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Department of State, Foreign Opertions, and Related Programs Appropriations Act, 2006

Location: Washington, DC



Mr. COBURN. Mr. President, I will make a few comments before I call up a couple of amendments.

No. 1, I am disheartened that the committee, as well as the administration, would not take our restrictions on the USAID program for malaria. The Federal Financial Management Subcommittee of the Homeland Security and Governmental Affairs Committee had a very insightful and revealing hearing that revealed in testimony that the vast majority of the funds to help those in Africa suffering from malaria, both in terms of prevention and treatment, were not going for that purpose, but yet were being consumed by consultations and travel, and very little of the $90 million that is allocated each year actually is going to treat malaria.

One million African children under 5 years of age each year die from a totally preventable disease, malaria. It takes 90 cents to treat them and cure them of that disease.

I am markedly disappointed in the process that even though the administration has a great new program for malaria in Africa, limitations on the present program would not be agreed to and put in place. I assure this body and the administration that within 3 months, we are going to look at the USAID program for malaria again and if, in fact, they are still wasting money the way they are today and not achieving the goals of prevention and treatment for malaria, then we will be bringing another piece of legislation to the floor to modify the expenditures and put a limitation on them.

I also am somewhat disheartened that the State Department failed to recognize the contribution of 47 individuals in Iraq and that, through their own inappropriateness and lack of ability to follow the law, overpaid these individuals. Their average work time was 16 to 18 hours a day, 7 days a week over the last year, and the State Department has now made a very onerous and difficult situation for those people, who are still in Iraq, to now have to pay back money inadvertently overpaid. This is a small price to pay. The cost to collect the overpayments is going to be more than the forgiveness would have been. But yet we have a stiff rule that we seem to be more interested in doing what the State Department wants in terms of its technical problems instead of doing what is probably the best thing to do for these people who have sacrificed greatly in Iraq.

We are going to be debating a couple of amendments in a few moments. One amendment will be an amendment under which Senator Boxer and I limit some funds of the Export-Import Bank in terms of financing sales of nuclear powerplants to China. It is a fairly straightforward amendment. There is no question we want to promote jobs in this country. It is important for us to stay competitive. But competing with the French in terms of subsidizing a British corporation, not an American corporation, and subsidizing that to the intent that it will, in fact, allow technology that Westinghouse Electric, which is owned by British Nuclear Fuels which is owned by the British Government, that technology 10 years from now will belong to the Chinese. We are in essence through an American taxpayers' loan, subsidizing the Chinese to take more of our technology.

The press is rife, the reports are rife, our trade people also recognize intellectual property is not something that is honored by the Chinese Government. There are some very significant inconsistencies in our policy that I think we need to reinforce, and this amendment with Senator Boxer is intended to do that.

The other amendment I will be calling up has to do with the expenditure of USAID in terms of entertainment. There is no question that we have much to do in terms of our foreign policy internationally and that the USAID can and should be the agent of a lot of those changes. However, there are significant problems associated with that, and we will be discussing that.

I ask unanimous consent to set aside the pending amendment.

The PRESIDING OFFICER. Without objection, it is so ordered.


Mr. COBURN. I call up amendments Nos. 1241 and 1242.


The Senator from Oklahoma [Mr. Coburn], for himself, and Mrs. Boxer, proposes an amendment numbered 1242.

Mr. COBURN. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

The PRESIDING OFFICER. Without objection, it is so ordered.

The amendments are as follows:

(Purpose: To prohibit funds from being made available to the United States Agency for International Development for entertainment expenses)

On page 206, strike lines 6 through 10, and insert the following:


SEC. 6004. None of the funds appropriated or made available pursuant to this Act may be used for entertainment expenses of the United States Agency for International Development.

(Purpose: To prohibit any funds from being used by the Export-Import Bank of the United States to approve a loan or a loan guarantee related to a nuclear project in China)

On page 326, between lines 10 and 11, insert the following:


SEC. 6113. Notwithstanding any other provision of this Act, none of the funds appropriated or made available pursuant to this Act may be used by the Export09Import Bank of the United States to approve an application for a long-term loan or a loan guarantee related to a nuclear project in the People's Republic of China.

Mr. COBURN. Amendment 1241 has to do with entertainment expenses associated with USAID. I have a couple of charts that I will refer to. We are going to run a true on-budget deficit this year of $541 billion. It is inappropriate for bureaucracies of our Government to spend money in ways that are not appropriate when, in fact, that money can do much greater things.

