarded the Medal of Honor before the date of 
     enactment of this Act who is living as of that date. Such 
     presentation shall be made as expeditiously as possible after 
     the date of the designation of the Medal of Honor Flag by the 
     Secretary of Defense under such section.
                                  ____



                           amendment no. 4422

 (Purpose: To set aside $6,000,000 of operation and maintenance, Navy, 
 funds for Servicewide Communications for the Critical Infrastructure 
                          Protection Program)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the total amount appropriated by title II 
     under the heading ``Operation and Maintenance, Navy'', for 
     Servicewide Communications, $6,000,000 may be used for the 
     Critical Infrastructure Protection Program.
                                  ____



                           amendment no. 4423

 (Purpose: To make available from amounts available for the Air Force 
   for operation and maintenance $500,000 for a contribution to the 
 renovation of Hangar Building 101 at former Griffiss Air Force Base, 
New York, in order to facilitate the reuse of the building for economic 
                         development purposes)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title II under the 
     heading ``Operation and Maintenance, Air Force'', up to 
     $500,000 may be available for a contribution to the Griffiss 
     Local Development Corporation (GLDC) for the renovation of 
     Hangar Building 101 at former Griffiss Air Force Base, New 
     York, in order to facilitate the reuse of the building for 
     economic development purposes. Such renovation may include a 
     new roof, building systems, fixtures, and lease-hold 
     improvements of the building.
                                  ____



                           amendment no. 4424

  (Purpose: To make available from amounts available for Defense-Wide 
    research, development, test, and evaluation $5,000,000 for the 
                 Maintainers Remote Logistics Network)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title IV under the 
     heading ``Research, Development, Test, and Evaluation, 
     Defense-Wide'', up to $5,000,000 may be available for the 
     Maintainers Remote Logistics Network.
                                  ____



                           amendment no. 4425

  (Purpose: To make available from amounts available for the Navy for 
    research, development, test, and evaluation $5,000,000 for the 
      Integrated Chemical Biological Warfare Agent Detector Chip)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title IV under the 
     heading ``Research, Development, Test, and Evaluation, 
     Navy'', up to $5,000,000 may be available for the Integrated 
     Chemical Biological Warfare Agent Detector Chip.
                                  ____



                           amendment no. 4426

       At the appropriate place in the bill insert the following:
       Of the funds provided under the heading ``Research and 
     Development, Air Force,'' up to $1,000,000 may be made 
     available for research on nanoenergetic materials.
                                  ____



                           amendment no. 4427

    (Purpose: To make available from amounts available for the Army 
    National Guard for operation and maintenance $2,000,000 for the 
              Communicator emergency notification system)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title II under the 
     heading ``Operation and

[[Page S7702]]

     Maintenance, Army National Guard'', up to $2,000,000 may be 
     available for the Communicator emergency notification system.
                                  ____



                           amendment no. 4428

  (Purpose: To authorize a grant of $5,000,000 to the National D-Day 
                                Museum)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. The Secretary of Defense may, using amounts 
     appropriated or otherwise made available by this Act, make a 
     grant to the National D-Day Museum in the amount of 
     $5,000,000.
                                  ____



                           amendment no. 4429

  (Purpose: To make available from amounts available for the Navy for 
 research, development, test, and evaluation $6,000,000 for the Center 
                      for Advanced Power Systems)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title IV under the 
     heading ``Research, Development, Test, and Evaluation, 
     Navy'', up to $6,000,000 may be available for the Center for 
     Advanced Power Systems.
                                  ____



                           Amendment No. 4430

   (Purpose: To allow the Department of Defense to obligate funds to 
 secure its sensitive and classified materials to further enhance the 
                national security of the United States)

       At the appropriate place in the bill insert the following 
     section:
       Sec.  . Out of the Operation and Maintenance, Defense-Wide, 
     funds appropriated, $1,000,000 may be available to continue 
     the Department of Defense's internal security-container lock 
     retrofit program for purchasing additional security locks 
     which meet federal specification FF-L-2740A.
                                  ____



