[Congressional Record (Bound Edition), Volume 159 (2013), Part 4]
[Senate]
[Pages 5647-5663]
[From the U.S. Government Publishing Office, www.gpo.gov]




     MARKETPLACE FAIRNESS ACT OF 2013--MOTION TO PROCEED--Continued

  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. REED. Madam President, are we in regular order?
  The PRESIDING OFFICER. We are considering the motion to proceed.
  Mr. REED. Madam President, I rise today in support of the Marketplace 
Fairness Act. I am pleased to join Senators Enzi and Durbin and many of 
my colleagues in this bipartisan effort to pass this bill that will 
help small businesses in my State expand and create jobs by ending a 
tax loophole that benefits out-of-State remote sellers. I want to 
particularly commend Senator Enzi and Senator Durbin for their long-
time leadership on this issue. They have been relentless in trying to 
find an effective way to allow States to collect sales taxes on items 
that are actually delivered into their States.
  This is a huge issue in my State of Rhode Island where businesses are 
having a very difficult time competing against out-of-State retailers 
because of, frankly, the outdated rules that require shops on Main 
Street to collect taxes while their out-of-State online competition 
does not. When you go to the stores in Rhode Island you'll see that 
they are facing this with increasing frequency. And small business men 
and women are demanding help.
  When Internet commerce was in its early stages, online companies were 
basically exempted by what is now, by all accounts, an out-of-date 
Supreme Court decision, from collecting State and local sales taxes for 
sales in States where they do not have a physical presence--despite the 
fact that there was still an obligation to collect sales taxes on those 
purchases. That obligation was shifted to consumers, who are often 
unaware they have an obligation. This loophole puts Main Street 
businesses at a competitive disadvantage, hurts the ability of Rhode 
Island to keep jobs in the State, and strains State budgets all across 
the United States.
  In order to address this inequity, the bill before us today would 
give States the ability to enforce their own sales tax laws and, by so 
doing, relieve consumers of the legal burden to report to State tax 
departments the sales taxes they owe on online purchases--since they 
would be paying sales taxes as a matter of course at the time of 
purchase, just as they would in a regular store.
  Essentially it levels the playing field. If you walk into a store in 
Rhode Island and there is a sales tax charge, you would pay it. If you 
receive an item you ordered off the Internet, you would pay a sales tax 
as part of the bundled price of the item. It is what people would 
expect to do.
  The legislation would also ensure that the rules for collecting sales 
tax from out-of-State retailers are clear and consistent. States can 
enter into an already established Streamlined Sales and Use Tax 
Agreement which my State and 21 other States are party to, or States 
can adopt a set of alternative minimum simplification standards to make 
it easier for online businesses to comply with their tax laws.
  And this bill makes it easier for businesses--that choose to do 
business in a State that requires remote sellers to collect sales 
taxes--to comply with the law by providing software to help them 
calculate the sales tax.
  Furthermore, this bill exempts small businesses with less than $1 
million in gross revenue from having to collect sales taxes on remote 
sales. Those truly small businesses would not be affected by the 
legislation before us today.
  This bill does not create new taxes or increase existing taxes. 
Instead, the bill will help States and cities collect billions in 
unpaid taxes already owed, reducing the need to raise new taxes on tax-
compliant businesses and citizens. Indeed, yesterday I was with my 
Governor and he indicated that if we could pass this at the Federal 
level and allow the State of Rhode Island to collect approximately $70 
million a year, he would secure a reduction in our sales taxes which 
would benefit all the people and businesses in Rhode Island.
  This is a proposal that I think is not only necessary, it is long 
overdue. In 2012, as I have indicated, Rhode Island estimated it lost 
approximately $70 million in uncollected revenue. The revenue was 
legally owed but, because of this loophole, it went uncollected. This 
puts pressure on individuals and businesses that play by the rules. 
Indeed, if the Marketplace Fairness Act becomes law, Rhode Island has 
provisions in State law--and the Governor reiterated that yesterday--
that would help lower the sales tax from 7 percent to 6.5 percent and 
eliminate the recent extension of sales tax to clothing purchases over 
$250. This would have huge and immediate benefits to the people and 
businesses of Rhode Island.
  The other thing it could do, frankly, is it would encourage local 
businesses to hire Rhode Islanders. We are facing a 9.1-percent 
unemployment rate. We have been slowly making progress in terms of 
putting people back to work--but there is much more to be done. This 
bill would help with that recovery because one of the barriers main 
street businesses face in hiring locally is the unfair competition from 
remote sellers that do not collect sales tax. This bill corrects that.
  Now some online retailers who benefit from this unfair tax advantage 
understand the need to correct the loophole. That is why companies such 
as Amazon.com, with substantial remote sales, support this legislation. 
Governors of every political stripe recognize the undue pressure this 
tax loophole puts on their budgets, businesses, and citizens, and that 
is why the National Governors Association supports this. Ultimately, 
the Marketplace Fairness Act is about revitalizing our real economy by 
helping Main Street businesses compete against remote sellers that 
benefit from this tax loophole because these Main Street businesses 
cannot hire workers or expand if shoppers use their stores just to 
browse and then make their purchases online in order to avoid paying 
sales tax.
  Yesterday I was with a group of business leaders in Rhode Island. 
Among them were the Cardi brothers, Ron and Pete Cardi, who own a 
family furniture store. It has been in the family for generations. They 
are first-rate businessmen and first-rate community leaders. They tell 
me it is not uncommon for someone to come in the showroom, get help 
from one of their skilled sales personnel, order the furniture, have it 
shipped to their homes so they see it fits exactly right, then call up 
and have it returned to the store--and then a truck will show up a day 
or two later at the customer's house, from a remote seller with the 
same item because the remote seller doesn't collect sales tax. We 
cannot have our retailers in States such as Rhode Island simply be 
showrooms for remote sellers. That is one of the consequences of this 
loophole we have to correct. This bipartisan proposal is designed not 
only to allow States to keep or retain the tax that is owed, but also, 
in the case of Rhode Island, to allow a tax reduction; and furthermore, 
to give local businesses more incentive to hire.
  This is legislation that makes extraordinary sense in every 
dimension. I hope we can get through this debate this week and 
successfully pass this legislation. We are all encouraged by the 75 
votes this proposal received when it was made as an amendment during 
the budget debate and the 74 votes this bill received on the cloture 
motion. I am hopeful it will continue to enjoy a similar level of 
support moving forward.
  Once again, let me thank Senators Enzi and Durbin for their 
extraordinary leadership, which has helped forge this bipartisan and 
bicameral bill, and I urge my colleagues to support its passage.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Hawaii.
  Ms. HIRONO. Madam President, I join my colleague Senator Reed of

[[Page 5648]]

Rhode Island and I thank Senators Enzi and Durbin for their hard work 
on S. 743.
  I rise to speak in favor of the Marketplace Fairness Act. This 
legislation will put businesses in Hawaii on an even playing field with 
their out-of-State competitors. It does this by giving the States--not 
the Federal Government, the States--the authority to require out-of-
State merchants to collect the same taxes local merchants have to 
collect when they sell goods to customers in Hawaii. This is only fair.
  I want to be clear about what this bill does and what it does not do 
because there is some confusion about what this bill does and doesn't 
do. For example, this bill does not impose a new Federal sales tax. 
This bill does not require the States to do anything. In fact, if this 
bill becomes law, nothing would change unless a State passes its own 
legislation.
  What this bill does do is to give States that choice. It lets each 
State choose whether to level the playing field for its local 
businesses. In addition, this legislation provides a framework that 
ensures States can exercise this authority in a way that ensures 
fairness for businesses of all sizes.
  For example, it requires any State that chooses to exercise this new 
authority to streamline its sales and use taxes, and to provide free 
software to calculate these taxes to out-of-State sellers. This does 
not impose any kind of burden on these out-of-State sellers who are 
selling items to people in States such as Hawaii. This legislation 
protects small online businesses by exempting any business with less 
than $1 million of annual sales.
  The growth of the Internet has been one of the most significant 
drivers of innovation in our country's history. More and more Americans 
rely on the Internet to run their small businesses, access educational 
and health resources, keep in touch with loved ones, and for 
entertainment. Expanding fast, affordable, and secure Internet access 
is an essential building block for a strong 21st century economy.
  However, we must be careful to ensure that while we are promoting the 
economic potential of the Internet, we are also being fair to local 
businesses and entrepreneurs. These are the businesses that populate 
the Main Streets of towns all across the country, across all the 
islands in the Hawaiian chain. These are hardware stores, clothing 
stores, gift shops, and many others--many of which are small 
businesses. These are businesses that create jobs, pay taxes, and 
provide needed goods and services in our communities. In fact, in 
Hawaii, retail businesses employ nearly 25 percent of the workforce, 
about 128,000 people. In 2012, these businesses in Hawaii generated $30 
billion in sales as well as $1.2 billion in tax revenue. Many of these 
entrepreneurs do not want to just contribute economically, they want to 
contribute and do contribute to the culture and character of their 
communities.
  For example, my office received a call from the owner of Kona 
Stories, a small bookstore in Kailua-Kona, HI. Kona Stories opened in 
2006 and sells over 10,000 titles of all kinds. But Kona Stories 
doesn't just sell books, it hosts book clubs, supports local authors 
and artists, and it also helps promote other local businesses. The 
programs and meetings Kona Stories hosts focus on promoting the local 
culture and character of the community. Small shops like these are 
places that can teach visitors about the unique characteristics of our 
communities. They also help bring local people closer together around 
shared experiences and values.
  Unfortunately, these small businesses are the ones that are hurt most 
by the advantage online merchants currently have, because they do not 
collect Hawaii sales and use taxes. This makes online products appear 
cheaper because their prices do not include State taxes, even though 
these taxes are technically still owed. That is not real competition, 
it is an artificial discount that is unfair to local brick-and-mortar 
businesses and it puts businesses in Hawaii, such as Kona Stories, at a 
disadvantage. As small businesses, they have a hard enough time 
competing with the online giants that can offer lower prices even if 
they were collecting State taxes.
  In addition to allowing States to level the playing field for their 
local businesses, this bill would also provide a boost for State and 
local government by letting them collect the taxes that are already 
owed. According to a 2012 Hawaii Tax Review Commission report, fixing 
the situation and giving States such as Hawaii that option to enact 
necessary legislation would mean nearly $160 million in additional 
revenue for the State of Hawaii in 2013.
  I want to be clear. That money does not come from new taxes. It comes 
from taxes that are already owed, that are not paid. That is money that 
should be going to keep teachers in the classroom, firefighters and 
cops on the beat, and fixing our roads and bridges so we all benefit.
  Overall, the Marketplace Fairness Act is a good bill whose time has 
come. It balances the need to preserve a vibrant and innovative online 
marketplace with a need to ensure fairness for local businesses. It 
also ensures that everyone is meeting their responsibilities with 
regard to paying State and local taxes.
  That is why this legislation has such a broad range of support from 
business, government, labor organizations, big and small, from all 
across the country. In fact, my home State of Hawaii has been working 
to try to address this issue on the State level for years. We need this 
Federal legislation. Passage of this bill will finally give Hawaii the 
ability to address this disparity and put our businesses on an even 
playing field. That will be especially important to the 2,000 local 
businesses that make up the retail merchants of Hawaii.
  Madam President, I ask unanimous consent that a list of Hawaii 
national supporters be printed in the Record. There being no objection, 
the material was ordered to be printed in the Record, as follows:


           Supporters of S. 743, the Marketplace Fairness Act

       Retail Merchants of Hawaii, National Association of 
     Counties, National League of Cities, U.S. Conference of 
     Mayors, Government Finance Officers Association, National 
     Council of State Legislatures, Bipartisan Policy Center's 
     Governors Council, AFL-CIO, AFSCME, American Federation of 
     Teachers, National Education Association, American Federation 
     of Government Employees, International Association of Fire 
     Fighters, International Federation of Professional Technical 
     Engineers, International Union of Police Associations, 
     Service Employees International Union, UAW, American Apparel 
     & Footwear Association, Food Marketing Institute, Consumer 
     Electronics Association.

  Ms. HIRONO. I hope my colleagues will join me in supporting this 
important legislation.
  I yield the floor and note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. ALEXANDER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Manchin). Without objection, it is so 
ordered.


                          Judicial Nominations

  Mr. ALEXANDER. Mr. President, occasionally some of my friends on the 
other side of the aisle will say President Obama is being poorly 
treated on his nominations. That did not ring true to me because it 
seems to me that just the reverse was true. I have spent a good deal of 
time in the last two Congresses to actually make it easier for 
Presidents--not just President Obama but any President--to have his or 
her nominations considered in a timely fashion.
  There are about 1,000 nominations that a President makes in the whole 
government that are subject to advice and consent. This is the 
constitutional authority of the Senate. It was put there deliberately 
by the Founders to provide a check and balance. The Founders did not 
want a king. They had been accustomed to tyranny and they wanted to 
think of ways to avoid that. So they created a President, not a king. 
They said the President shall, with these important nominations, send 
them up to the Senate. The Senate has the right to advise and consent.

