[Congressional Record Volume 152, Number 84 (Monday, June 26, 2006)]
[Senate]
[Pages S6468-S6471]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ENERGY AND HEALTH CARE
Mr. WYDEN. Mr. President, with the Senate heading for the break for
the Fourth of July recess, obviously, there will not be many more days
left in this year's schedule. I am going to spend
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some time on the floor in the days ahead focusing on those areas where
there is significant bipartisan support for making a real difference
for the American people, especially on those key domestic issues of
energy and health care, two areas I know the Presiding Officer, the
distinguished Senator from North Carolina, cares a great deal about.
For example, on the energy front, today, I and Senator Kyl and
Senator Snowe and Senator Lieberman sent a letter to the distinguished
majority leader, Senator Frist, asking that we have an opportunity to
debate how the Government can save between $20 billion and $80 billion
on an energy program that is totally out of control. It involves the
Federal Government's oil and natural gas royalty program.
It is a program that began at a time when oil was somewhere in the
vicinity of $20 a barrel. It has been a bipartisan concern of Senators
that it makes no sense to spend billions and billions of dollars
subsidizing the price of oil when it is at record levels.
I spent, as you know, Mr. President, about 5 hours on the floor of
the U.S. Senate discussing this issue a few weeks ago, and I certainly
have no intention of duplicating that this afternoon. But I do think it
is important to zero in on those issues that have bipartisan support,
and I want to describe what has happened in the Senate and in the other
body since I and Senator Kyl talked about this program a number of
weeks ago.
After we discussed it for those many hours on the floor of the U.S.
Senate, on May 17 the House of Representatives voted on a measure that
was virtually identical to the final Wyden-Kyl amendment. Two-hundred
and fifty Members of the House of Representatives, with regard to this
issue, after a lengthy debate, voted to address a mistake that has been
pointed out by Senators of both political parties here on this floor.
So my hope is--and this is the point of our bipartisan letter to
Senator Frist today--we can get an opportunity for a real debate on
this issue on the floor of the U.S. Senate before the Senate breaks for
the August recess.
It is one thing to talk about subsidies at a time, for example, when
the price of oil is low, when the oil sector is hurting, when they are
having difficulty getting the adequate dollars together for the
investments that are needed in this vital part of our economy. But
certainly that is not the case today. Today we are talking about record
profits, we are talking about record prices, and we certainly do not
need record subsidies.
I and Senator Kyl would like a chance to put this issue before the
entire U.S. Senate. On our letter today to the majority leader, Senator
Snowe and Senator Lieberman--two Members who have been very involved in
these issues for a number of years as well--are joining us.
I also point out the mistakes in this program are bipartisan.
Certainly, there were mistakes made during the Clinton administration
when there was a failure to address what is called the threshold issue
to ensure you do not subsidize these oil companies at a time when
profits are extremely high and you do not need these incentives. So the
Clinton administration mangled the job before President Bush and his
team took over. But certainly the problem was compounded by Gale
Norton, who was then Secretary of the Interior, who insisted on raising
the subsidies even more administratively.
And then, as I talked about on the floor of the Senate when the
Congress passed the energy bill as part of this session, the deal was
sweetened even more. Again, virtually no independent expert thought the
subsidies were needed. When I asked the oil company executives, who
came before the Energy Committee, on which the Presiding Officer, the
distinguished Senator from North Carolina, and I both serve, the
executives, to a person, said: We do not need these subsidies at a time
of record prices and record profits.
So the Congress is behind the American people. Frankly, the Congress
is lagging behind even what the oil executives have said they could
live with. At a time when the House of Representatives--more than 250
in number--has voted to cut these subsidies, the Senate should not be
dawdling on this issue any longer.
We are talking about substantial sums of money. The General
Accounting Office has said it is in the vicinity of $20 billion. There
is litigation underway now. If the litigation is successful, the bill
to the Government could be in the vicinity of $80 billion. That is a
substantial amount of money to be frittering away now when there are
all these pressing needs here at home and for our country.
So given that I am going to be talking in the days ahead about issues
where there is significant bipartisan support, specifically focusing on
these key domestic issues of health care and energy, I start today by
making a unanimous consent request that the letter that I, Senator Kyl,
Senator Lieberman, and Senator Snowe have sent to Senator Frist be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
U.S. Senate,
Washington, DC, June 26, 2006.
Hon. Bill Frist,
Majority Leader, U.S. Senate,
Washington, DC.
Dear Senator Frist: Serious concerns have arisen regarding
the implementation of the federal government's oil and
natural gas royalty program. Recent news reports and the
administration's own statements suggest that the government
may be unable to collect billions in royalties from certain
leases of federal land and waters. With oil and gas prices at
historic levels, there is no good reason for royalty relief
incentives.