In the current bill, and since 1999, there has been a limitation of $5,000 in the USAID budget for entertainment. Much of this entertainment has gone for personal gifts, for live entertainment, for dinners. One of the things I found quite striking was what the USAID handbook states about spending.

The USAID handbook states: For budget purposes, entertainment includes food and drink, receptions, banquets, live or recorded music, live artistic performances, personal gifts and furnishings.

The USAID handbook also states: The USAID has the authority to use program and regular operating expense funds for entertainment under the necessary expense doctrine. GAO decisions to the contrary are not binding on the executive branch. There are no restrictions on the use of the entertainment account or representation allowances for alcoholic beverages.

Let us talk about what $5,000 per pop could do. Five thousand dollars per pop in Africa today is enough to prevent 1,250 babies from getting HIV. Are we going to have a party or buy gifts for officials of African governments, or are we going to cure babies of HIV and prevent the transmission?

Five thousand dollars is enough to prevent 5,000 children from dying of malaria. Are we going to have a party with USAID, are we going to have entertainment, or are we going to direct USAID back to their directed purpose, which is carrying out the good will and the financial assets of Americans to make an impact on the health, lives, and prosperity of those we are attempting to serve?

Five thousand dollars would buy 5,000 5-gallon bottles of clean water for the multitudes of cities that have no clean water. Are we going to spend it on entertainment--and we do not care what the GAO says, we do not care what Congress says--are we going to spend it on entertainment and furnishings?

Five thousand dollars would buy 300 bags of rice, oats, and wheat for communities in need of food and nourishment. Are we going to have entertainment for USAID, or are we going to send the money?

The problem the American people have with our foreign aid is not that they do not want to help people. They want to help. The problem is they have become skeptical that their tax dollars are actually getting to the very people they intend and want to help. USAID can limit this. They can make a bigger difference if, in fact, they will eliminate the entertainment portions of their budgets.

Five thousand dollars can buy 10 additional body armor units for our troops. Are we going to have entertainment by USAID, or are we going to have additional body armor units for our troops?

I am not a prude. I think there is an appropriate time for us to greet in a diplomatic fashion, in a way that is commensurate with what is protocol, but I do not think USAID has to be doing that. There are other areas within the State Department that should be doing that.

The last thing I would say is $5,000 may seem like an inconsequential amount one at a time, but when it is done multiple times, it is not inconsequential, No. 1. No. 2, it could be the difference of life and death for the very people USAID proposes to want to help.

I yield the floor.


Mr. COBURN. Mr. President, I rise in support of an amendment that I called up earlier, the Coburn-Boxer amendment, banning the Export-Import Bank of the United States from funding construction of nuclear facilities in the People's Republic of China.

I want the American people to know, and especially this body, that we are walking down a road using taxpayers' funds for low-interest loans to finance a British Government-owned company to sell U.S. nuclear technology to the Chinese Government, which has already said that after they get that technology, they are going to take it and then they are going to start utilizing it to resell the same nuclear technology around the world. To me, that seems insane, that we would give a subsidy to finance the export of technology--American technology owned by the British Government through the British Nuclear Fuels Corporation--to the Chinese, who will then take that technology, once they build nuclear plants, own it themselves, and then sell that product around the world.

We are going to take the largest amount of money the Export-Import Bank has ever used, $3.2 billion, a sum bigger than the Export-Import Bank has ever loaned--$1.8 billion was the highest in the past--and we are going to subsidize a country that is holding $165 billion worth of our notes. We already owe them $165 billion. They have plenty of cash to finance this themselves. And the reason we are told we are going to do this is it is going to help hold on to 5,000 jobs.

The fact is, if we take that same kind of subsidy, through our Export-Import Bank, and put it into venture capital, small business, research in this country, we would

create hundreds of thousands of jobs. So the only rationale for doing this is to hang on to some jobs. And we are going to ask the American taxpayer to subsidize this.

What happens if the Chinese do not pay back the loan? The American taxpayer has to pay $5 billion. That is what happens if they, in fact, do not pay it back. I do not know if that is realistic or not. I don't know what is going to happen over the next 10 years to a $5 billion loan to a country that already is attempting to buy, through their Government, assets of this country's oil infrastructure.

I think it behooves us to have a vigorous debate on what our policy should be with the Export-Import Bank and whether it is a shortsighted policy to save 5,000 jobs. The actual logic behind that is that if we don't do it, France will do it; France will beat us on this contract because the French Government will do it.