[[Page 5649]]

Movies and books have been writing about this. It is well known. Some 
of the most celebrated debates we have had in the Senate have been 
about Presidential nominations.
  But for the most part, the Senate listens to the President's 
nominations, extends to him the courtesy that he was, after all, 
elected by the American people, that he has a right to staff his 
government. He has the benefit of the doubt on his nominations for 
judges.
  So I was surprised to keep hearing from some of my Democratic 
friends. Every time we confirmed a judge, somebody would come on the 
floor and say: The Republicans are holding up President Obama's 
nominations. I did not think that was true. So I asked my staff to work 
with the Congressional Research Service. I come to the floor to include 
in the Record the facts which show it is not true.
  Here is the bottom line. The Senate has confirmed President Obama's 
nominations for Cabinet more rapidly than it did those of President 
George W. Bush or President Clinton; and has confirmed Obama's 
nominations to circuit courts--but not his district court nominations--
more rapidly than it did those of President George W. Bush.
  In 2013, the Senate changed its rules to speed up consideration of 
those district judge nominations. In the history of the Senate, of 
course this includes President Obama, no Cabinet member, unless we 
count John Bolton's nomination by George W. Bush to be the U.N. 
Ambassador, and no district judge has ever been denied his or her seat 
because of a filibuster; that is, a failed cloture vote.
  In the history of the Senate, only seven circuit judge nominees have 
been denied their seats by a filibuster, five of George W. Bush's 
nominees and two of President Obama's nominees. I ask unanimous consent 
to have printed in the Record this summary of President Obama's 
nominations, along with an article from the Washington Post that points 
out that President Obama's nominees have been confirmed more rapidly 
than those of the last three Presidents in his first term.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                     President Obama's Nominations


                              BOTTOM LINE:

       The Senate has confirmed President Obama's nominations for 
     cabinet and circuit court--but not his district court 
     nominations--more rapidly than it did those of President G.W. 
     Bush or President Clinton. In 2013 the Senate changed its 
     rules to speed up consideration of district judge 
     nominations.
       In the history of the Senate, no cabinet member (unless you 
     count John Bolton) and no district judge has ever been denied 
     his/her seat because of a filibuster (failed cloture vote). 
     In the history of the Senate, only SEVEN circuit judge 
     nominees have been denied their seat by filibuster--FIVE G.W. 
     Bush nominees and TWO Obama nominees.


            First-Term Circuit Court Judicial Confirmations:

       Obama average time (240 days) is FASTER than G.W. Bush (277 
     days) from nomination to confirmation.


                  First-Term District Court Nominees:

       Obama average time (221 days) is SLOWER than G.W. Bush (156 
     days) from nomination to confirmation NOTE: January, 2013 
     Senate rules changes should speed this up.


                   Second-Term Cabinet Confirmations:

       Obama average time (46 days) is FASTER than G.W. Bush (55 
     days) or Clinton (68 days) from announcement to confirmation 
     (see attached Washington Post article).


Senate Filibusters that denied a cabinet nominee his/her seat due to a 
                          failed cloture vote:

       NONE in the history of Senate (with only exception G.W. 
     Bush's nomination of John Bolton in 2005).


 Senate Filibusters that denied a district judge nominee his/her seat 
                    because of failed cloture vote:

       NONE in the history of the Senate.


  Senate Filibusters that denied a circuit judge nominee his/her seat 
                   because of a failed cloture vote:

       SEVEN in the history of the Senate, including five under 
     G.W. Bush and two under Obama.
       In 2011, Senate rules changes created ``innocent until 
     nominated'' working group to make it easier for presidential 
     nominees to be considered and eliminated 169 major and 
     approximately 3000 minor presidential nominations requiring 
     confirmation. And 273 Presidential nominations were placed in 
     an expedited process.
       In 2013, the Senate has confirmed 10 Obama judicial 
     nominees (4 circuit, 6 district). President G.W. Bush by 
     comparison had 0 judges confirmed at this point in his 
     second-term.
                                  ____


               [From the Washington Post, Mar. 18, 2013]

                    Senate Moving on Obama Nominees

                             (By Al Kamen)

       How slowly is President Obama's second-term Cabinet coming 
     together?
       Well, there are two sides to the story.
       One part of the equation is how fast Obama is putting up 
     nominees. And it seems he's been pretty sluggish on that 
     front. With the addition Monday of Thomas Perez for labor 
     secretary, he's announced eight nominees and still has four 
     more Cabinet or Cabinet-rank jobs to fill. By contrast, 
     George W. Bush had made 11 nominations by this time in his 
     second term--nine of which he made in the six weeks after 
     reelection. Bill Clinton had announced 12 nominees by the end 
     of the December after his reelection.
       But in the second half of the Obama administration's 
     nomination picture--how quickly the Senate is approving those 
     nominees--things are moving apace.
       Three of Obama's Cabinet nominees have been confirmed so 
     far: Secretary of State John Kerry, Defense Secretary Chuck 
     Hagel and Treasury Secretary Jack Lew. For those folks, the 
     average number of days between the announcement by the White 
     House and confirmation is 45.6 days, which beats the averages 
     of the last three administrations that had second terms.
       According to the Congressional Research Service, it took an 
     average of 54.6 days for Bush's second-term nominees; that 
     figure was 67.8 days for Clinton's picks and 56 days for 
     Ronald Reagan's.
       Who says the Senate can't step lively these days?

  Mr. ALEXANDER. To be more specific about these matters, let's take 
circuit court judicial confirmations in President Obama's first term. 
According to our research, the average time for President Obama's 
nominees was 240 days. That is faster than President George W. Bush, 
277 days from nomination to confirmation. So circuit court judicial 
confirmations which are usually the subject of great interest around 
here, President Obama treated better than President George W. Bush, 
slightly better.
  First-term district court nominees. The Obama average time, 221 days 
is slower than George W. Bush, 156 days from nomination to 
confirmation. That is why in January of 2013 we changed the Senate 
rules to speed this up. Apparently, that is working. Last time I 
checked, during this year, the beginning of President Obama's second 
term, he has to date had 13 judges confirmed. President Bush, in this 
same period of time in his second term, had one judge confirmed. 
Second-term Cabinet confirmations. The average time of President 
Obama's nominees is 46 days. That is faster than George W. Bush, 55 
days, and faster than Bill Clinton, 68 days from announcement to 
confirmation.
  I mentioned the Washington Post article which said--it was published 
March 18, 2013. It says:

       He has announced eight nominees and still has four more 
     cabinet or cabinet-ranked jobs to fill. By contrast, George 
     W. Bush had made 11 nominations by this time in his second 
     term--nine of which he made in the six weeks after 
     reelection. Bill Clinton had announced 12 nominees by the end 
     of December after his reelection.

  In other words, President Obama is a little slower in making his 
second-term nominations.

       According to the Congressional Research Service,--

  Says the Washington Post:

     --it took an average of 54.6 days for Bush's second-term 
     nominees; that figure was 67.8 days for Clinton's picks and 
     56 days for Ronald Reagan's. So the Obama nominees were 
     moving more rapidly.

  Senate filibusters that denied a Cabinet nominee his or her seat due 
to a failed cloture vote. It has never happened in Senate history so 
far as we can find, with the exception of President George W. Bush's 
nomination of John Bolton.
  There have been occasions when the minority says we are not ready to 
cut off debate yet. We have more information we want about a Cabinet 
member. That happened with Secretary Hagel. Many of us made it clear to 
the majority leader that his motion to cut off debate on Secretary 
Hagel's nomination was premature because it had only been reported by 
committee for 2 days; we requested another 10 days to consider it, that 
was until after the recess,

[[Page 5650]]

and said that there would be an up-or-down vote.
  But so far as we are able to tell, there has always been an up-or-
down vote on any President's nominee for the Cabinet, after that 
Cabinet member has gotten to floor. Now it may be that in the past some 
Cabinet nominees fell by the wayside in committee. I have repeated on 
the floor my own experience in 1991, when President Bush nominated me 
to be Education Secretary and Senator Metzenbaum put a hold on my 
nomination that lasted a month, but I was eventually confirmed 
unanimously.
  So there may have been secret holds in the past that slowed down 
nominations or even may have killed one. But so far as the 
Congressional Research Service has found, no Cabinet member by 
President Obama or any President has been denied his or her seat 
ultimately by a failed cloture vote.
  Same with district judges. No district judge in the history of the 
Senate has been denied his or her seat by a failed cloture vote. There 
may have been a cloture vote on one or two occasions, but in the end, 
that person was finally seated.
  Then, as far as circuit judges, one of my great disappointments in 
the Senate was when I arrived in 2003. The Democrats had cooked up a 
plan to filibuster President Bush's circuit court Federal nominees. So 
far as I can tell, that had never been done before. There was always an 
up-or-down vote. Even in the case of Clarence Thomas, for example, a 
controversial nominee for the Supreme Court, I think the vote was 53 to 
47 or 52 to 48. There was no thought of killing Clarence Thomas's 
nomination by a cloture vote, by a 60-vote margin.
  What happened was, without dwelling on it too much, Democrats decided 
they did not like some of President Bush's nominees. It was not they 
were not qualified. Michael Estrada was one, one of the most eminently 
qualified persons ever nominated. Bill Pryor was another one, from 
Alabama, former law clerk to Judge Wisdom for whom I used to clerk. 
Pickering of Mississippi was another.
  They were basically smeared is what happened. It was an outrageous 
thing. I remember I was waiting to make my maiden speech as a Senator 
in 2003 on another subject. I got so upset about this. The first time I 
spoke on the Senate floor was against that, against that practice of 
denying a President an up-or-down vote on his circuit judge nominees.
  If you do not like the person, vote against him or her but at least 
allow an up-or-down vote. That so enraged the other Republicans that 
they wanted to change the rules of the Senate. They said: OK. We have 
the majority. There are 55 of us. We will just change the rules. We 
will confirm all of President Bush's judges with 51 votes. That is what 
the Democrats have tried to do at the beginning of the last two 
Congresses: We have enough votes to do it. We will change the rules and 
everything will be 51.
  Cooler heads prevailed. I made a couple speeches about it. Democrats 
and Republicans got together, one of these gangs that we have, maybe 14 
Members, they said: Look, except in extraordinary cases in the case of 
circuit judges, there will always be an up-or-down vote on a 
President's nominee.
  But a lot of the damage had been done. Five of President George W. 
Bush's Federal circuit judge nominees were denied their seat because of 
a filibuster. So as far as we can tell, with the research of the 
Congressional Research Service, that was the first time in the history 
of the Senate that it happened. As one might expect, now Republicans 
have done the same thing, twice in the case of Ms. Halligan. If we 
count her as twice, that is three. But we can count Miguel Estrada 
several times because he was filibustered a half dozen times.
  The record is the Democrats have now blocked five of President Bush's 
Republican nominees for circuit judge, and Republicans have blocked two 
of President Obama's nominees. I don't believe this is good for the 
Senate or for the country. It would be better if we had up-or-down 
votes for Cabinet members and for Federal judges, both Cabinet and 
district.
  The body of the Senate has precedents. My own personal view is as far 
as district judges go I will always vote for an up-or-down vote. As far 
as circuit judges go, I will always do so except in an extraordinary 
case. I have always thought a President ought to be able to have an up-
or-down vote on a Cabinet member. Again, the Democrats, under President 
Bush, decided once not to do this.
  I believe it is important to bring this before the Senate. I would 
like us not to go any further in the direction we have followed in the 
last 20 years. I would like for us in the Senate to get back to where 
we recognize elections have consequences. The President needs to staff 
his government. Give the President the presumption of the doubt on 
judicial nominees. If we don't like the judge, vote no.
  This means Republicans now need to swallow a little hard because 
there is a Democratic President and a Democratic Senate. It will not 
always be this way. We may have a Republican President and a Democratic 
Senate. Then the Democratic Senate could decide never to confirm a 
Cabinet member or never to confirm a circuit judge. I think the 
American people would be very upset with that. It is important to bring 
this to the attention of the full Senate and place this in the Record.
  One other aspect which is important, we have had very good 
conversations at the beginning of the last two Congresses about the 
rules of the Senate. The rules of the Senate are not as exciting as a 
debate about guns, immigration, or a debate about marketplace fairness, 
which is really the 10th Amendment we are having today. However, they 
are very fundamental to our country's structure.
  The wisdom of our Founders was that they set up three competing, 
sound branches of government. All need to function well in order for us 
to have our liberty. This is why we have checks and balances. We want 
our liberty. We don't want a king, we don't want a runaway parliament, 
and we don't want a runaway court. We want checks and balances so we, 
as individuals, can retain our liberty.
  I wish the Senate to function as it should and the advice and consent 
nomination to function as it should.
  This is why as part of our rules change we took some steps to 
streamline the advice and consent role of the Senate. We did this when 
it wasn't clear whether there would be a President Obama or a President 
Romney, which is one way we were able to do it with the Democratic 
Senate and a Republican House.
  We took some important steps. For example, we reduced the number of 
Presidential nominees which require a full-blown Senate confirmation by 
approximately 170. We took approximately 200 of those nominees right to 
the desk, and they were expedited. Unless an individual Senator says: I 
wish to have a full hearing on a member of the board for the Goldwater 
Scholarship Fund--or something such as this, then it stays on the desk, 
goes through the committee for vetting, and is moved to the calendar 
for a vote. This has worked pretty well.
  We did one other thing which was important and which, hopefully, the 
President and his administration are taking advantage of, we tried to 
work on the innocent-until-nominated syndrome which has existed around 
here for a long time.
  Whenever someone is nominated for a Cabinet position, we need to go 
through such a process of vetting, public scrutiny, and general 
indignation, we wonder why anybody in his or her right mind would do 
it. Many people won't. This is why we call it innocent until nominated.
  One reason for this is because of the multiplicity of forms a nominee 
such as the Secretary of Education needs to fill out. They might need 
to fill out one form about what their income was in 1977 and then 
another form about what their income was in 1977 by a different 
definition. When they arrive at their hearing and someone has made a 
mistake, some Senator accuses the nominee of perjury because he was 
sworn in and said he was going to tell the truth. It was easy to make a 
mistake under those circumstances.