In an effort to promote the exploration and production of
natural gas and crude oil in deep water, the Deep Water
Royalty Relief Act of 1995 implemented a royalty-relief
program that relieves eligible leases from paying royalties
on defined amounts of deep-water production. This would be
accomplished by allowing the Secretary of the Interior and
the oil and gas companies to enter into leases with a defined
volume suspension and price threshold. This incentive was
intended to help companies that undertook these investments
in particularly highcost, high-risk areas to be able to
recover their capital investment before having to pay
royalties on their gross revenues. It came at a time when oil
and gas prices were low and the interest in deep water
drilling was lacking. At that time, the program was needed to
encourage production and it helped achieve that goal. The
American Petroleum Institute estimates that since 1996,
natural gas production is up 407 percent and oil 386 percent.
However, during 1998 and 1999, price thresholds were not
included in terms of the leases, thereby allowing companies
to recoup their capital investments long before the
expiration of volume suspension. The absence of price
thresholds in these leases allows companies to benefit both
from both high market prices and volume suspensions. The
Mineral Management Service has said the failure to include
price thresholds was not intentional, but a costly mistake--
and one that must be corrected with some help from Congress.
On May 17, the House of Representatives during
consideration of the Fiscal Year 2007 Interior Appropriations
Bill debated and voted 252-165 to address this mistake. We do
not necessarily believe the House proposal is the answer, but
we should have an opportunity in the Senate to take up the
issue. We want to correct the error by requiring the federal
government to add price thresholds to all leases including
those issued in 1998 and 1999.
We ask that you schedule an up-or-down vote on the issue at
the earliest opportunity and no later than the August recess.
Thank you for your prompt consideration of our request.
Sincerely,
Ron Wyden.
Joseph I. Lieberman.
Jon Kyl.
Olympia Snowe.
Mr. WYDEN. It is the hope of the bipartisan group of Senators that
have followed this issue that this program, run by the Minerals
Management Service, can be corrected. These are costly, costly mistakes
involving billions of dollars. The Presiding Officer, the Senator from
North Carolina, has been a great advocate of renewable energy.
For example, think what you could do if you took just a fraction of
the money that is being wasted on royalty relief and moved it to the
renewable energy field. You could help stimulate renewable energy
production and reduce the deficit simultaneously. So that is what the
bipartisan group of Senators want to do on this key issue.
Since I talked at some length about this a few weeks ago, I think I
will move on to the other pocketbook issue. But I do hope, with
hundreds of bills having been introduced in the Senate in both the
energy and health care areas, that as we go into these last days of the
session, the focus can be on those pieces of legislation that have
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significant bipartisan support. That is true in the case of oil royalty
relief and cutting those needless subsidies. It is also true with
respect to prescription drugs, and I will wrap up with a few comments
in that regard.
Mr. President, on the prescription drug issue, we saw, just a few
days ago, two reports issued, one by AARP and the other by Families
USA, indicating we have seen a very significant increase in the cost of
prescription medicine since the beginning of this year. This comes, of
course, at a time when Medicare Part D, the prescription drug program,
is just kicking in. It comes at a time, of course, when we have seen
the costs of this program skyrocket far beyond the original
projections.
It would indicate to me that some of those who said competition in
the private sector alone was going to do the job have not dealt with
the consequences of what happens when the Government does not back up
those private-sector kind of efforts. As you will recall, in the
prescription drug debate, I was one of nine on this side of the aisle
who voted for the legislation. I have got the welts on my back to show
for it.
Senator Snowe and I said then that we have to make sure the
Government isn't the only part of the prescription drug arena where
there is no opportunity to hold down the cost of medicine. Everybody
else bargains today for the cost of medicine. That is true for any
manufacturing in North Carolina. It is true in Oregon. It is true
anywhere. Nobody ties their hands behind their back when it comes to
trying to get the full value for their dollar in the health care
sector. The only one who has their hands tied behind their back is the
Federal Government when it comes to prescription medicine purchased
under the Part D Medicare Program.
My sense is that this is another area where, with significant
bipartisan support, Congress can move ahead. On the question of lifting
the restriction so that Medicare can bargain to hold down the cost of
medicine, Senator Snowe and I got 54 votes for our bipartisan proposal
to change the law. Once again, significant bipartisan support was given
for a major change that will help taxpayers and consumers.