                           amendment no. 4431

  (Purpose: To make available from the National Defense Sealift Fund 
  $10,000,000 for implementing the recommendations resulting from the 
Navy's Non-Self Deployable Watercraft (NDSW) Study and the Joint Chiefs 
 of Staff Focused Logistics Study to determine the requirements of the 
   Navy for providing lift support for mine warfare ships and other 
                                vessels)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title V under the 
     heading ``National Defense Sealift Fund'', up to $10,000,000 
     may be available for implementing the recommendations 
     resulting from the Navy's Non-Self Deployable Watercraft 
     (NDSW) Study and the Joint Chiefs of Staff Focused Logistics 
     Study, which are to determine the requirements of the Navy 
     for providing lift support for mine warfare ships and other 
     vessels.


                           amendment no. 4432

  (Purpose: To set aside from amounts available for the Air National 
  Guard for operation and maintenance $350,000 for medical equipment)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title II under the 
     heading ``Operation and Maintenance, Air National Guard'', up 
     to $350,000 may be available for medical equipment.

                           amendment no. 4433

  (Purpose: To make available from amounts available for the Navy for 
research, development, test, and evaluation $18,000,000 for the Sealion 
                   Technology Demonstration program)

       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Of the amount appropriated by title IV under the 
     heading ``Research, Development, Test, and Evaluation, Navy'' 
     and available for Ship Concept Advanced Design up to 
     $18,000,000 may be available for the Sealion Technology 
     Demonstration program for the purchase, test, and evaluation 
     of a Sealion craft with modular capability.
                                  ____



                           amendment no. 4434

(Purpose: To provide for standardized digitizing, conversion, indexing, 
and formatting of captured foreign documentary materials, and for other 
                               purposes)

       At the appropriate place in Title VIII, insert the 
     following:
       ``Sec.  . Of the funds made available in this Act under the 
     heading `Research, Development, Test and Evaluation, Defense-
     Wide', up to $3,000,000 may be made available to digitize, 
     convert, index, and format captured foreign documentary 
     materials (including legacy materials) into a standard, 
     usable format, to enable the timely analysis and use of 
     mission critical data by analytical and warfighter personnel.

  Mr. STEVENS. Mr. President, I move to reconsider that action.
  Mr. BYRD. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Indiana is recognized.


                           Amendment No. 4435

  (Purpose: To authorize the waiver of the prohibition on the use of 
  Cooperative Threat Reduction funds for chemical weapons destruction)