[[Page 5651]]

  What we did was create a working group to review all the forms. They 
made recommendations mainly to the executive branch about simplifying 
them. The executive branch has worked with our Senate committees. They 
are doing this now.
  As a result, if I am nominated for Secretary of Education, I might 
fill out a single form which might comprise the only form I would need 
to fill out for the executive branch. Any Senate committee could ask 
any question at once and add that to the form, but they might agree to 
start with this form. It should make it simpler for the nominee, easier 
for the Senators as we go through the confirmation process, and it 
might be a way to help encourage talented men and women to enter public 
service.
  The President has said to several of us before that he recognizes 
part of the reason his nominations aren't moving as rapidly as he would 
wish is because of the vetting process, the process he and his 
administration need to go through before they even send anybody over to 
the Senate.
  Much of the delay is in the time which comes before a nomination 
actually arrives in the Senate.
  I hope this review will help to quiet down these--as Senator Grassley 
said--crocodile tears on the other side of the aisle. We don't think 
they are deserved.
  The President's nominees are moving more rapidly than the last three 
Presidents, and his circuit court nominees moved more rapidly than 
those of George W. Bush. As we change the rules to speed up his 
district court nominees--he is ahead 13 to 1 in terms of nominations in 
the second term for judges. This is a pretty good record.
  It is my desire the President will work with us to speed up the 
vetting process to develop an innocent-until-nominated effort, which is 
ongoing to enable it to be an advantage not to just this President but 
future Presidents. Hopefully, we may give respect and due consideration 
to any nominee the President sends forward.
  At the same time, the President will recognize we have an advice and 
consent responsibility. It may take some time. We will ask questions 
and may not want to move to a final vote at the very moment the 
majority leader may. This doesn't necessarily mean the nominee will be 
denied his or her seat. As a matter of fact, as far as I can find in 
the history of the Senate, it has not, with the exception of John 
Bolton.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, I thank my colleague from Tennessee for 
coming to the floor. He has been here with some frequency together with 
the Republican Senator from Wyoming to discuss the matter which is 
pending before the Senate.
  What is pending before the Senate is known as the Marketplace 
Fairness Act. It is a measure which Senator Enzi of Wyoming has been 
working on for 12 years and one on which I have worked with him for 
several years. It is an interesting issue because it is one where the 
Supreme Court challenged Congress 20 years ago. The States went to the 
Supreme Court and said: We want those who are not physically present in 
our State, but sell in our State, to collect sales tax. At that time 
the Supreme Court in the Quill decision said no; this is up to 
Congress. Congress needs to take action.
  Here we are 20 years later and the conversation has changed 
dramatically. What used to be sales by mail or catalog are now Internet 
sales, and they are growing in volume by the day. States are finding 
themselves in a challenging situation.
  States pass sales taxes. Senator Alexander was Governor of Tennessee. 
The State decided on a State sales tax. They say to every business in 
the State--as Senator Manchin understands because he was Governor of 
West Virginia--every sale you make over the counter collects sales tax 
for West Virginia, Tennessee, or in the State of Illinois. Those 
merchants understand their legal responsibility, their civic 
responsibility, and they collect the sales tax, remitting this amount 
back to the State.
  The problem they now have discovered is what is known as showrooming. 
Store owners have described this as a situation where a customer shows 
up and requests to look at running shoes--this happens at Chris Koos 
running sports shop in Normal, IL. The customer will say: These look 
good, but do you have them in a different color? Staff goes back and 
gets another box of shoes for the customer who tries them on. Then they 
will say: This looks great but do you have a wider one? Yes, that is 
perfect. That is the shoe I want. Let me write down the information 
about the shoe.
  The customer will then turn around, go home, and order the shoe on 
the Internet. The local merchant who did all of the work, who displayed 
the merchandise, pays the rent, pays the taxes, receives nothing. The 
person buys it over the Internet because many Internet retailers do not 
collect sales tax.
  In my State this might be 8, 9 or 10 percent difference. Chris, my 
friend, the mayor of Normal, told me it is not unusual 2 weeks later 
for them to come back in with the shoes purchased over the Internet and 
say: These didn't turn out right. He reminds them they didn't buy the 
shoes in his store.
  This is a story repeated over and over. The brick-and-mortar 
retailers, the shops on Main Street, and the malls feel they are at a 
great disadvantage. If their competition on the Internet is not 
collecting sales tax and they are, it puts them at a competitive 
disadvantage.
  In all of the States with a sales tax, approximately 46 States, if I 
am not mistaken the purchaser over the Internet has a legal 
responsibility to pay the sales tax. Most people don't know this. In my 
State of Illinois people are supposed to pay it when they file their 
State income tax. There is a line: How much do you owe for sales tax 
and use tax for remote purchases on Internet purchases?
  Several months ago I was reminded by my bookkeeper this line was on 
the form. I said I should take a quick look to see what I owe.
  One in twenty people in Illinois fill out this line. We have about 95 
percent of the taxpayers in my State who put zero. We know it is more 
than 5 percent of the people living in Illinois who are purchasing over 
the Internet. This tax is not paid.
  What this bill says is we don't create any Federal tax; no, none at 
all. We don't create any new State or local tax, none at all. What we 
do say is States can give the software to these Internet retailers to 
collect the tax when people make the purchase.
  I recently bought a book on amazon.com, put in my address, ZIP code, 
and they calculated instantly how much I owed in sales tax on that 
purchase. I paid it and the money was emitted to the Illinois 
Department of revenue. They are doing this even though there is no 
legal obligation for them to do so. More and more companies such as 
Lands End--I called them. They said: We collect sales tax.
  More and more companies are doing so, but this would make it uniform. 
We wrote this law understanding there are some small Internet retailers 
who perhaps sell several hundred or several thousands of dollars' worth 
of goods in the course of a year. We exempt them. They don't have to 
collect the sales tax if their revenues from the previous year are 
below $1 million. We exempt them. That is to put no hardship on the 
small retailers but to go after the 1 percent with sales in excess--
revenue in excess of $1 million. We go after them to make them pay what 
they should.
  This is what is pending before the Senate. It has been a long time 
coming. We have been working with retailers across America to 
accomplish this. They have said this will give them a level playing 
field when it comes to sales. The same sales tax is collected over the 
counter which is collected over the Internet. This is the way it works 
and at no expense to the retailer.
  The States need to provide the software for the collection. They are 
not going to be held responsible if the State gives software which is 
imperfect. They can't be held responsible for it. If they use the 
software given to

[[Page 5652]]

them, they have met their legal obligation. This is what is before us.
  We have had two votes now: one a symbolic vote on the budget and 
another a procedural vote to move forward on this measure yesterday, 
which 74 Senators voted for, which is pretty substantial in a body of 
100 Senators. All but 5 of the Democratic Senators support it, and a 
substantial number, 24 or 25 Senators, from the Republican side support 
this, more than half of their caucus.
  We are on this measure now. I have said to my colleagues, and I 
believe Senator Alexander said to his Republican colleagues: If you 
have an amendment which is relevant and material to this bill, bring it 
to the floor. Let's get into a debate. Let's talk about these 
amendments. Let's vote on these amendments, and then let's move to 
final passage.
  Those who will witness this will see a rare occurrence on the floor 
of the Senate--perhaps an actual debate and vote on an amendment. It 
doesn't happen very often around here. So you may wish to stay tuned. I 
encourage all of my colleagues interested in this issue who believe 
they would like to offer some form of an amendment to please bring it 
to the floor as soon as it is ready, which I hope will be today. This 
is our last week in session before we break for a week. We want to get 
this bill done. We started early in the week--on Monday, yesterday--and 
we want to get it done by Friday. If we have to stay over, we will stay 
over--Saturday, whatever it takes. We want to get this done before this 
break, and it now depends on my colleagues.
  Those who are sitting on an idea, it is time to let it hatch. Bring 
it to the floor, and let's have a vote on it or let's talk about it. It 
may be something we can accept. If it is, we will try. If it isn't, we 
will bring it up for a vote and let the Senate decide. We want to act 
as a Senate because we have a good bipartisan measure, Senator Heitkamp 
of North Dakota and I, joining on the Democratic side along with quite 
a few others, Senators Enzi and Alexander on the Republican side.
  I urge my colleagues and staff who are following this debate, now is 
the time. If you have an amendment, bring it to the floor today, right 
now. We will be here to receive those amendments and to work on them.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. ALEXANDER. Mr. President, I see the principal leaders for this 
legislation, Senators Durbin and Enzi, and I congratulate them for 
their leadership. What they have been able to do is to come up with a 
simple, 11-page bill that has two words for a theme--States rights or 
10th Amendment. We have a majority of Senators on the Democratic side 
and a majority of Senators on the Republican side who have indicated 
their support for it. They voted twice in support of it.
  I talked with Senators at the Republican luncheon today, and at least 
one Member told me he had a couple of amendments, and I encouraged him 
to bring them on down because we want amendments. We want this to be 
discussed on the Senate floor. Senator Reid, the majority leader, has 
said there will be amendments. I have a fishing amendment I would like 
to get passed somewhere, but I will not offer it on this bill because I 
want to offer amendments that are related to marketplace fairness. But 
there are a number of ideas that are, and they ought to be discussed.
  I wonder if, before I finish, I might ask the distinguished Senator 
from Illinois a question. Maybe I am just sensitive to this as a former 
Governor, as I know the occupant of the Chair is as well, but I wonder 
if the Senator from Illinois finds it a little ironic there are some 
people in Washington who say they do not trust the States to make 
decisions about their own tax structure. I was Governor of a State that 
has a triple-A bond rating, no State debt on roads, no income tax, is 
one of the best run States, and when I was there had eight balanced 
budgets. Unfortunately, during the 10 years I have been in the Senate, 
we haven't had any of that. So I feel just the reverse.
  In a constitutional framework that has a 10th Amendment that says 
decisions are reserved to the sovereign State, it not only smacks of a 
lack of respect for our constitutional structure, but it makes no sense 
to me that Members of Congress would not trust the Governor of 
Tennessee and the Legislature of Tennessee to make their own decisions.
  We had a representative today at a meeting that all three of us 
attended who said that in Ohio, as I recall, the legislature and the 
Governor have already decided that if we pass this law permitting Ohio 
to collect taxes from everybody who already owes them rather than just 
some people, they will reduce their income tax rate.
  So does the Senator find it ironic there would be people in 
Washington who don't trust the States to make decisions for themselves 
in a constitutional system that was created by sovereign States?
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. I thank the Senator from Tennessee for posing that 
question, and through the Chair I would say to him that I am in a tough 
position here facing two former Governors--Governors of West Virginia 
and Tennessee--but I am sure they agree with what I am about to say.
  In this circumstance, the decision was made by the State of 
Tennessee--and West Virginia as well--as to what the sales tax would be 
by the people living in the State and making purchases in the State. We 
don't change that at all. That is up to the States to decide.
  As I mentioned, four States, maybe five States, when it comes to 
sales tax, have no sales tax. What we are putting in this bill will not 
change that in any way. If you live in Oregon, you will pay no sales 
tax because of this bill for what is sold over the counter or over the 
Internet.
  Our friends from Delaware are supporting this bill because they think 
because they are a no-sales-tax State surrounded by Pennsylvania and 
New Jersey and Maryland, they are going to have an advantage. They 
believe people will cross the borders to buy in Delaware. So they have 
calculated this actually helps them.
  But we are respecting the decisions made by each State as to the 
taxes that will be imposed. We are doing it on a fair and equalized 
basis for those who have brick-and-mortar stores as well as those over 
the Internet. And I would say that is consistent with the 10th 
Amendment and consistent with States rights in this area.
  Mr. ALEXANDER. Mr. President, I wonder if I could, through the Chair, 
pose another question to the Senator from Illinois.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. ALEXANDER. If I am not mistaken, there is a Federal moratorium on 
Internet taxes; that is, there is a Federal temporary ban on State 
taxes on access to the Internet. Am I not correct that if the 
Marketplace Fairness Act passes, that ban will still be there? In other 
words, today there is a Federal ban on Internet taxes, and after this 
law passes there will continue to be a ban on Internet taxes? And this 
is not about Internet taxes, it is about State sales and use taxes that 
are already owed but in some cases are not collected.
  Mr. DURBIN. Responding to the Senator from Tennessee through the 
Chair, he is right. And this has been controversial. I can remember 
that in the last debate--and it was a few years ago--the argument being 
made was that we should have free access to the Internet. I don't 
quarrel with that. The Internet has been a powerful force in our 
economy. It is going to grow as a force in our economy, and I don't 
believe we should tax access to the Internet. There are also a myriad 
of bills related to services over the Internet and whether they should 
be taxed. We do not get into that in any way whatsoever. What we are 
talking about are taxable goods by State law subject to State sales 
taxes as they currently exist. We don't change those taxes in any way.
  A point that was raised in our press conference is an important one. 
Some

[[Page 5653]]