If we are going to invest $5 billion or put that on the line, let's loan it to small businesses across America. Let's invest in technology here rather than invest in a corporation that is owned by the British. Let's invest in American corporations. Let's give American companies this kind of benefit.

But, in fact, we have chosen to go down this path for a very good reason. It is important to save jobs. I don't mean to demean that whatsoever. But it is a short-range answer to a very long-range problem. If, in fact, $5 billion will save 5,000 jobs in the United States, that is $100,000 a job. It is important for us to be clear about what the intent is. The Export-Import Bank was designed to help us enhance our exports.

First of all, there are some jobs in California and Pennsylvania and Louisiana that are affected by this deal. It is not to say that those jobs will not be there if this deal doesn't go through. As a matter of fact, I would say, as we look at the need for nuclear energy in the future in this country, most probably we are going to see some greater demand from these companies. But I find it very ironic that a country that has a trade surplus with us approaching $200 billion, that has a significant growth factor that is greater than ours, that is ``cash rich'' at this time to the tune of $165 billion just in U.S. Treasury securities, that the taxpayer ought to be financing the sale of nuclear powerplants and nuclear technology to China.

With that, I reserve the remainder of my time.


Mr. COBURN. A couple of points: No. 1, this is not just the British-owned corporation; this is a corporation owned by the British Government. There is a big difference. It is not a privately held corporation. The British Government owns British Nuclear Fuels, which owns Westinghouse. If there is a subsidized loan that ought to go anywhere, it ought to come from the British, not the American taxpayers.

Second, I spoke in error. It is not $100,000 per job but $1 million per job; $5 billion for 5,000 jobs is $1 million a job. That is what we are putting at risk to save 5,000 jobs.

The third point I make is we are not just offering a loan subsidy and guarantee to a Westinghouse power generation subsidiary of British Nuclear Fuels owned by the British Government.

We are also allowing a subsidy for Mitsubishi Heavy Industries that also has a large portion of this deal. What we are doing is financing just as many jobs out of the country as we are in the country. So the claim that we want to do this to save 5,000 jobs means we are going to enhance the ability of the Japanese steel manufacturers to compete with our steel manufacturers because we are going to give them a guaranteed loan to supply the steel for this facility.

It makes no sense. How do we best create more jobs in this country? We trim Government spending. We cut taxes. We allow the entrepreneurs of this country, the people who have paid 14 percent more taxes this year already, to have the money with which to invest. If we are not going to do that, then let's subsidize the small businessmen, the venture capitalists in this country. Let's put it into our own research and development, our own science and our own technology. If we are going to put the taxpayer on hold for $5 billion, I would much rather do that than trying to collect it, because I think we would have a tough time trying to collect it from the Japanese if they did default. I don't think that would happen. But we start putting American taxpayers', Americans' future at risk on something that does not make any sense.

I have a difference of opinion with the Senator from California about the need for nuclear power. We differ on that. There is no question about that. I happen to believe this very deal will come back to haunt us. I believe 20 years from now we will be buying nuclear powerplants from the Chinese rather than them buying from ourselves or from the British, because if you look at every other major manufacturer that has a deal in China, one of the components to have the deal in China is to give up your technology at the specified period of time. There isn't one manufacturer over there today that has not agreed to license or give away their technology for the opportunity to enter that market. That is not free trade. That is extortion and that is what is going on in China today. To get into that big market and to have access to that labor market, what American companies are doing is giving up their future. They are giving away their technology. And this is more of the same. It is bad medicine for America. It is bad medicine for American workers. It is bad medicine for investment in our own future technology. And it is bad medicine for the American taxpayer.

With that, I will reserve the remainder of my time.

I note the absence of a quorum.


Mr. COBURN. Will the Senator yield?

Mr. SANTORUM. Yes, I will be happy to yield to the Senator from Oklahoma.

Mr. COBURN. I understand we are competing in the global economy and the French or the Russians are going to subsidize it, but the fact is this is a very low interest rate. We are borrowing money from China today and paying over 4 percent and we are going to finance this at less than that, so the cost to the taxpayer is real. There is a real cost to the American taxpayer. It is the difference between at what rate they invest and the interest rate we pay to them and at what rate we are going to subsidize this loan. So there is a cost to the taxpayer.