  Mr. LUGAR. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from Indiana [Mr. LUGAR], for himself, Mr. 
     Biden, Mr. Domenici, Mr. Hagel, Mr. Graham, Mr. Levin, Mr. 
     Dodd, and Mr. McCain, proposes an amendment numbered 4435:
       On page 223, between lines 20 and 21, insert the following:
       Sec. 8124. Section 1305 of the National Defense 
     Authorization Act for Fiscal Year 2000 (Public Law 106-65; 22 
     U.S.C. 5952 note) is amended--
       (1) by inserting ``(a) Limitation.--'' before ``No fiscal 
     year''; and
       (2) by adding at the end the following new subsection:
       ``(b) Waiver.--(1) The limitation in subsection (a) shall 
     not apply to funds appropriated for Cooperative Threat 
     Reduction programs for a fiscal year if the President submits 
     to the Speaker of the House of Representatives and the 
     President pro tempore of the Senate a written certification 
     that the waiver of the limitation in such fiscal year is 
     important to the national security of the United States.
       ``(2) A certification under paragraph (1) for fiscal year 
     2003 shall cover funds appropriated for Cooperative Threat 
     Reduction programs for that fiscal year and for fiscal years 
     2000, 2001, and 2002.
       ``(3) A certification under paragraph (1) shall include a 
     full and complete justification for the waiver of the 
     limitation in subsection (a) for the fiscal year covered by 
     the certification.''.
  The PRESIDING OFFICER. The Senator from Indiana is recognized.
  Mr. LUGAR. Mr. President, during the Memorial Day recess, it was the 
privilege of this Senator to travel again with my colleague and 
partner, Senator Sam Nunn, and with Representative John Spratt and 
Representative Christopher Shays to a number of sites in Russia. One of 
particular interest to us was the chemical weapons facility at 
Shchuch'ye, which is approximately 1,200 miles east of Moscow. That 
particular installation has been a part of the Cooperative Threat 
Reduction Program insofar as the United States has worked cooperatively 
with Russia to put extensive fencing and various other security around 
what amounts to 1.9 million weapon shells--that is, chemical weapon 
shells--filled with nerve gas, saran, and VX.
  I had visited the sites 18 months before, and this was a return to 
envision precisely these 85-millimeter shells, these small shells that 
you can put in a small suitcase. Indeed, I have an illustration of 
this, Mr. President.
  Here is the small suitcase, and here is the Senator from Indiana, and 
a Russian major took the picture.
  As we discuss proliferation, this intersection between terrorists and 
weapons of mass destruction, envision, if you will, that there are 1.9 
million more of these 85-millimeter shells. The Russians on the site 
estimate if one shell was put into a stadium of 100,000 people, 
everybody would die. It has that degree of efficacy and it has this 
degree of portability.
  This is why the United States takes seriously the penning up of the 
chemical weapons of Russia. Russia has declared 40,000 metric tons. 
One-seventh of them are at Shchuch'ye, in this condition. Also at 
Shchuch'ye is our greatest hope in working with the Russians to destroy 
the chemical weapons. They are in the process of building a plant that 
will require U.S. money to complete. The German Bundesbank has 
appropriated money this year for this plant, and so has Great Britain, 
Canada, and Norway, in modest amounts, to join us.
  The Russian Duma has appropriated substantially more money for this 
purpose. Why? Because Russia and the United States and many other 
nations ratified the Chemical Weapons Convention. We did so 5 years 
ago. The Russians did so a short time thereafter. It is a 10-year 
treaty. We are almost at halftime and not the first pound of chemical 
weapons has, in fact, been destroyed because there was not the money, 
not the technical organization, until at least this present point.
  Mr. President, when I came back from Russia, Senator Biden, the 
chairman of the Foreign Relations Committee, and I were asked to come 
to the White House to visit with the President and the Vice President, 
Condoleezza Rice, and Andrew Card. Six of us sat there and talked about 
the new treaty between the United States and Russia, on which we have 
had testimony at some of our committee hearings. The point made by the 
President, Secretary Powell, and Secretary Rumsfeld is that we have a 
turn

[[Page S7703]]

of the road with Russia. We are not naive with regard to all of the 
problems with Russia, but the President is asking for ratification of 
this new treaty that would substantially reduce nuclear warheads in the 
next 10 years.
  I took the opportunity to point out to the President of the United 
States that it is one thing to ratify a treaty, and to negotiate one to 
begin with, and it is quite another to see actual results from the 
treaty. We are working in this country to reduce our chemical weapons, 
and we hope to do so in the 10 years. We have pledged to do so under 
the treaty. The Russians have a whole lot more of them. My point is 
that there has not been a reduction there. In this case, it is not a 
lack of good will, it is a lack of money, lack of technical support.