States treat food differently, prescription drugs differently. The 
State has to basically tell the retail community what the State 
standard is going to be for the categories of goods that are being 
sold. So we make it as easy as humanly possible for the Internet 
retailers, providing at the expense of the State the software they need 
to make this work.
  Mr. ALEXANDER. Mr. President, the Senator alluded to this in his 
remarks, and we both heard Senator Heitkamp from North Dakota. It is 
pretty remarkable that a Senator, in her first 3 months, would find 
herself in the middle of a debate about a problem she created 20 years 
ago in North Dakota. She brought this case that created this situation.
  But let me ask the Senator from Illinois what he envisions will 
happen if we do not act. If I am not mistaken, under the arrangements 
we now have today, if a big Internet seller in Illinois--someone who 
sells more than $1 million a year--and as I understand it, 99 percent 
of Internet sellers are exempt from this, but let's say you are in that 
1 percent and you want to sell in Tennessee--your responsibility is to 
file one return in Tennessee, and you are subject to one audit, period. 
And if you sell in another State, the same thing. So you might be 
subject to filing one report and one audit in all the States, and many 
of the States are part of what is called a streamline structure where 
they work together, so they audit together. And audits don't occur 
every year.
  But there are 9,600 taxing jurisdictions in the United States. So 
what we have done or propose to do is simplify this greatly so that if 
you are an Internet seller, if you sell online or by catalog from 
Illinois to Tennessee, you have a very small number of reports you need 
to fill out, a very small number of audits to which you might be 
subjected. And your liability is very limited for making a mistake 
because the State has to provide the software, and if the software 
doesn't work, that is the State's fault and not yours.
  But what would happen if we didn't act, I would ask the Senator from 
Illinois? What if we did not act to simplify this system, as the 
Supreme Court said 20 years ago is our responsibility?
  Mr. DURBIN. I would say to the Senator from Tennessee through the 
Chair that there are two possibilities:
  We continue under this current system, which works a disadvantage on 
the Main Street stores and shopping malls and denies to those units of 
government the revenue that would otherwise be coming from the sales 
tax. That would be one outcome.
  The second outcome is--and Senator Heitkamp has mentioned it--this 
case may return to the Supreme Court. If it returns to the Supreme 
Court, it is quite possible it won't be written as mercifully as our 
version. We have exempted--we have exempted Internet retail sellers 
with revenues the previous year below $1 million. We have tried to lean 
toward an accommodating approach. I don't know if the Supreme Court 
would reach the same decision when it comes to sales tax liability. I 
believe it is better for us to accept their challenge, even 20 years 
later, and get this done.
  Mr. ALEXANDER. In addition to that, let's say I am the Governor of 
Tennessee and I look to the Senate and say: These guys can't get 
anything done. They have been debating this ever since Senator Enzi has 
been a Senator. They have been debating it for 14 years. They are never 
going to do anything.
  So I just bring a lawsuit and I say: If you are going to sell in 
Tennessee, you are welcome, but you are going to collect the tax. I 
mean, Tennessee businesses collect the tax and send it in. So if you 
want to come in and sell to us, you do that too. We are going to treat 
you exactly the same way.
  Now, let's say the Congress hasn't acted. Then that seller in 
Illinois who wants to sell in Tennessee has not only the State taxing 
jurisdiction to consider, he has 95 counties to consider, he has 
several dozen cities with local sales taxes to consider, and he has 
9,600 jurisdictions across the country to consider if we don't act.
  So some of the opponents of this legislation who raise this 9,600 
jurisdictions--this is the solution to that problem. If you want to 
sell by catalog or online, this simplifies it for you, it reduces your 
liability, it reduces the number of forms, and it requires the States 
to provide the software that you would use, which many businesses are 
using today and it works for them.
  So I would ask the Senator from Illinois, don't you imagine if we 
don't act, another consequence will be some Governor in some State will 
go back to the Supreme Court, and the Supreme Court will say: Twenty 
years have passed. We now have an Internet. There is no burden on 
interstate commerce, so it is up to the States to decide what to do.
  And then we would have a big free-for-all.
  Mr. DURBIN. Responding to the Senator from Tennessee through the 
Chair, I listened to the speeches of our critics, and they were 
swooning over the notion of being subjected to 9,600 taxing districts, 
taxing entities. What the Senator from Tennessee has described is our 
answer. This bill avoids that problem. This bill simplifies that 
situation.
  We are down to 46 States with the defined goods and the defined sales 
tax. That is more reasonable for the retailers than running the risk, 
as the Senator suggests, that this goes back to the Supreme Court, and 
20 years after the fact they say: It is wide open. If Congress is not 
going to act, the Internet retail community has now matured to a point 
where they should be able to collect sales tax in every taxing entity 
where a person resides.
  I believe that is a much more complex and challenging situation.
  Mr. ALEXANDER. Mr. President, I see Senator Enzi is here, and I 
appreciate his patience in allowing me to go ahead, but I know if I 
were still the Governor of Tennessee--which I am not, and I won't be 
again--and Congress did not act on this and I saw an opportunity--if I 
looked across my State and I saw that our tax laws treated some 
taxpayers one way and other taxpayers a different way and instate 
businesses one way and out-of-State businesses better, it wouldn't take 
me 20 minutes to call the attorney general over and say: Let's take 
this case to court. Let's go back to court. If somebody is going to 
sell in Tennessee, they are going to collect the tax.
  I believe I would have a reasonably good chance of winning. And I am 
confident that, knowing a number of the Governors around this country, 
if we fail to act, I will bet one of them will be in court the next 
day.
  I congratulate Senator Durbin and Senator Enzi for their persistence 
in creating what is an 11-page bill about two words--States rights--
that will--my prediction--allow many States to lower their tax rates 
when they collect taxes that are already owed but not paid and treat 
businesses the same way and taxpayers the same way.
  I thank the Presiding Officer, and I yield the floor.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. Mr. President, I thank the Senator from Tennessee, Mr. 
Alexander, and the Senator from Illinois, Mr. Durbin, for this 
discussion they have had where I think they cleared up a lot of the 
confusion there might be over the bill. They have presented excellent 
reasons why we need to get this bill done, and why we need to get it 
done now--so we can continue to grow businesses in our States instead 
of growing businesses outside of our States.
  There are a number of things people have mentioned. One of the big 
ones I want to talk about is the small seller exemption. I know Senator 
Wyden from Oregon has suggested a compromise for the whole bill which 
was to create the nontax States to be a haven for all Internet sales, 
and that won't work. Our purpose is not to move all of the business 
online out of our own States but to keep it there.
  But there is a compromise in this bill. It is called the small seller 
exemption, and that is where people who are starting in business don't 
have to collect the tax when they are out of State. With in-State 
sales, a lot of them will

[[Page 5654]]

have retail sales in their State as well as hopefully some online 
sales. On what they sell in their bricks-and-mortar store, they collect 
sales tax from everybody who buys from them. There is no exemption. But 
the compromise we made for the online sales was until a retailer hits 
the $1 million mark in a year--and we would love for them to hit the $1 
million mark and have that kind of business. But until they do, they 
are protected in that they don't have to collect the tax. We give them 
a break over the in-State retailers. Of course, the ones who are in 
State who are selling out of State have that same online break. But 
that is why we have a small seller exemption, to continue to grow small 
businesses that are using the Internet. We want the Internet to grow 
and are not discriminating against the Internet. And as has been 
mentioned, there will be no tax on the use of the Internet. That is not 
a part of this bill.
  This is a tax on what people buy on the Internet, because States 
already anticipate that the sales tax they have in place is going to be 
paid on every purchase. When that money comes back, part usually goes 
to the State, part goes to the county, part goes to the towns. That is 
to provide for their schools, fire protection, for all of the services 
people who live in the communities are used to. I can tell you that in 
Wyoming that makes up at least 30 percent of everybody's budget. I know 
in one town it is 70 percent of their budget.
  So if you start eliminating the sales tax by getting products from 
out of State, you are wiping out services in the local communities. 
Those local communities are where the Main Street retailers, the 
shopping center retailers--the brick-and-mortar retailers--are the ones 
paying property tax. They are hiring local people, and they are also 
participating in the community in a number of ways. School yearbooks 
probably wouldn't exist without the participation of the local 
merchants.
  We want to continue to encourage the local merchants, and so we came 
up with the small seller exemption of $1 million. You don't start 
collecting the tax and you don't need to get the free software to be 
able to collect the tax until you hit the $1 million mark in a year, 
and then that would go into effect.
  We looked into a number of different levels. Our older bill had \1/2\ 
million in the Senate bill and the House had $1 million in their bill. 
I said, Let's give a little more flexibility. Let's go with the $1 
million. So that is how we wound up with $1 million.
  I will comment more on this later, but I see my fellow Senator is 
here who would probably like to make a comment.
  I yield the floor and reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Maryland.
  Mr. CARDIN. Mr. President, first let me thank Senator Enzi and 
Senator Alexander. I completely agree with their position.
  I had a chance to talk about this issue when we were debating it on 
the budget issue. The bill simply removes an impediment from the States 
being able to collect the sales taxes that are due. It responds to the 
Quill decision about requiring a physical presence in a State in order 
to require that State to collect the sales tax.
  Senator Enzi points out there are no new taxes; that it is a matter 
of basic fairness. It really does help small businesses. The brick-and-
mortar companies located in our neighborhoods, small shopowners who 
build a neighborhood and build a community, are the ones who are at 
risk where they have to pay sales taxes and yet their competitors 
don't.
  I will give a short example with a story told to me about a retailer 
selling electronic goods. The consumer came into the shop, looked and 
found the product she wanted, went on the Internet, found the product 
for the same price on the Internet but didn't have to pay the sales 
tax, and literally bought it while the shopowner was watching--after 
the shopowner had given that individual personal service. The shopowner 
didn't lose the sale because of competitiveness but lost the sale 
because of tax avoidance. This bill would correct that.
  This is $23 billion. This is a lot of money our States are not 
collecting. These are taxes that are already imposed. In my own State 
of Maryland, it is somewhere between $150 million and $300 million of 
taxes that could be used to reduce tax burdens to the taxpayers in my 
State.
  It is a matter of basic fairness, something that needs to be done. As 
Senator Enzi pointed out, it will simplify the sales tax collections by 
using the Streamlined Sales and Use Tax Agreement, and we exempt small 
sellers of $1-million-or-below sales. So it is an issue that needs to 
be passed, and I am pleased that we are finally getting around to 
passing it.
  Mr. President, I ask unanimous consent to speak for up to 10 minutes 
as if in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                             Sequestration

  Mr. CARDIN. I have never supported the sequestration. I always 
thought it was a big mistake. These are across-the-board, mindless cuts 
that say every priority in government is identical to the other. That 
is not the case.
  If you had a problem in your family budget and you had to reduce some 
spending and you had money put aside for your mortgage payment, your 
rent payment, or your family food budget, and maybe some money for a 
weekend trip, you wouldn't identically cut every category. You may give 
up that weekend trip in order to be able to save the roof over your 
family or put food on the table. Sequestration says every priority in 
government is the same.
  It is also not directed to where we need to go to reduce the deficit. 
Once again, sequestration primarily applies to domestic discretionary 
spending. It provides a fourth round of cuts when we have already had 
cuts over the last 3 years. For the agencies that are affected, it is 
equivalent to about a 10-percent cut. You can't do that without 
seriously affecting the mission of the agencies, and that is wrong. 
That is why I have said from the beginning, let's replace 
sequestration.
  March 1 came; sequestration came; people woke up the next day and 
said, What is the big deal? Well, we are finding out what the big deal 
is all about. We just heard from the FAA, the air traffic controllers, 
that because of sequestration they have very little option--85 percent 
of their operational budget is in personnel, and air traffic 
controllers are most of the personnel. Therefore, they have announced 
they have to furlough 11 days during the remainder of this fiscal year. 
That comes out to about one furlough day over each work period. It is 
as much as a 10-percent reduction in the workforce to man our towers to 
make sure air traffic is managed safely. You can't do that with that 
type of reduction, and we are now looking at whether there are going to 
be significant delays of flights. Those types of cuts are ridiculous. 
We know better than that. There is no question about it, these are the 
types of things that are going to hurt our economy if we can't have a 
reliable air traffic service.
  I was talking to one of the nonprofits in Maryland that manages a 
Head Start Program, and they were telling me about what the fall 
enrollment is going to be. They have a waiting list of families who 
want their children in Head Start and qualify for Head Start and aren't 
going to be able to get into a Head Start Program. Why? Because of 
sequestration. The waiting list will get longer. Children will be 
denied the ability to go to Head Start Programs. Did we intend that? I 
don't think so. I don't think our colleagues wanted to say we were 
going to balance our budgets on the backs of children being denied Head 
Start placement.
  I was at the National Institutes of Health not too long ago. The 
research they do is so critically important to our country's future. It 
is not only the fact that they are discovering the answers to dread 
diseases or ways in which we can keep people healthy. They are now 
working on developing a universal flu vaccine against the influenza so 
you don't have to get a vaccine every year. Think how many lives that