My sense is the price increases in prescription drugs we are seeing
today is because there are few restraints on the prices that can be
charged. There are what are called PBMs, pharmaceutical benefit
managers. They have a role to play. It can be a useful one. But if we
are really going to make sure we are using all the tools to hold down
the cost of medicine, the Government ought to have authority to say, if
the private sector isn't going to give a fair shake to seniors and
taxpayers, there ought to be backup authority. The Government should be
able to say: We are going to now make it clear that there is an
opportunity to bargain and do what everybody else in America does to
hold down the cost of medicine.
The price increases we have seen in the first 3 months of this year
comprise the largest quarterly price increases in 6 years. It comes at
a time when the Medicare prescription drug program is going into
effect. The prices jumped something like four times the general
inflation rate. We are seeing, right at a key time when the Medicare
prescription drug program is getting off the ground, prices go up four
times faster than the inflation rate. We are seeing the biggest
quarterly price increases in 6 years. That makes the case for the
Congress looking at a bipartisan way to beef up opportunities to
contain the cost of prescription drug medicine.
In the Snowe-Wyden legislation which received 54 votes, we
specifically state that there can be no price controls and no uniform
formulary which would be, in effect, a backdoor Federal price control.
I know the Senator from North Carolina has been interested in the
question of what will happen to research, what will happen to
innovation. I happen to share the view of the Senator from North
Carolina that to come up with big price control regimes and Federal
arbitrary standards for the formularies that make judgments about
medicine would be a mistake. Under our legislation, we specifically say
we will lift the restriction on bargaining power so the Government will
not be the only part of the health care sector that is not trying to
get value for the dollar. But our amendment said no price controls and
no uniform, one-size-fits-all formulary that, for all practical
purposes, would be a backdoor set of price controls.
These two studies from AARP and Families USA are extremely alarming
because the theory behind the Medicare prescription drug program was
that having a variety of plans in the private sector would produce
competition, and competition would serve to hold down the cost of
medicine. Now there is concrete proof that competition alone is not
serving to be an adequate strategy for containing the cost of medicine.
That is why the bipartisan amendment Senator Snowe and I have been
pursuing since the prescription drug program went into effect several
years ago is much needed.
When you have these higher prescription drug prices, premiums seniors
have to pay almost always bump up. Let's think about what happens if
you bump up the premiums the seniors pay for Medicare Part D. One of
the things I have seen in my years of working with older people--it
goes back to my days when I was director of the Gray Panthers--is you
jack up the premiums on seniors and, as sure as the night follows the
day, you will get fewer seniors enrolling in the program.
We understand that if this program is going to be successful over the
long term, you have to get more seniors signed up. You have to get more
seniors enrolled. But what happens when you have higher drug prices as
AARP and Families USA found, will be higher premiums next year for
seniors in the Part D program. Then all of a sudden, with higher prices
and higher premiums, what will happen is fewer seniors will sign up for
the program. And without them enrolling in this program, Part D will
not be the success we all would like to it to be, especially those of
us who voted for it.
I wanted to take a few minutes today to talk about two issues: the
question of needless oil company subsidies, an effort Senator Kyl and I
have spearheaded that has significant bipartisan support for saving
taxpayers money, getting us on track for a fresh, new energy policy
that can truly make us free of our dependence on foreign oil; and this
question of prescription drug costs where, as well. There is
significant bipartisan support to put bargaining power in Medicare. The
Snowe-Wyden amendment received 54 votes the last time the Senate voted
on it. There is a real role for the Senate to play at this key time now
that it has been reported that drug prices jumped up in the first
quarter of this year just as the Medicare Part D Program was going into
effect.
Finally, we understand that on the Senate calendar there is not going
to be a time for every possible issue to be considered. In the case of
energy and health care, there are hundreds of bills in both areas, both
energy and medical services, that have been introduced by Senators of
both parties. My hope is that a handful of these issues can be moved to
the head of the queue. The real measure for consideration ought to be
significant bipartisan support.
In the areas I have talked about this afternoon, that test has been
met. The other body has already passed efforts to reduce these needless
oil subsidies, essentially passed the very thing I talked about on the
floor of the Senate for 5 hours. A majority of Senators have voted for
the effort Senator Snowe and I have spearheaded to hold down the cost
of medicine. There are opportunities, at a time when the country is
looking at the partisanship coming from Washington, DC, to bring the
Senate together around good and bipartisan legislation that addresses
the pocketbook concerns of the American people. That is why I have come
to the Chamber to talk about how we can make a difference working
together for the public.
It is my intention to come back in the weeks ahead to talk about
similar efforts that can actually be passed in the Senate before the
session wraps up and constitute the kind of good government the
American people expect from the Senate.
I yield the floor and suggest the absence of a quorum.
The ACTING PRESIDENT pro tempore. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. SPECTER. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
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The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
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