  In the midst of all of this, the dilemma for President Bush--and he 
raised this during our face-to-face meeting--is: What can I do about 
it? With the other Nunn-Lugar programs, the Cooperative Threat 
Reduction Programs, the President could certify that the conditions 
imposed by Congress on the Nunn-Lugar Act are being met. In the past 10 
years, such certification has come each year. This year, it did not.
  Ms. Rice and the Vice President advised the President that the 
administration has sought authorization to waive the certification 
requirement so that the money could be spent. In effect, no new 
programs under cooperative threat reduction have occurred for 10 months 
of this fiscal year due to lack of certification and lack of waiver.
  Now, in the supplemental appropriations bill we passed the other 
evening, as this becomes law--at least for the last 2 months of this 
year--our Government can actively move to destroy weapons of mass 
destruction with new contracts--nuclear, chemical, and biological--for 
2 months. In a conference now on the authorization of the Defense 
Department, there is a debate as to how long a waiver might last. The 
President has asked for permanent authority, and the Senate has offered 
that in its bill. The House has offered, as I understand it, a 3-year 
time for the President to waive this certification. But when we come to 
chemical weapons, the President apparently has no ability to waive 
anything, or to certify anything.
  An additional six requirements are posed, and they have not been met, 
in the judgment at least of those in the administration who were 
involved in these deliberations. So as a result, nothing is happening 
with regard to American money or the destruction of these weapons.
  Following my meeting with the President, I wrote a letter to 
Condoleezza Rice, and I stated everything that I have indicated in 
these remarks today. I appreciate the fact that she has responded and 
indicated to me that:
  The President has repeatedly emphasized the importance of cooperative 
threat reduction in his strategy to reduce and prevent the 
proliferation of weapons of mass destruction, delivery means, and the 
materials and technology to develop them. Because of the program's 
value to the nation's security, the President has asked the Congress to 
grant him permanent authority to waive CTR certification requirements 
if he determines that is in the national interest. We strongly support 
the waiver provision of the Senate version of the FY2003 Defense 
Reauthorization bill, and have urged the conferees to adopt it.
  Our serious concerns about Russian chemical and biological weapons 
activities make it difficult for the Secretary of State to certify 
Russia as eligible for CTR assistance. Waiver authority will enable the 
Administration both to pursue essential CTR weapons reduction and 
nonproliferation projects, and to work with Russia to resolve our 
concerns about its chemical and biological weapons activities.
  Parenthetically, I might say that one of the concerns is the four 
installations, allegedly with biological weapons or preparations for 
them, in Russia to which none of us have had access.
  It is my hope in the coming recess to enter two of these and at least 
clear away whatever may be the dilemmas of those two situations and 
maybe in the fullness of time to make the other two.
  I have been permitted to go into a number of biological situations, 
in addition to the full gamut of the chemical ones, largely because 
there is a sense of cooperative threat reduction.
  The Russians themselves appreciate that if there are accidents, 
theft, or a breakdown of the system, Russians will be killed first and 
in large numbers. This is a grim and serious business which ought not 
be a part of parliamentary byplay and that has been the dilemma this 
year.
  Condoleezza Rice continues:

       Similarly, we welcome your proposal of a waiver of the 
     legislative conditions on CTR assistance to construct a nerve 
     agent destruction facility at Shchuch'ye. As you point out, 
     the small, transportable munitions at Shchuch'ye pose a real 
     proliferation risk. The President underscored the importance 
     of assistance to Russian chemical weapons destruction in his 
     December speech at the Citadel and most recently in the G8 
     Leaders announcement of Global Partnership Against the Spread 
     of Weapons and Materials of Mass Destruction.
       We have been working hard with Russia to meet the 
     legislative conditions on the Shchuch'ye project, and have 
     made considerable progress. Nevertheless, it may be difficult 
     to assess with confidence that the information we have from 
     Russia on its chemical weapons stockpile is full and 
     accurate. At a minimum, the information-gathering process 
     will be very time-consuming, but the proliferation threat 
     gives us no time to delay. Indeed, the Administration 
     concluded after its thorough review of nonproliferation 
     assistance to Russia that the destruction project at 
     Shchuch'ye should be accelerated.
       Therefore, the Administration has urged the conferees to 
     the FY2003 Defense Authorization bill to provide the 
     President the authority to waive the conditions on CTR 
     chemical weapons destruction assistance, if he determines 
     that to do so is in the national interest.