[[Page 5655]]

can save. It is also the basic research we need in order to create the 
jobs in the bioscience areas and the tech areas. This is about creating 
more jobs in our communities. Now they are going to have to give up 
grants as a result of sequestration even though today they are only 
approving about one out of every seven worthwhile grant applications. 
We certainly didn't intend that through sequestration.
  I could talk about new transit starts. We have some very exciting 
programs in Baltimore, Washington, and Maryland--a purple line to 
provide transit between the Washington suburban counties and Maryland. 
We have transit programs in Baltimore. We have the corridor cities 
along the 270 corridor. We have southern Maryland that needs help. All 
these programs need to compete for a limited amount of funds. Now, 
because of sequestration, there are going to be less funds available, 
meaning we are going to have more traffic jams rather than less. Do we 
mean for that to happen?
  I could go on and on. I could talk about the cuts to the Department 
of Defense and what they have to go through. These weren't cuts we 
initiated, saying this program needs to be reduced. These aren't the 
types of deliberative actions a Congress would do. It is saying we are 
going to do a meat ax approach and tell the agency: You cut your 
program by this percentage amount. We advertised it a little over 5 
percent, but in reality it is much higher than that because these cuts 
over a 7-month period reflect a year's reduction. So the cuts are even 
more severe when used on an annual basis.
  Our Federal workforce deserves more. These are people working hard 
providing vital services in our country, whether it is protecting our 
borders or doing research or keeping our food supply safe or making 
sure our seniors get Social Security checks. The list goes on and on. 
It is not fair to those who signed up to serve the public as Federal 
workers, and it is certainly not fair to our economy. This is having a 
very damaging impact on the economy of this country. We have already 
seen in the most recent job reports a slowdown of more than we 
predicted, and most economists say it is directly related to these 
across-the-board sequestration cuts.
  So what should we do? We are in session. It is time for us to act. We 
are in the fiscal budget year 2013. Yes, we passed a budget at the end 
of last year. I think it was on January 1 when it finally got around to 
passing. We passed it at the sequestration levels saying we hoped we 
would figure out a budget plan to avoid the sequestration cuts in this 
year. So let us consider a way to avoid these mindless across-the-board 
cuts, and substitute it for sensible reductions that we know will not 
have the same type of unintended consequences on services that are 
vitally important to our economy and to the people of this country.
  There are areas where we have savings. We know that. We have that in 
the overseas contingency accounts under the Department of Defense. We 
know we can find savings in tax expenditures. We spend $1.2 trillion a 
year in tax expenditures. We know we can certainly find some savings on 
tax expenditures. I think we have to look at a broader level than just 
these discretionary spending accounts that are particularly devastated 
by these sequestration cuts.
  I urge this body to find a way we can replace sequestration for 
fiscal year 2013--this current fiscal year--by more responsible budget 
savings, and then, working through our appropriations committees, 
working through the Budget Committee and the other committees for 
fiscal year 2014, have time under a more normal legislative process to 
figure out our spending priorities to go beyond the appropriate 
dollars--what we do on the Tax Code, what we do under mandatory 
spending. Let's bring up that game plan after the next fiscal year, 
2014, which begins October 1. But for the current situation, let's 
replace sequestration with a more sensible way to get those savings, 
rather than causing harm--whether it is to those who depend upon air 
traffic, those who depend upon a place in Head Start, those who rely 
upon the research done at NIH, or those who depend upon having adequate 
support within our military. All of the above are adversely affected by 
sequestration. It is time for us to take action, to do what we were 
supposed to do: Make the tough decisions. Don't take the way out that 
every program in government is of equal importance.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Ms. AYOTTE. Mr. President, yesterday I came to the floor to oppose 
the cloture motion on the motion to proceed to the so-called 
Marketplace Fairness Act. I, of course, would like to, I think 
properly, name it the Internet Tax Collection Act because that is what 
it is. I strongly oppose this bill which has very serious flaws to it 
and very serious ramifications for not only businesses in my State, 
online businesses where we have seen great growth, but also online 
businesses across this Nation.
  I strongly disagree with the decision to fast-track this bill, to 
skip the regular markup process of the Finance Committee. Both the 
chairman of the Finance Committee, Senator Baucus, and the ranking 
Republican on the Finance Committee, Senator Hatch, had opposed going 
to this bill without the committee doing its work.
  Why? There are a number of concerns that have been raised about this 
bill by Members on both sides of the aisle. At a very minimum, we 
believe these concerns warrant a thorough vetting through the regular 
order. That is why I, along with Senators Wyden, Tester, Shaheen, 
Rubio, Lee, and Cruz wrote a letter to the majority leader expressing 
these concerns, asking again for regular order for this bill. But here 
we are. Cloture was invoked and I suspect the supporters of this bill 
certainly do not want to go through the markup process so here we are 
again without regular order.
  This bill is wrong for a great area of growth for our country, which 
is online businesses. Small business owners get hit the worst under 
this bill. Small business owners from my State of New Hampshire have 
told me--and large businesses from my State of New Hampshire that do 
business online have told me--this legislation would make it harder for 
them to do business. During the recent Senate work period, I held two 
roundtable discussions in New Hampshire, one in Manchester and one in 
Portsmouth. It was a great opportunity to hear directly from those on 
the ground what the implications of this bill will be to business 
owners in my State. I would like to share a sampling of the feedback 
from businesses in New Hampshire about this bill.
  Russ Gaitskill, who is the president and CEO of Garnet Hill, in 
Franconia, NH: ``It's going to be a nightmare.''
  He sent to my office an example of what he would have to do. 
Understand what this will make online businesses have to do in this 
country. They now become the tax collectors for other States, even 
though they do not rely on the services in those States, they do not 
use the roads in those States, they don't get to vote for the 
Representatives in those States. Taxation without representation, that 
is what this bill is about. They now have to collect for the rest of 
the Nation's 9,600 tax jurisdictions of different not only State sales 
taxes but local and county sales taxes.
  I want to use one example of what this is like and what an 
administrative nightmare this is for businesses. This is 1 page of a 
40-page sales tax manual that is an example of what any online business 
across the Nation could have to face. In New Hampshire, if there is a 
customer from Illinois who chooses to buy from an online business in 
New Hampshire--here we are. If the person lives in Grand Prairie, it is 
a 6.5-percent rate. But if the person is from Colona or Collison, a 
6.5-percent rate or if you live in Dow, it is a 7-percent rate.
  There are 9,600 different tax jurisdictions across this Nation and 
the people pushing this bill, the proponents, say: Oh, no problem for 
these businesses. Just use software. Every business has this software. 
It is going to be easy as pie.
  So when Dow changes their tax rate half a percent, the whole program

[[Page 5656]]

changes. Yes, that burden is put on the business. Talk about an 
administrative nightmare. Do you know why. Because States are in a 
position where they want to use that as a cash grab to make other 
States and online businesses do their work of tax collecting for them 
instead of them doing it themselves. I cannot believe my colleagues are 
going to go along with this and those who are pushing it.
  I think it is especially odd there are Republicans who want to create 
this kind of complicated tax mess. I hear from my colleagues on this 
side of the aisle all the time about how we are going to cut through 
regulations, we are going to make it easier for businesses. A lot of my 
colleagues on the Republican end are pushing this notion that a 
business--oh, just let them purchase some software and then let them 
try to collect for almost 9,600 tax jurisdictions in the Nation. What 
could possibly go wrong for an online business? Many of them, smaller 
businesses in this country, are trying to thrive, trying to grow 
through a difficult time in our country.
  I also heard from E&R Laundry and Dry Cleaners, a small business 
founded in 1921 in Manchester. About 70 percent of E&R's sales are now 
Internet based. The company's president said he would not have the 
resources to calculate, collect, and deliver sales taxes for thousands 
of jurisdictions across the country.
  A bakery in my hometown of Nashua echoed that sentiment. Susan Lozier 
Roberts of Frederick's Pastries--and anybody who has been there, yum. I 
can understand why people across the country would want to get some 
Frederick's pastries. Susan said it would create mass confusion, 
keeping up with all the individual State tax codes.
  I heard the same from one of the most prominent maple sugar producers 
in the State. In New Hampshire, we are a State that prides itself on 
its maple sugar products. Peter Thomson--his father was the late Gov. 
Mel Thomson, a wonderful figure in the history of our State--said it 
would be a burden we just couldn't afford.
  Ken Smith, the owner of Maine-ly New Hampshire, said: I physically 
don't have the manpower or the hours to be able to handle something 
like this.
  Jenn Coffey, another business owner, said: If I had to become a tax 
collector on top of what I am already trying to do as a startup--we all 
know how hard it is so start your own business, by the way--she said: I 
would be out of business.
  I also heard widespread concerns about the threat from faraway audits 
that this legislation would bring. That is the poster board I had up 
there, with all these tax rates. In every single one of those 
jurisdictions, if we divide it by county or we divide it by State, when 
a business in another State, in New Hampshire, for example--if they are 
selling to a customer in Illinois, they can then, if their computer 
program that everyone is saying is so easy doesn't calculate it right, 
they can be hauled in for an audit in another State where they do not 
have any physical presence. What do they do? They have to get a lawyer 
in another State. They have to deal in a court system in another State 
or with auditors with a department of revenue. Whom do they deal with? 
Talk about administrative nightmare, to be dragged into another State 
for potential audits, to have to hire lawyers in other States--what an 
administrative mess this bill will create.
  It is truly shocking to think that people actually want to say this 
somehow is going to level the playing field or make it more fair, when 
it puts this great burden on businesses.
  Travis Adams, with whaddy.com, based in Nashua, said: One tax audit 
from another State or jurisdiction would completely crush us.
  Ben Baker, an online retailer in Barrington, said: Small businesses 
like mine just can't handle that kind of accounting burden. If I have 
to hire a bookkeeper or pay my current offsite accountants 
significantly more per month to track all this, you can bet my plans to 
expand my business in the next 6 months are a lot less likely.
  Paul Ford, an online dealer in Portsmouth, perhaps summed it best 
when he said: The last thing we need is legislation like this.
  I would also like to mention a comment from Joel Maloy, a friend of 
mine, a great business owner in New Hampshire, president of Polaris 
Direct. He said: This is not about making Main Street more competitive. 
It is about passing new taxes on to consumers. That is consistent with 
what other business owners have told me from across New Hampshire, and 
I have certainly also heard it from businesses across the Nation. They 
know this is not about competitiveness. It is about helping States get 
more money to spend on programs they cannot afford.
  That is what the Wall Street Journal said this week. The paper called 
the Marketplace Fairness Act an online revenue raid. They said this is 
a bill--of course, do you know who is pushing this bill? Big business, 
big retail business. Do you know what it does, according to the Wall 
Street Journal--and I fully agree with them on this--``. . . big 
business and big government are uniting to pursue their mutual interest 
in sticking it to the little guy.''
  ``[B]ig business and big government are uniting to pursue their 
mutual interest in sticking it to the little guy.'' Haven't we had 
enough of that in our Nation? The paper concluded that ``the new 
revenues will merely fund larger government.''
  Some of my conservative colleagues have tried to justify their 
support for this big government bill on the notion that their States 
will be able to reduce their income or sales tax. I think we all 
understand there is no requirement in this bill that States have to 
reduce some other tax burden if they collect taxes in this way. This is 
just about spending more money.
  Let's talk about the Constitution. By imposing collection 
requirements on businesses that have no physical presence outside their 
home State, I also fear this is going to trample on existing State 
sovereignty. Under current Supreme Court precedent, in the absence of 
an actual sufficient nexus, a State cannot reach beyond its borders to 
compel out-of-State Internet vendors to collect taxes on a particular 
transaction. That is the Quill decision.
  By usurping and changing the standard, it would undermine an 
important limitation in the commerce clause, the nexus requirement. So 
now your nexus with a State is a click; instead of a physical presence 
in a State. If an online business in New Hampshire has to collect and 
remit sales taxes for online customers from Massachusetts, what is to 
prevent Congress from later expanding the commerce clause even further 
to require New Hampshire brick-and-mortar businesses to collect the 
Massachusetts tax, because Massachusetts has already tried to do this 
to New Hampshire. In fact, when I was attorney general of the State, we 
brought a case to the Massachusetts Supreme Court because there were 
customers from Massachusetts who came over to buy some tires in New 
Hampshire and the Massachusetts DRA tried to get New Hampshire 
businesses to collect that tax.
  That is exactly what we are doing with this bill. It actually places 
an unfair burden on online businesses versus brick-and-mortar 
businesses that are in that situation that now do not have to collect 
that. But I worry that will be the next step for businesses in my State 
of New Hampshire and other States across this Nation that do not have a 
sales tax.
  What about stores that sell through catalogs. Their customers are 
frequently older and less likely to have transportation or be online. 
Will catalog vendors also have to collect and remit State sales taxes?
  Finally, what about other unintended consequences on consumers, 
retirees, and investors? That is the type of information we would have 
talked about in a committee hearing that we did not have on this bill 
before the Finance Committee. There was a hearing, but there was no 
markup. A markup is when we try to improve and deal with unintended 
consequences to a bill.
  Could this bill open the door to taxes on financial services or 
transaction taxes? Some of the financial organizations have raised that 
issue. In my

[[Page 5657]]

home State of New Hampshire, it is a matter of pride that we do not 
have a sales tax, and this bill tramples on that choice for the State 
of New Hampshire. That is because we know it gives our retailers, yes, 
an advantage in a competitive marketplace, but we also know low taxes 
are the result of low spending. This legislation threatens to trample 
on retailers in all States, forcing them to become tax collectors for 
other States--nearly 9,600 tax jurisdictions, as I have mentioned.
  I said it before, and I will say it again. This truly is taxation 
without representation because businesses in New Hampshire or online 
businesses in other States can now be subject to doing the business of 
governments in other States, of collecting their taxes, when they don't 
elect the representatives there, when they don't rely on the roads 
there or the services there. Here we have it--the ultimate in taxation 
without representation. I say to my conservative colleagues, why would 
they want to support such authority given by the Federal Government?
  Supporters of this amendment argue that they have created an 
exemption for small businesses of $1 million for small sellers, but 
this amount is not indexed to anything. What about the business that is 
$1 million and $1 in sales? Then they have to do it, and it is going to 
discourage businesses from growing.
  Also, this limit is far lower than the SBA--the Small Business 
Administration--actually defines a small business.
  Even with this exemption, trust me, once this exemption is in place 
and the States don't get all the revenue they want, they will be back. 
They will be back before this body to say: We didn't get enough money, 
so the Senate needs to authorize us further. Get rid of the exemption. 
We have a right to collect from those businesses as well or have them 
collect for us as well because that is what it is--requiring them to 
collect for us.
  A broad coalition of groups is opposed to this far-reaching 
legislation. Let me talk about a few of them.
  No. 1, Americans for Tax Reform. Americans for Tax Reform said:

       This legislation grants states new tax collection authority 
     without removing equivalent taxing authority elsewhere. 
     Therefore, this legislation can only be viewed as a tax 
     increase.

  The Financial Services Roundtable said:

       This legislation has the potential for unintended 
     consequences. It's important for Congress to explore all 
     possible outcomes and costs of this proposal, especially the 
     impact on consumers.
       A transaction tax on financial services products will hurt 
     retail investors, retired Americans, and small businesses, 
     effectively making it more expensive for them to invest and 
     plan for the long term. Without hearings, these implications 
     and others will not be properly addressed.

