[Congressional Record (Bound Edition), Volume 152 (2006), Part 9]
[Senate]
[Pages 12527-12529]
[From the U.S. 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 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.

[[Page 12528]]

  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 
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

[[Page 12529]]

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.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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