  Given this letter, Mr. President, I have offered the amendment that 
is at the desk. It achieves that objective of giving the President 
waiver authority that he does not have with regard to these chemical 
weapons. In due course, the conference committee and the armed services 
will come to a decision as to whether the request by the President for 
permanent waiver authority on all Nunn-Lugar programs is to be granted 
to the President.
  In a commonsense way, I pray that will be the case. I cannot imagine 
that it is in the national interest for us to deliberately, having 
authorized money for Nunn-Lugar, having appropriated money for the 
Nunn-Lugar program, to have it all tied up in terms of new projects for 
10 months.
  My point to the President has been: Mr. President, that could very 
well be the fate of a nuclear treaty with regard to warheads. Why do we 
believe that somehow that might be exempt because, clearly, American 
money is going to be involved if we are to make progress in seeing 
those warheads reduced.
  The Russians may want to reduce the warheads to 2,200 or 1,700 or 
whatever figure is in their national interest, but they clearly do not 
have the means to do so.
  Some Americans, perhaps even Members of this body, may say: Well, 
that is the Russian's problem; they made their bed; let them sleep in 
it. But it is our problem because those warheads are aimed at us. The 
nerve gas at Shchuch'ye will not be aimed at us if it is destroyed, and 
it can be destroyed during this historical window of opportunity.
  Therefore, I earnestly ask for support of the Senate in adopting this 
amendment so it is absolutely clear that the President has the 
authority to give the waivers so that we may move ahead on something I 
think is vital not only to our national interest but in the war against 
terrorism is imperative. My feeling always has been if the Senate had 
any idea of this general problem, there would be a speedy resolution.
  The purpose of my speech tonight is to make sure this Senate does 
understand and makes a commitment to destroy these weapons as rapidly 
as possible, given the storage and given the destruction facility.
  I add finally that for those who are at all wondering how they 
destroy the stockpile, this is the weapon in the suitcase. It would be 
taken down to a vacuum space. Two holes would be drilled in the bottom 
of the weapon. The material would be drained out and put in a chemical 
formulation which finally renders that toxic material without 
consequence. This has to happen 1.9 million times. It will take 6 years 
if we begin now.
  I hope it will begin now. My plea is for immediate action on the 
amendment which I hope will be favorable.

[[Page S7704]]

  I ask unanimous consent that a letter addressed to Dr. Rice dated 
July 12, 2002, and her response to me dated July 30, 2002, be printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                Congress of the United States,