  Again, the Securities Industry and Financial Markets Association has 
raised similar concerns, saying that this could lead to a financial 
transaction tax which will hurt all of us.
  TechNet opposes this, saying:

       Imposing a new Internet sales tax regime is a tremendously 
     complex issue that should be addressed through regular order, 
     starting in the Senate Finance Committee, and done in a 
     thorough and deliberative manner.

  That has not been done here.

       We should not rush a proposal that is riddled with holes 
     and, most importantly, does not provide enough protections 
     for small businesses, the back bone of our economy.

  Americans for Prosperity opposes this. Americans for Prosperity says:

       This bill would not level the playing field; it would 
     burden online retailers in a way that brick-and-mortar stores 
     are not. Complying with the internet sales tax would be a 
     considerable administrative burden for companies, 
     particularly for small businesses.

  Freedom Works opposes this as well. Heritage Action for America 
opposes this. The National Taxpayers Union opposes this. The 
Competitive Enterprise Union opposes this. Competitive Enterprise 
Institute opposes this, as well as the Council for Citizens Against 
Government Waste. These are groups that are committed to low taxes, 
less government, and free enterprise so we can have a strong economy.
  Again, I encourage my colleagues on both sides of the aisle--
especially my colleagues on this side of the aisle--to listen to the 
red flags these groups and several of my other colleagues have raised.
  I will conclude by once again restating the serious concerns I have 
about this legislation. I have concerns about the impact on small 
business owners in my State and in States across the Nation. I have 
concerns about the impact on online businesses that have been such an 
area of growth for this country.
  The concerns about the administrative application of this bill--I 
showed my colleagues all the tax jurisdictions. To put that burden on 
businesses is absolutely wrong. It is wrong for creating jobs in this 
country, and it is absolutely wrong to put such an administrative 
burden on people who are working so hard in starting their businesses 
and thriving and making sure they grow.
  I believe we are opening Pandora's box with this bill, and this 
shouldn't be done in the manner it has been--without regular order. We 
are talking about a massive reorganization on how sales taxes are 
collected in this country. What will be next? What will the States ask 
us for the authority to tax next? That should be a very big question 
for our colleagues.
  I strongly encourage my colleagues to put the brakes on this bill and 
to think about the harm this legislation would do to small online 
retailers across America. When consumers and online retailers in the 
States of my colleagues find out what is actually in this bill and they 
don't understand why their Senators would support an online sales tax 
bill, I know they will raise many concerns to my colleagues when they 
have the administrative burden and the nightmare of trying to collect 
for 9,600 tax jurisdictions in this Nation.
  I urge my colleagues to oppose this bill. Thank you.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. FRANKEN. Mr. President, I rise today in support of the 
legislation that will level the playing field for brick-and-mortar 
retailers in Minnesota and across our Nation. I join my bipartisan 
group of friends, including Senators Durbin, Enzi, Heitkamp, and 
Alexander, in support of the legislation we are debating this week, the 
Marketplace Fairness Act. It will simply allow States to help their 
brick-and-mortar retailers, including the mom-and-pop shops on Main 
Street, stay competitive in a marketplace where online sales have 
become a fact of life. This legislation is a commonsense measure that 
brings our sales tax laws into the 21st century.
  In Minnesota the retail industry includes nearly half a million 
workers--about one in five jobs in our State--and those retailers need 
to compete on price and on service every single day. But the current 
sales tax system makes it impossible for them to compete on an even 
playing field.
  Take Michael Norby, who owns Norby's, a department store in downtown 
Detroit Lakes, MN, whom I met last August. His situation and what I 
have learned from him explains a lot about why I support this bill. 
Norby's has been in his family since 1906. Mr. Norby wants to compete 
with the big guys--with the Amazons and the Overstocks of the world. He 
said he can compete with anybody just as long as it is on a level 
playing field. He said: Once you bring those guys onto the same playing 
field as the rest of us, we will compete with them.
  But there is a problem. Mr. Norby described what they see in Norby's 
every day. We have heard it from other Senators. It is called 
showrooming. The customers come and check out the merchandise, they get 
help from a sales associate, then they pull out their smart phones and 
say: I can get this cheaper online. When Norby's has to collect sales 
tax and the other guys don't, it makes it impossible to compete. Mr. 
Norby describes this simply as an issue of fairness. And he is right.
  Brick-and-mortar stores such as his should be able to compete on the 
same terms as online retailers. That is what this bill does, and that 
is why Mr.

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Norby supports the Marketplace Fairness Act. But it is not just about 
fairness. When Mr. Norby is able to compete on fair terms, he will be 
able to hire more people. That is what will happen when the Marketplace 
Fairness Act passes. And what goes for Norby's goes for other 
businesses around Minnesota. The Marketplace Fairness Act is going to 
help the local businesses in our communities that provide jobs to our 
constituents. And when customers shop at local retailers, that money 
then supports the local community and it stays in that community.
  The Marketplace Fairness Act will help our States and our communities 
in another way. State and local budgets have been hit really hard since 
the great recession. One thing that has meant is that even though the 
private sector jobs have grown for the past 37 months, the public 
sector has shed a tremendous number of essential jobs--teachers, 
firefighters, police officers. That is why so many Governors across 
this country support efforts of reform, because it is the right thing 
to do for their States.
  Republican Governors in Alabama, Arizona, South Dakota, Georgia, 
South Carolina, Idaho, and many other States support the concept of 
leveling the playing field for small businesses because it brings much 
needed revenue to their States without creating a new tax. There is no 
new tax created here. It is simply going to improve compliance under 
existing laws.
  Minnesota has lost an estimated $397 million in revenue in 2011 alone 
from taxes owed but not collected on remote sales. I am sure that $397 
million could do a lot for the people of Minnesota, including hiring 
back some of those teachers and firefighters and police officers, 
making improvements in infrastructure, in education, and in so many of 
the things that create prosperity and that affect the middle class.
  I have heard from big retailers in Minnesota, such as Best Buy and 
Target, about how important this issue is, but I have also heard from 
countless mom-and-pop stores, such as Norby's Department Store. I have 
spoken with the Minnesota Retailers Association and the Metro 
Independent Business Alliance. In addition to retailers, I have heard 
from the League of Minnesota Cities, from mayors across the State, and 
from our Governor--all who understand what that revenue they are 
missing can do for our communities.
  The Marketplace Fairness Act is bipartisan, and it is a commonsense 
bill. I urge my colleagues to support this legislation.
  Thank you, Mr. President. I yield the floor.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. BLUNT. Mr. President, I ask unanimous consent to speak as in 
morning business as my remarks will not relate to the business at hand.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BLUNT. Mr. President, first of all, I wish to talk about the bill 
that is on the floor. I agree with Senator Franken--this is a bill that 
enjoys bipartisan support. We saw in the budget debate just how broad 
and how bipartisan that support is. It is the right thing to do. It is 
the fair thing to do. It is a situation where government no longer 
decides that one business located in a community that provides the 
police protection, the sidewalk, and whatever else one might use as one 
goes into a local store and looks something over, is disadvantaged over 
a business that is located somewhere else.
  Also, there is a fundamental policy of the importance of having laws 
on the books that are actually enforced. In almost all the States--I 
think the number is somewhere near 37 or 38 States--this tax is 
currently due. This tax is supposed to be voluntarily paid, and winking 
and nodding on not paying this tax creates real concerns. I think in 
Missouri last year--a State where this tax is supposed to be paid as a 
use tax--300 people filed that they owed this tax and paid some of that 
use tax. Now, my absolute certain guess is that more than 300 
Missourians received something in the mail at their house that didn't 
have taxes paid on it when they received it.
  So my view would be that we should do one of two things: We should 
either take all of those laws off the books or determine a way where 
the laws that States have are actually able to be enforced by those 
States.
  States have a right to decide, no, we don't want to be a part of this 
compact. We don't want to be a part of it. We don't want this sales tax 
revenue. We don't want to collect the money that is due on the same 
product in our State. But they also have the right to say, yes, that is 
our law, and we need to collect that tax, and we do not want to pick 
winners and losers.
  From the point of view of some of the most conservative leaders in 
the country, including those who are in government--Al Cardenas, the 
chairman of the American Conservative Union, says:

       When it comes to state sales taxes, it is time to address 
     the area where federally mandated prejudice is most 
     egregious--the policy toward Internet sales, the decades old 
     inequity between online and in-person sales as outdated and 
     unfair.

  Governor Mike Pence from Indiana says:

       I don't think Congress should be in the business of picking 
     winners and losers. Inaction by Congress today results in a 
     system today that does pick winners and losers.

  Another Indiana Governor, Mitch Daniels, said:

       Sales taxes that states impose ought to be paid, and paid 
     by everybody equally and collected by everybody in the retail 
     business.

  Art Laffer, in a Wall Street Journal article just this week, said:

       The principle of levying the lowest possible tax rate on 
     the broadest possible tax base is the way to improve the 
     incentives to work, save and produce--which are necessary to 
     reinvigorate the American economy and cope with the nation's 
     fiscal problems. Properly addressing the problem of e-
     fairness on the state level is a small, but important step 
     toward achieving this goal.

  Art Laffer--President Reagan's adviser on exactly that concept of 
having a tax that is fairly applied in the broadest possible way--is 
supportive of this, along with Mitch Daniels and Mike Pence and Al 
Cardenas and many other conservatives who have looked at this as both a 
fairness issue and an issue of simply providing a way that States are 
allowed to enforce their law.
  Regulating interstate commerce is one of the principal reasons to 
have a Constitution and a Federal Government.


                         Essential Services Act

  Mr. President, the other thing I would like to talk about is what 
happened beginning on Sunday in the country as people tried to travel 
when approximately 47,000 Federal Aviation Administration employees 
were furloughed, and furloughed in a way that created needless airport 
delays nationwide.
  The announcement came on the heels of a report that the President has 
cut other public services, such as the self-guided tours at the White 
House. I cannot imagine how much the self-guided tours at the White 
House cost, but I do know it was cut when for almost every school 
student in America who comes to Washington, one of the things they 
would like to see is the White House. So I guess there is some 
immediate pain involved there, just like there has been pain involved 
at airports since Sunday.
  The airline industry was not even told until late last week that this 
was going to happen. This has been mismanagement, and intentional 
mismanagement. As late as September 28, the Office of Management and 
Budget sent out a notice to the entire executive branch of the 
government that said: Spend your money--this is for the spending year 
that begins October 1--spend your money like the law will not be 
obeyed. Suddenly, 6 months into the spending year, the spending caps, 
the budget caps, the amount of money that had been appropriated beyond 
that--it is twice as big a problem as it would have been October 1. 
Then you have to give notice to people that they are going to be 
furloughed, if that is the option you have taken, and it is a bigger 
problem than it needed to be.
  During his sworn testimony before Congress last week, FAA 
Administrator Michael Huerta admitted that the agency has the 
flexibility under current law to transfer up to 2 percent

[[Page 5659]]

of funding from one activity to another without congressional action, 
and also they could ask to transfer up to 5 percent--setting 
priorities--by asking Congress. It would be 2 percent without even 
asking Congress and 5 percent by asking Congress that could be 
transferred.
  There was a serious discussion and an amendment offered early this 
year in the continuing resolution debate to give the agencies the 
authority they needed to set priorities between now and September 30. 
But the administration clearly said it did not want to be able to set 
those priorities.
  The idea that any reduction in Federal spending has to create the 
maximum amount of pain is offensive to me. I think it is offensive to 
most Americans.
  The FAA currently spends $2.7 billion annually on nonpersonnel costs. 
The day they started this, saving $600 million by furloughing 
employees, they announced $474 million of new grants for sustainable 
and livable communities.
  I am actually for sustainable and livable communities, but this is a 
new program. It is a program that I would bet a considerable amount of 
money that if the Department of Transportation would have come to 
Congress and said: Could we spend this $474 million on keeping the 
airlines and the airports working--the freight that goes all over the 
country, the people who go all over the country to do business and 
create jobs--I will bet you Congress would have said: Absolutely, take 
that $474 million. Do not announce those new grants that you have not 
told anybody they have yet and use it to solve this problem, while we 
work to see if there are better ways to solve this problem.
  Last week, I introduced the Essential Services Act as a standalone 
bill. I introduced that same act, in fact, during the continuing 
resolution debate. We were able to get a part of it into the continuing 
resolution for food safety inspectors.
  But what the Essential Services Act says is that people who are 
essential to public health and safety have to show up for work. The 
basis for that is President Clinton, in 1995, on August 22, issued a 
letter, an excerpt from which I ask unanimous consent to have printed 
in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         Executive Office of the President, Office of Management 
           and Budget,
                                  Washington, DC, August 22, 1995.

       MEMORANDUM FOR HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES

     FROM: Alice M. Rivlin Director
     SUBJECT: Agency Plans for Operations During Funding Hiatus
       OMB Bulletin 80-14, dated August 28, 1980 (and amended by 
     the OMB Director's memorandum of November 17, 1981) requires 
     all agencies to maintain contingency plans to deal with a 
     possible appropriations hiatus. The bulletin requires agency 
     plans to be consistent with the January 16, 1981 opinion of 
     the Attorney General on this subject.
       The Office of Legal Counsel of the Department of Justice 
     has issued an opinion dated August 16, 1995 that updates the 
     1981 opinion. A copy of the August 16th opinion is attached. 
     You should review your plans in light of this opinion, make 
     any changes necessary to conform to the opinion, and 
     otherwise ensure your plan is up to date.
       Please send a copy of your updated plan to your OMB program 
     examiner no later than September 5, 1995. Any questions 
     should be directed to your program examiner.
                                  ____

                                       U.S. Department of Justice,


                                      Office of Legal Counsel,

                                  Washington, DC, August 16, 1995.

 MEMORANDUM FOR ALICE RIVLIN DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET

     From: Walter Dellinger, Assistant Attorney General
     Re: Government Operations in the Event of a Lapse in 
         Appropriations
       This memorandum responds to your request to the Attorney 
     General for advice regarding the permissible scope of 
     government operations during a lapse in appropriations.
       The Constitution provides that ``no money shall be drawn 
     from the treasury, but in consequence of appropriations made 
     by law.'' U.S. Const. art. I, Sec. 9, cl. 7. The treasury is 
     further protected through the Antideficiency Act, which among 
     other things prohibits all officers and employees of the 
     federal government from entering into obligations in advance 
     of appropriations and prohibits employing federal personnel 
     except in emergencies, unless otherwise authorized by law. 
     See 31 U.S.C. 1341 et seq.
       In the early 1980s, Attorney General Civiletti issued two 
     opinions with respect to the implications of the 
     Antideficiency Act. See ``Applicability of the Antideficiency 
     Act Upon A Lapse in an Agency's Appropriations,'' 4A Op. 
     O.L.C. 16 (1980); ``Authority for the Continuance of 
     Government Functions During a Temporary Lapse in 
     Appropriations,'' 5 Op. O.L.C. 1 (1981) (1981 Opinion). The 
     1981 Opinion has frequently been cited in the ensuing years. 
     Since that opinion was written, the Antideficiency Act has 
     been amended in one respect, and we analyze the effect of 
     that amendment below. The amendment amplified on the 
     emergencies exception for employing federal personnel by 
     providing that ``[a]s used in this section, the term 
     `emergencies involving the safety of human life or the 
     protection of property' does not include ongoing, regular 
     functions of government the suspension of which would not 
     imminently threaten the safety of human life or the 
     protection of property.'' 31 U.S.C. Sec. 1342.
       With respect to the effects of this amendment, we continue 
     to adhere to the view expressed to General Counsel Robert 
     Damus of the Office of Management and Budget that ``the 1990 
     amendment to 31 U.S.C. Sec. 1342 does not detract from the 
     Attorney General's earlier analyses; if anything, the 
     amendment clarified that the Antideficiency Act's exception 
     for emergencies is narrow and must be applied only when a 
     threat to life or property is imminent.'' Letter from Walter 
     Dellinger to Robert G. Damus, October 19, 1993. In order to 
     ensure that the clarification of the 1990 amendment is not 
     overlooked, we believe that one aspect of the 1981 Opinion's 
     description of emergency governmental functions should be 
     modified. Otherwise, the 1981 Opinion continues to be a sound 
     analysis of the legal authorities respecting government 
     operations when Congress has failed to enact regular 
     appropriations bills or a continuing resolution to cover a 
     hiatus between regular appropriations. . . .

  Mr. BLUNT. That letter from Alice Rivlin, the Director of OMB, says: 
Here are the people who have to show up for work if the government 
shuts down. The government did shut down, we all remember, in 1995, and 
these people did show up for work.
  On April 6, 2011, it appeared we might have another government 
shutdown, and the Obama administration put out a similar letter based 
on the same groups of people. These are not hard people to identify, as 
it turns out. On April 6, 2011, the examples they gave of essential 
employees who would have to work would be: FAA employees who would keep 
the air traffic control system open, FEMA disaster operations would 
continue, Social Security checks would be sent out to beneficiaries, 
the National Weather Service alerts and forecasts would be maintained, 
the U.S. Postal Service would continue to collect mail and deliver 
mail, the Customs and Border Protection activity would continue, and 
the food safety inspectors would show up.
  There is a list. Mr. President, I ask unanimous consent to have this 
notice from the Obama administration printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record as follows:

          Email Guidance From OPM to Agencies (April 6, 2011)

                     Shutdown Contingency Planning

       The Administration is committed to working out a compromise 
     for funding the remainder of the fiscal year so that we can 
     avoid a costly and disruptive shutdown that would imperil our 
     economic recovery. Yet, the Administration is preparing for 
     all possible outcomes.
       In the event of a Government shutdown, Federal departments, 
     agencies, and the District of Columbia are legally prohibited 
     from incurring further financial obligations for those 
     activities that are funded by the annual appropriations that 
     have lapsed--with the exception that an agency may incur 
     those obligations that are necessary to carry out an orderly 
     suspension of operations and to perform certain legally-
     defined ``excepted'' activities. Excepted activities include 
     the safety of life and protection of property. (Since the 
     general prohibition on incurring obligations relates to those 
     activities that are funded by the annual appropriations that 
     have lapsed, an agency may continue to carry out activities 
     that are supported by other sources of funding which continue 
     to remain available to the agency, such as existing balances 
     of a multiyear appropriation.) Across the Federal Government, 
     a shutdown would mean that many of the essential services 
     that Americans rely on would be suspended or required to 
     operate at lower levels, and many Federal employees would be 
     furloughed and unable to work.
       Below is a snapshot of how many major Federal activities 
     would be affected. This is

[[Page 5660]]

     not a comprehensive list. For more details, please contact 
     the relevant Federal agency directly.


              Examples of Services That Would Be Affected

       The Federal Housing Administration (FHA) would not endorse 
     any single-family mortgage loans or have staff available to 
     process and approve new multifamily loans. FHA single-family 
     lending represents a market share of more than 20 percent of 
     overall loan volume (home purchases and re-financing).
       No new approvals of SBA-guaranteed loans for business 
     working capital, real estate investment or job creation 
     activities would occur.
       National Parks, National Forests, and the Smithsonian 
     Institution would be closed.
       Those filing paper tax returns would not receive tax 
     refunds from the IRS, and many taxpayers would be unable to 
     receive service from the IRS to help them meet their tax 
     obligations. For example, 400 walk-in service centers would 
     be closed.
       The Mine Safety and Health Administration would not be able 
     to conduct regular safety and health inspections.
       Only emergency passport services would be open; normal 
     processing would not.
       Department of Commerce grant-making programs for economic 
     development would cease, as would most payments by HUD's 
     Community Development Block Grant program to State and local 
     governments.
       USDA would not be able to approve any grants, loans or loan 
     guarantees for its rural housing, utilities, business, and 
     community facilities programs.
       Farm loans, farm payment, and enrollment in conservation 
     programs would cease.
       Agricultural export credit and other agricultural trade 
     development and monitoring would stop.
       The Community Development Financial Institutions Fund would 
     suspend its grants and technical assistance to communities 
     across the country, delaying investments that finance 
     businesses and create jobs in distressed neighborhoods.
       Inspections of stock brokers, receipt and publication of 
     corporate financial disclosures, and routine oversight of 
     financial markets by Federal agencies would cease.
       Enforcement actions would be postponed in all but a few 
     cases.
       Certain FEMA flood mitigation and flood insurance 
     operations would be suspended.
       Agricultural export credit activity and other agricultural 
     trade development and monitoring would cease.
       Most of the Veterans Benefits Administration customer 
     support services would be suspended.
       Most Department of Defense budget planning and preparation 
     would cease; military personnel would not receive paychecks 
     during a funding lapse.
       Customer service would be reduced across the federal 
     government.
       Department of Justice civil litigation activities, 
     including civil rights enforcement and defensive litigation 
     (where the U.S. government is a defendant), would mostly 
     stop.
       Freedom of Information Act (FOIA) processing would cease.


           Examples of Services That Would Remain Operational

       The Federal Aviation Administration would keep the air 
     traffic control system open and safe.
       FEMA disaster operations would continue.
       Social Security checks would be sent to beneficiaries.
       National Weather Service alerts and forecasts, as well as 
     volcano and earthquake monitoring by other agencies, would 
     continue.
       The U.S. Postal Service would continue mail collection, 
     delivery, and other operations.
       Customs and Border Protection activity would continue.
       Military operations in Afghanistan, Libya, and Iraq would 
     continue.
       NASA satellite missions currently in operation would 
     continue.
       SNAP, WIC, and other child nutrition benefits would 
     continue.
       Most Federal Student Aid operations would continue.
       Core Federal law enforcement, such as the FBI and U.S. 
     Marshals, would continue, as would prison and detention 
     operations.
       Medical services for veterans would continue to be 
     available.
       FDA monitoring of drug imports would continue.
       Meat and poultry inspection would continue.
       Treasury's core payment and collection programs would 
     remain operational.
       OMB is working diligently with Agencies to finalize 
     operational plans for all possible scenarios, including a 
     Government shutdown. We will continue to make new information 
     available to the media and general public as it is finalized.

  Mr. BLUNT. This is not very complicated. All the Essential Services 
Act says is that the people whom the government said had to show up if 
there is no money to run the government would also be the people who 
would be prioritized and would be allowed to show up if there is a 2.5-
percent cut. Who can argue with that?
  People are told: The weather is really bad today. If you think you 
have some risk to your person to get to work, do not come in. But these 
people are told: If you can possibly get to work, get to work. If the 
food safety inspector does not get there, 500,000 Americans could not 
work that day if they did not show up at every food safety facility 
where that one Federal employee has to be there for everybody to work. 
If the air traffic controller does not get there, and the runways are 
cleared off and planes can land and planes can take off, that may not 
happen if the air traffic controller is not there.
  This says those people would not be subject to furlough under the new 
Budget Control Act. They would have the same priority on a day when 
there is a reduction in the funding for a Department that they had in 
the day when there was no funding for the Department. If people are 
told they have to show up when there is no money to run the government, 
surely those same people need to show up if there is a 2.5-percent 
reduction.
  The definitions set by President Clinton and President Obama in their 
administrations are fine with me for this purpose. Washington is living 
outside its means today. Federal spending has skyrocketed 19 percent 
since 2008. The Federal debt is approaching $17 trillion. Clearly, we 
have to do something about spending, and we can do that without 
interrupting people's lives. We can do that by prioritizing what the 
government should do.
  Last week, we had Mr. Huerta before the Commerce Committee that 
Senator Rockefeller chairs and Senator Thune is the ranking Republican. 
I think it was on Wednesday. There was no discussion that on Sunday we 
are going to start furloughs of air traffic controllers.
  In the legitimate oversight responsibility of our committee, we are 
to be told by the FAA Director: Our plans are drawn up. We are about to 
execute them. I am here to testify before the Congress. I think one of 
the things I should tell you is that all kinds of flights are going to 
be delayed on Sunday and Monday because of this plan. It was not 
mentioned. Plenty of questions, even questions about how you were going 
to furlough employees, but no answers.
  I encourage Americans to visit our Web site: bitly.com/cutwasteful
spending. Let's find the things we can cut rather than finding things 
that you cut--from the White House tours, to vaccines for kids, to air 
traffic controllers, to border security guards. I hope we will do the 
right thing. I encourage Senator Reid to allow a vote on the Essential 
Services Act and prioritize the way we spend money.
  Back to the start of my remarks, I am a proud cosponsor of the 
Marketplace Fairness Act. Senator Pryor and I intend to offer an 
amendment on that to just clarify current law, that we are not taxing 
use of the Internet; we are just having a fair tax for products people 
buy over the Internet.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Ms. HEITKAMP. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. HEITKAMP. Mr. President, I rise in response to my good friend, 
the Senator from New Hampshire, who obviously feels very passionately 
about the bill, as do all of us who have worked for years and years to 
try to create a marketplace that is fair and equitable for so many 
people in this country, particularly our brick-and-mortar Main Street 
businesses.
  I can certainly appreciate that remote sellers in New Hampshire who 
have, in fact, enjoyed a nice opportunity to move products into the 
marketplace free of any burden--unlike a Main Street business with any 
tax collection burden--that they do not want to lose that advantage 
they have. In many States that advantage can be quite significant.
  I want to give you an example. Today, in our news conference we

[[Page 5661]]