                                    Washington, DC, July 12, 2002.
     Dr. Condoleezza Rice,
     Assistant to the President for National Security Affairs,
     The White House, Washington, DC.
       Dear Dr. Rice: We write out of great concern over the 
     current status of various projects in the Nunn-Lugar 
     Cooperative Threat Reduction (CTR) Program at the Department 
     of Defense. Final disposition has yet to be reached on an 
     Administration request for permanent annual waiver authority 
     relative to legislatively-imposed conditions requiring 
     certification by the Executive branch in order to permit 
     elements of the program to go forward. That will remain 
     dependent on the outcome of a conference between the two 
     houses of Congress on the FY 2003 Defense Authorization bill.
       Despite the Administration's difficulties in attempting to 
     secure permanent waiver authority from the Congress in order 
     to proceed with the overall Nunn-Lugar/CTR program, we are 
     encouraged that the Administration has continued to seek the 
     waiver to the certification requirements. The same cannot be 
     said with respect to the Administration's approach to the 
     Nunn-Lugar/CTR chemical weapons elimination project in 
     Russia. Congressional conditions--above and beyond those that 
     apply to CTR in general--continue to stymie and delay 
     construction of a chemical weapons destruction facility at 
     Shchuchye, Russia, that is decidedly in the national security 
     interests of the United States. A swift solution to the 
     current stalemate is only possible with strong Administration 
     leadership.
       The project at Shchuchye was reviewed by the Administration 
     as part of its non-proliferation program review last year. In 
     a Fact Sheet released December 27, 2001, the White House 
     stated that: ``The Department of Defense will seek to 
     accelerate the Cooperative Threat Reduction project to 
     construct a chemical weapons destruction facility at 
     Shchuchye, to enable its earlier completion at no increased 
     expense. We welcome the contributions that friends and allies 
     have made to this project thus far, and will work for their 
     enhancement.'' Unfortunately, little progress has been made 
     in this direction.
       Several of us recently visited Shchuchye and have come to 
     the conclusion that the U.S. needs to move forward 
     expeditiously if we are to eliminate this critical 
     proliferation threat. The depot houses nearly 2,000,000 
     modern ground-launched chemical weapons. These artillery 
     shells and SCUD missile warheads are in excellent working 
     condition and many are small and easily transportable and 
     could be deadly in the hands of terrorists, religious sects, 
     or para-military units. We were told by our Russian hosts 
     that the weapons stored at Shchuchye could kill the world's 
     population some twenty times over. The size and lethality of 
     the weapons at Shchuchye are clearly a direct proliferation 
     threat to the American people.
       Last year, the House of Representatives attached six 
     conditions to the Shchuchye project. Of the original six 
     conditions, four can be met but two continue to be 
     problematic. The remaining conditions require the Secretary 
     of Defense to certify that the information provided by Russia 
     on the size of its chemical weapons stockpile is full and 
     accurate and that Russia has developed a practical plan for 
     destroying its stockpile of nerve agents. We share the goals 
     associated with these conditions, but these same concerns 
     prompted the Administration to seek a waiver to the larger 
     certification requirements required under the Nunn-Lugar 
     program. Unfortunately, without a similar White House request 
     for a waiver at Shchuchye, it is unlikely that the Pentagon 
     will be able to begin construction of a facility to destroy 
     these weapons in the foreseeable future.
       We urge the Administration to weigh in with conferees to 
     the FY 2003 Defense Authorization bill to include a national 
     security waiver of congressionally-imposed conditions on the 
     spending of funds authorized for chemical weapons elimination 
     under the Nunn-Lugar program. As the war on terrorism 
     continues we must ensure that terrorists do not intersect 
     with weapons of mass destruction. Failure to begin 
     destruction of the chemical weapons arsenal at Shchuchye 
     would leave these dangerous, highly portable weapons in an 
     unsafe and insecure location and vulnerable to proliferation. 
     Construction could start tomorrow if Congress were to embrace 
     the proper policy prescription.
       The Administration's plans to speed up implementation of 
     this important Nunn-Lugar project cannot coexist with the 
     current Congressional conditions on the program. We urge you 
     to provide vitally needed leadership to permit the Pentagon 
     to begin dismantlement efforts. Without strong White House 
     leadership we fear that progress will again be stymied and 
     U.S. national security interests will suffer.
       We look forward to discussing this with you in the near 
     future.
           Sincerely,
         Richard G. Lugar, U.S. Senator; Joseph R. Biden Jr., U.S. 
           Senator; Chris Shays, U.S. Representative; John Spratt, 
           U.S. Representative; Pete Domenici, U.S. Senator; Jeff 
           Bingaman, U.S. Senator; Ellen Taushcher, U.S. 
           Representative; Bob Graham, U.S. Senator; Chuck Hagel, 
           U.S. Senator; Vic Snyder, U.S. Representative.
                                  ____