heard from a woman named Teresa Miller. Teresa Miller sells pet 
supplies both in her store and remotely. She operates out of the State 
of Missouri, and in many of the jurisdictions where she sells pet 
supplies, the tax rate can be as high as 9.5 percent. She has a trained 
sales force that listens to customers' concerns about their pets and 
what their pets need in terms of nutrition.
  The customer will walk out of the store, never to return. It is 
pretty clear those customers are buying those products on the Internet 
having used the expertise of Ms. Miller's staff.
  I would suggest that is exactly the situation that we are trying to 
address. The Senator from New Hampshire raised a fair number of points 
which, ironically, can all be responded to and can be addressed by 
simply reading the bill. The first point I want to make is the point 
that someone will have to deal with upwards of 9,600 different 
jurisdictions.
  That is not true. In fact, this bill mandates that if you are going 
to expand your collection obligation to remote sellers, you need to 
participate as a State in a streamlined process either through the 
streamlined process that is already set up or you need to look at a 
bill or some kind of process in your State that will reduce those 
compliance burdens to simply 46 State jurisdictions.
  The other concerns that have been raised--and I want to just take a 
moment. Sometimes too often we do not actually look at what we are 
debating. I want to take a moment and talk a little bit about page 3 of 
the bill. Page 3 provides that in order to qualify, a single entity 
within the State responsible for all State and local taxes and return 
processing and audits for remote sales needs to be sourced to the 
State. There is a single audit requirement and a single State or use 
tax return.
  So these jurisdictions will be limited to simply one within the 
State. The bill clearly provides that. In discussing the certified 
software, talking about how that would provide additional burdens, 
again, understand this bill requires that certified software be 
provided for free to the remote seller. If the remote seller, in fact, 
does use the certified software, that certified software then gives 
them immunity from any future tax liability and audits and gives them 
basically the ability to say: I did my job. I did my due diligence. I 
used the software you told us to use. I do not expect that there is 
going to be an audit that could assess me any additional taxes having 
used that safe harbor.
  The next issue the Senator from New Hampshire raised is the effect of 
this bill on nexus requirements. It gets a little tricky because in law 
we have an obligation in this body to regulate interstate commerce. But 
what we do not, I believe--and some people may disagree. I believe, as 
a lawyer who has litigated a lot of cases, this body does not have the 
authority to determine due process standards under the Constitution. To 
reiterate, it is clearly stated that nothing in this bill affects State 
nexus. So when the good Senator from New Hampshire suggests that this 
will change nexus standards, that is absolutely incorrect.
  The final issue I want to touch on is the issue of the financial 
services tax. I want to make the point that in the bill itself it is 
clearly limited to imposing a sales and use tax obligation. It clearly 
states no other tax will be, in fact, affected by this bill. So I think 
frequently we get into discussions about what if. All of those 
discussions can be clearly clarified by simply reading the bill. That 
is what I would suggest. It is 11 pages. It is very straightforward. 
There has been a lot of work put into this piece of legislation over 
very many years, and a lot of accommodations, including an 
accommodation that you are only required to do this if you have $1 
million in remote sales.
  I am going to close with the words of Teresa Miller. When someone 
asked her how she would feel about this, because she also markets on 
the Internet, she said she would be thrilled to have this obligation 
because it would mean that her remote sales exceeded $1 million.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Ms. KLOBUCHAR. Mr. President, I rise today in strong support of the 
Marketplace Fairness Act. I would like to thank Chairman Rockefeller. I 
would like to thank the two major sponsors of this bill, Senator Durbin 
and Senator Enzi, who have been working on this for years, and Senator 
Heitkamp for her longtime knowledge and leadership on this bill, as 
well as Senator Alexander.
  I am proud to be a cosponsor of this important legislation. It has 
been very important for years for businesses in Minnesota, both big and 
small, and across the country, giving them the certainty they need. 
That is what this bill will do so they can succeed and grow.
  I am encouraged to see the Senate coming together in a bipartisan way 
to create a level playing field for our businesses on Main Street to 
compete. That is all they want to do. They just want an even playing 
field to compete. The bipartisan support for the Marketplace Fairness 
Act is a reminder that when we put politics aside we can get things 
done, something the Presiding Officer from the State of West Virginia 
knows about very much.
  During the budget debate, 75 Senators came together and we succeeded 
in passing an amendment that I cosponsored to the budget resolution 
that helped outline the broad support for a very simple idea: that all 
businesses need to play by the same set of rules.
  When I go around my own State, as I know Chairman Rockefeller does in 
his, I hear from small locally owned retailers, and competitive issues 
are raised all the time. We have small businesses--this gives a sense 
of what we are talking about--places such as the Uffda Gift Shop in Red 
Wing, MN. I hope all of you will visit there. I have been there and did 
Christmas shopping there. There is Mary's Morsels, which is a bakery in 
Eveleth, MN, on the Iron Range, northern Minnesota, where my dad grew 
up; Sleepy Eye Floral--I suggest all of you go to Sleepy Eye, MN, at 
some point in your life. You can then go and buy some flowers at Sleepy 
Eye Floral. You will find big support for this legislation, the 
Marketplace Fairness Act.
  In my time in the Senate I have been committed to a competitive 
agenda that promotes long-term economic growth. Part of that agenda 
includes not only bringing our debt down in a balanced way, promoting 
exports, making sure that our workforce is trained for the jobs of 
today, but it also means an even playing field and making sure that all 
businesses can compete.
  That is what America has been built on. I know our businesses in 
Minnesota want that level playing field. It is time we give it to them. 
That is exactly what this bill does. It allows brick-and-mortar 
retailers the ability to compete against out-of-State Internet 
retailers. States are currently unable to require out-of-State or 
online-only retailers to collect sales tax. It puts local mom-and-pop 
shops at a significant disadvantage.
  Not only that but this loophole--by the way, this is not about adding 
a tax. That is why we have such strong bipartisan support. It is only 
about allowing those taxes to be collected, something most people 
support. I have to tell you that because these taxes are not being 
collected, it creates a loophole that is literally draining billions of 
dollars in lost revenue from State and local governments at a time when 
they need it for police officers, they need it for firefighters, and 
when they need it for our schools.
  Some $23 billion last year alone was lost because these laws were not 
being enforced in an even way. My State lost about $394 million in 2011 
from out-of-State sales taxes that are legally due but not collected. 
This lost revenue translated into over 7 percent of Minnesota's general 
sales tax liability in 2011.
  In our State, local brick-and-mortar retailers assess sales tax at a 
rate of 6.875 percent, while their online competitors typically assess 
no sales tax. That is simply not right. When this happens, city and 
State governments either have to find revenue from other

[[Page 5662]]

sources, such as raising taxes, or they must cut critical services.
  Let's also be clear about what the legislation that Senator Heitkamp 
has so intelligently pointed out--let's be clear about what the 
legislation does and does not do. It does not create any taxes or 
increase existing taxes. It simply gives States the ability to enforce 
their own sales and use tax laws, which reduces the need to raise 
taxes.
  It also relieves customers of the legal obligation to report to State 
tax departments the sales taxes they owe. One of the longstanding 
principles of tax fairness is that taxpayers who engage in similar 
economic transactions should face the same tax consequences.
  Today, that is simply not the case. Minnesota is home to these 
thriving small businesses, but also to many large businesses that are 
in retail, such as Target and Best Buy. I have seen with my own eyes 
people go into Best Buy, spend half an hour with a very eager 
salesperson who is helping them in any way, looking at dozens of TVs, 
and then go back outside the store and buy it on the Internet.
  That is not how things should work. We have to have fairness. That is 
why this bill is called the Marketplace Fairness Act. This bill has 
such strong support from business, such strong support in this Chamber. 
I am very excited about what is going on. We have been having this 
debate for over 10 years now. It is one of the first things I heard 
about when I got to the Senate 6 years ago. It is long past time to get 
this done.
  I yield the floor.
  Ms. HEITKAMP. I suggest the absence of a quorum.
  The PRESIDING OFFICER (Ms. Warren.) The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. I ask unanimous consent that the order for the quorum call 
be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                             Sequestration

  Mr. REID. Madam President, my friend from Oklahoma is on the Senate 
floor. I would ask if he would be kind enough to wait while I say a few 
words and withhold offering the consent agreement to allow Senator 
Schumer to speak for 5 minutes. Following Senator Schumer, I will offer 
the consent agreement. Would that be appropriate for the Senator from 
Oklahoma?
  Madam President, the arbitrary spending cuts in the Budget Control 
Act were designed to be painful--so painful that both parties would 
come together to find a bipartisan way to reduce the deficit. Thus far, 
it hasn't worked. We have reduced the debt by doing a number of 
different things by approximately $2.5 trillion. We have cooperated in 
that regard. The deep cuts required by the sequester failed to bring 
the Republicans to the negotiating table to find more savings or more 
revenue.
  Even after both the House and the Senate passed budget resolutions, 
the House Republican leadership has refused to go to conference to work 
out our differences. Republicans have been telling us for a long time 
that they want regular order. When we come to regular order, they don't 
want regular order.
  Republicans are afraid to even be seen considering a compromise with 
Democrats. I speak more strongly, as the Republicans here in the Senate 
are doing their objection here on going to conference more to protect 
the House. This applies much more to the House Republicans than it does 
to the Republicans in the Senate. The Republicans in the House are 
afraid to be seen considering a compromise with us.
  Because Republicans have refused to negotiate a compromise, 
sequestration kicked in with devastating effect. We are just beginning 
to feel the impact of these deep cuts. Nationwide, the sequester will 
cut 750,000 jobs this year alone. More than 70,000 little boys and 
girls will be kicked off the Head Start Program. Programs funding 
medical research with Duke University, as I indicated on the floor 
yesterday, and scores of other programs that do the same and programs 
that help get homeless veterans off the streets are being decimated. 
Yesterday I spoke about Meals on Wheels. Meals on Wheels is one of the 
programs that are so helpful. Homebound seniors receive one meal a day, 
and it is usually only during the day. These are being significantly 
hammered. I have spoken about Head Start for young children, but 
education programs are being hit very hard. These are programs that 
deal with impoverished children.
  We know the sequester is causing massive delays. I am from Las Vegas. 
I am from Nevada. No place in America is more desperate to have the 
flights on time than tourist-oriented Las Vegas. It is the same in 
Reno. These cuts are hurting tourism in Las Vegas and in all of the 
country.
  It is not only the furloughs at the FAA, it is some of the programs I 
have spoken about and many more. We have seen the dire effects of these 
arbitrary budget cuts, and we have an obligation to stop them. That is 
why I am going to ask unanimous consent to take up and pass legislation 
that would block sequestration until the end of this fiscal year, until 
the first day of October. This would give us 5 months to sit down at 
the negotiating table and work out an agreement to reduce the deficit 
in a balanced way, in a way that doesn't punish the American people and 
our economy in the meantime.
  The legislation I am proposing is simple, and it deserves quick 
approval. There is no reason to go back, even though I would agree to 
it through the Buffett rule.
  Let's do some spending cuts, let's do some more cutting.
  We tried that. It wouldn't work.
  Let's try the flexibility.
  That also won't work because we are dealing with the same amount of 
money.
  I hope this simple solution I am offering will be supported by my 
Republican friends--establishing binding caps on the war spending. The 
wars are winding down, and currently there is $650 billion there. And 
as this bill proposes, the one on which I will ask consent, it will 
close that loophole and propose more than enough savings to offset the 
cost of delaying sequestration for 5 months.
  Let's put a stop to the furloughs, delays, and a stop to the job 
losses. Let's put a stop to the devastating cuts to programs that keep 
our poor children from receiving an equal shot in life. Let's stop 
senior citizens and homeless veterans, who are the most vulnerable 
among us, from falling through the cracks. They may not be as 
transparent as what is happening at our airports, but these are 
devastating to human beings. Let's do it in a fiscally responsible way 
and do it now. Then let's get to work finding a broader agreement to 
strengthen our economy and reduce our long-term deficits.
  I yield 5 minutes to my friend the Senator from New York as indicated 
with the tentative agreement I requested earlier. Then I will resume on 
the floor to ask for the consent, and my friend from Oklahoma will 
respond.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. SCHUMER. I rise in strong support of the proposal by our 
Democratic leader. We all know that sequestration was a blunt 
instrument, and now it is beginning to hurt. There is delay after delay 
at airports throughout the Nation.
  This is not only a question of traveler inconvenience. Our economy in 
all likelihood will lose many more dollars in the next week or two than 
it costs to furlough the air traffic controllers when businesspeople 
can't travel, when tourists can't travel. I know my home city of New 
York is greatly affected. No one stays in the hotels, no one dines in 
restaurants, and no one attends the shows. This may be repeated in 
destination after destination throughout the country. If people are so 
uncertain of air travel that when they show up at the airport, they may 
wait 1 hour or they may wait 5 hours, they won't go. A good percentage 
will stop their trips.
  So it doesn't make sense to go forward. I think we are in agreement. 
The problem is, how do we fix it? There aren't many ways to fix it 
because if you simply say, give flexibility, the Transportation 
Department has very little flexibility because many of its

[[Page 5663]]

funds are off limits. The highway trust fund, for instance, isn't 
affected by sequestration because those are our nickels and dimes that 
go into the gas tax per gallon, which wasn't affected by sequestration. 
An extremely high and disproportionate number of the Transportation 
Department's expenditures are air traffic controllers themselves.
  We have this problem. As Leader Reid pointed out, we have other 
problems--stopping cancer research and cutting back on NIH and NSF, 
which has always been our seed corn. NIH created a biopharmaceutical 
industry that is second to none and employs millions of people in your 
State and mine. NSF research basically created the Internet, which has 
created millions of jobs and makes the U.S. industry the envy of the 
world.
  So we are cutting our seed corn, the kinds of programs for our 
homeless veterans, and the kinds of programs for our homebound seniors. 
The meat-ax approach of sequestration cuts those across the board.
  My preference would be to close some tax loopholes to get rid of 
sequestration. I don't think we should give tax breaks to oil 
companies. We should not give tax breaks to companies that send jobs 
overseas. That would be my preference. But we know our friends on the 
other side of the aisle are against any revenue increases right now, so 
to put this on the floor immediately would be an exercise in futility.
  The leader's plan is the right plan. It is ingenious. We have $600 
billion on the budget that we know we won't spend the vast majority of 
because no one believes we will have troops in Iraq or Afghanistan 5 
years from now. Yet that money is sitting there on our budget and 
preventing cancer research, air traffic controllers, and money for 
homeless vets from being used where it was supposed to be.
  So the proposal to take a certain amount of money out of the OCO--the 
overseas contingency operations--which we know we won't spend, makes no 
sense. Now you say: Well, you know you won't spend it; it is a gimmick.
  It is not a gimmick. It is sitting there in the budget occupying 
space and could be used by these other agencies. And to insist the OCO 
continue is causing real pain, causing our economy not to grow as 
quickly, causing vulnerable people to be hurt, and causing research--
the seed corn of America--to decline.
  Our colleagues on the other side of the aisle are saying that 
President Obama is to blame for these delays. He has very little choice 
if we don't change things, and this is a way to change things.
  If we want to get rid of these delays, which we all on both sides of 
the aisle very much desire, I would propose to my colleagues that the 
solution proposed by the majority leader is the best way to go given 
the political necessities on the other side, the desire not to have any 
revenues--even closing certain tax loopholes.
  So I would hope we could come together and vote on this solution. 
Cutting the OCO has been supported by Republicans. I remember Senator 
Kyl, a former Senator from Arizona, was advocating this late last year 
to deal with the doc fix, the DRGs, and other things. The people will 
come together on this. So I hope we can vote for this proposal, put the 
air traffic controllers back to work off their furloughs, get rid of 
these delays, and then come together in a grand agreement in time for 
the September budget.
  I yield the floor.
  The PRESIDING OFFICER. The majority leader.

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