                                              The White House,

                                        Washington, July 30, 2002.
     Hon. Richard G. Lugar,
     U.S. Senate, Washington, DC.
       Dear Senator Lugar: Thank you for your letter on the 
     Department of Defense Cooperative Threat Reduction (CTR) 
     program.
       The President has repeatedly emphasized the importance of 
     CTR in his strategy to reduce and prevent the proliferation 
     of weapons of mass destruction, delivery means, and the 
     materials and technology to develop them. Because of the 
     program's value to the nation's security, the President has 
     asked the Congress to grant him permanent authority to waive 
     CTR certification requirements if he determines that is in 
     the national interest. We strongly support the waiver 
     provision in the Senate version of the FY2003 Defense 
     Authorization bill, and have urged the conferees to adopt it.
       Our serious concerns about Russian chemical and biological 
     weapons activities make it difficult for the Secretary of 
     State to certify Russia as eligible for CTR assistance. 
     Waiver authority will enable the Administration both to 
     pursue essential CTR weapons reduction and nonproliferation 
     projects, and to work with Russia to resolve our concerns 
     about its chemical and biological weapons activities.
       Similarly, we welcome your proposal for a waiver of the 
     legislative conditions on CTR assistance to construct a nerve 
     agent destruction facility at Shchuch'ye. As you point out, 
     the small, transportable munitions at Shchuch'ye pose a real 
     proliferation risk. The President underscored the importance 
     of assistance to Russian chemical weapons destruction in his 
     December speech at the Citadel and most recently in the G8 
     Leaders announcement of the Global Partnership Against the 
     Spread of Weapons and Materials of Mass Destruction.
       We have been working hard with Russia to meet the 
     legislative conditions on the Shchuch'ye project, and have 
     made considerable progress. Nevertheless, it may be difficult 
     to assess with confidence that the information we have from 
     Russia on its chemical weapons stockpile is full and 
     accurate. At a minimum, the information-gathering process 
     will be very time-consuming, but the proliferation threat 
     gives us no time to delay. Indeed, the Administration 
     concluded after its thorough review of nonproliferation 
     assistance to Russia that the destruction project at 
     Shchuch'ye should be accelerated.
       Therefore, the Administration has urged the conferees to 
     the FY2003 Defense Authorization bill to provide the 
     President the authority to waive the conditions on CTR 
     chemical weapons destruction assistance, if he determines 
     that to do so is in the national interest.
           Sincerely,
                                                 Condoleezza Rice,
     Assistance to the President for National Security Affairs.
                                  ____


  U.S. Senator Carl Levin (D-MI) Holds Hearing On Nuclear Treaty With 
 Russia, July 25, 2002, Senate Armed Services Committee, Washington, DC

       Levin: My final question. Secretary Rumsfeld, the 
     Cooperative Threat Reduction Program is coming to a halt 
     because of the inability to make the necessary 
     certifications. The Senate bill that's in conference contains 
     the legislative authority that the administration requested 
     which is permanent authority for the president to grant an 
     annual wavier of the prerequisites in the Freedom Support Act 
     and the Cooperative Threat Reduction Act. The House bill 
     contains authority to grant waivers for three years. I assume 
     that you support the administration positions relative to 
     permanent authority, and so, I won't ask you that. But if you 
     disagree with it, perhaps in your answer to the question I'm 
     going to ask you, you could let me know that, too. But here's 
     the issue. The permanent authority requested by the 
     administration to grant annual waivers of the prerequisites 
     to Implementation of the Cooperative Threats Reduction 
     Program does not include an ability to waive the special 
     prerequisites for the Russian chemical weapons destruction 
     program being carried out under the CTR program. President 
     Bush said that not only did he support this important effort 
     to destroy the Russian chemical weapons destruction program, 
     he actually wanted to accelerate it. But there's no authority 
     to waive those special prerequisites for the chemical 
     destruction, then that program is going to be shut down. Will 
     you be asking for waiver authority for the special 
     prerequisites for the Russian chemical weapons destruction 
     program?
       Rumsfeld: The administration either has or will be asking 
     for that waiver authority with respect to the chemical weapon 
     destruction program----
       Levin: Do you support that request?
       Rumsfeld: Indeed, I do.
       Levin: Thank you. General, you support that, too?
       Myers: Yes sir.
       Levin: Thank you very much.
  The PRESIDING OFFICER (Mr. Corzine). The Senator from Connecticut.

[[Page S7705]]

  Mr. DODD. Mr. President, I ask unanimous consent to be added as a 
cosponsor to the amendment of the distinguished Senator.
  Mr. LUGAR. I will be delighted.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. Mr. President, I commend my colleague from Indiana and 
thank him and our former colleague, Senator Nunn, whom he has mentioned 
on several occasions during his remarks this evening. These two 
individuals have made a significant contribution to the improved 
environment in which the world finds itself today, with all of its 
problems. Had it not been for the efforts of Senator Nunn and Senator 
Lugar over the years, we would not find ourselves in the position we 
are today to significantly reduce the kinds of threats the Senator from 
Indiana just highlighted in his remarks.
  I am confident this amendment will be overwhelmingly supported. It 
should be. My cosponsorship is not a gratuitous act, but I want to be 
identified with the substance of his remarks and, more importantly, the 
substance of this amendment.
  We had some testimony this morning, in fact, before the Senate 
Committee on Foreign Relations in talking about Iraq. These are very 
fine hearings that the chairman of the committee, Senator Biden, and 
Senator Lugar have cosponsored to give us a wonderful opportunity to 
consider what options we have with regard to Iraq.
  I do not want to dwell on that except to point out that Ambassador 
Butler this morning, when talking about various options and what we 
ought to consider and specifically talking about the issue of 
containment and whether we have exhausted the containment approach, 
questioned himself as to whether we had. But he said one thing we need 
to do, if anything at all, is to work more closely with Russia because 
they could play a very important role.
  What the Senator from Indiana is doing, not only with this amendment 
in the short term, is creating at least the possibility of that 
cooperation which may be essential in the months and years ahead.
  It is a staggering statistic. I do not know if my colleagues were 
listening carefully. Over the next 6 years, I presume working 5 or 6 
days a week, 10- or 12-hour days--that is how long it will take to 
eliminate this incredible risk. The idea that we would be prohibited 
from doing so because we deny the President waiver authority because of 
an existing parliamentary situation or treaties that require some prior 
action I think would be a great missed opportunity.
  I commend the Senator from Indiana immensely for his efforts in this 
regard, and I thank Senator Nunn as well for his previous work here and 
his continuing work. I wish to associate myself in this effort. This 
may be one of the most important things we will do in this bill, and I 
commend the Senator for offering the amendment.
  The PRESIDING OFFICER. The Senator from Indiana.
  Mr. LUGAR. Mr. President, I thank the distinguished Senator from 
Connecticut for his cosponsorship.
  Cosponsoring this amendment are the chairman of the Foreign Relations 
Committee, Mr. Biden; Mr. Domenici; Mr. Hagel; Mr. Graham; Mr. Levin, 
chairman of the Armed Services Committee; Mr. Dodd; and I am pleased to 
add my colleague from Arizona, Mr. McCain.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Hawaii.
  Mr. INOUYE. We are prepared to accept this amendment and take it to 
conference.
  The PRESIDING OFFICER. Is there further debate on the amendment?
  If not, the question is on agreeing to amendment No. 4435.
  The amendment (No. 4435) was agreed to.
  The PRESIDING OFFICER. The Senator from Arizona.


                           Amendment No. 4443

  Mr. McCAIN. Mr. President, I have a couple of amendments the managers 
have accepted, and I have another amendment that would be the subject 
of debate. I send those two amendments that I think are agreed to, to 
the desk at this time and ask for their immediate consideration, either 
separately or en bloc. The first amendment I would request be called up 
would be amendment No. 4443.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Arizona [Mr. McCain] proposes an amendment 
     numbered 4443.

  The amendment is as follows:

  (Purpose: To remove the waiting period in the limitation on use of 
    funds for conversion of the 939th Combat Search and Rescue Wing)

       Beginning on page 221, line 24, strike ``60 days after''.
  Mr. McCAIN. Mr. President, the first amendment would remove the 
reporting period required for the positioning of UH-60s and would allow 
that the report be submitted at any time. It is largely technical in 
nature.
  The PRESIDING OFFICER. Is there further debate on the amendment?
  If not, the question is on agreeing to amendment No. 4443.
  The amendment (No. 4443) was agreed to.

  

                          ____________________