The other thought I hope the Senator would agree with is, this is not just to Westinghouse, which is owned by the British Government, not a British corporation. This is also to Mitsubishi Steel because we are now going to take American taxpayer dollars, the difference between what we are paying on their notes that they are investing, their cash investment here, and we are going to subsidize a Japanese company. I hope the Senator would agree we shouldn't be doing that.

Mr. SANTORUM. Two things. First, the Senator is right, Westinghouse is owned by an entity owned by the British Government. As you probably also know, there have been widely spread reports that they are selling that division, they are selling Westinghouse. So probably by the time this deal goes through, it will not be owned by the British Government and will be--by the way, I don't have anything against the British Government. They have been great allies and I don't want to suggest somehow that I am speaking ill of that entity. All I am suggesting is Westinghouse is clearly, according to news reports, going to be spun off and sold and maybe recapitalize itself as an American company. Nevertheless, the jobs are here. The benefit is here. With respect to Mitsubishi, if it is your test then to suggest that any project being built has to be built with all-American steel, all-American concrete, all-American--obviously, in a global economy that is not going to happen, particularly if you are building a product in China.

Mr. COBURN. Will the Senator yield?

Mr. SANTORUM. In one second. So I would suggest, yes, there will be lots of corporations around the world that are part of this deal to build this reactor that would benefit from this, just as probably you could make the argument--and I don't want to make it for you, but I will make it for you--there may be an American company that benefits from the French building this reactor but certainly not to the extent if Westinghouse builds it.

Mr. COBURN. Would the Senator agree that today this is a British-Government-owned company and that the profits from this will accrue to the benefit of the Mitsubishi Corporation and Shaw Corporation? Why in the world wouldn't those two governments be subsidizing the loan rather than this government?

Mr. SANTORUM. Well, again, Westinghouse is a company based in the United States. As you know, we have multinational companies that are headquartered all around the world. But the bottom line is Westinghouse is a U.S. company, it pays U.S. taxes, it has a U.S. payroll, and that is where the AP1000 is being built. The AP1000 is something that was designed--I went and saw it in Pittsburgh, PA. These are the folks who have the technology. These are the folks who are going to be building and constructing this plant.

I am sure there may be some profit. Obviously, I am sure they would not be bidding if they didn't think there was profit. But the profit is in this U.S.-based subsidiary. And so I would suggest that the overwhelming benefit is coming to the United States, not to the British holding company.

Mr. President, I yield the floor.

The Senator from Oklahoma.

Mr. COBURN. The Senator from Pennsylvania didn't hear the debate about the $5 billion loan guarantee, and what that would turn into if we did the same type of thing for other American-owned corporations and invested here. As the Senator from California outlined, the difference is a $100 million investment in highways will produce 5,000 jobs; $100 million invested in small businesses will produce 5,000 jobs.

I still stand by the contention that this subsidy--and that is what it is. We need to make sure we talk about what this really is. This is a subsidy by the American taxpayer, and it is going to cost them money because we are going to loan money at lower than we are borrowing now so there is a net cost to the American taxpayers for doing this. Even if they do pay it back, we are still going to be losing the jobs.

What we have to recognize is our fiduciary responsibility. The fastest growing cost to the Federal Government is net interest. We are going to boot it up $5 billion, times about 1.5 percent, and that happens to be about $50 million a year that we are going to ask our grandkids to pay to subsidize this deal. Take $50 million. Can't we invest that $50 million in a better way? Can't we invest the true cost of this deal, about $50 million a year to the American taxpayer, in some other way to create 5,000 jobs in the future that will be here forever? We have already heard them say they have every intention of taking this technology; at the end of 10 years, it will be their technology and they will build their own plant, and there will be no benefit to Westinghouse or the British Government or Mitsubishi Steel or Shaw Corporation.

There will be none because they will do as they have done on every other issue: They take the technology; once it becomes theirs, they will just duplicate it. Or if it doesn't become theirs legally, they reverse engineer it.

Mrs. BOXER. Will the Senator yield to me?

Mr. COBURN. I am happy to.


Mr. COBURN. Mr. President, I listened very intently to the words of the Senator from California. I am somewhat confused. If in fact the American contractor, i.e. Bechtel, working with the British-owned company, not an American company, gets this contract, it will have an effect on reducing coal utilization. But in her first statement, the Senator said if the American company consortium doesn't get it, the French or Russians will. So the argument about coal and greenhouse gases doesn't fly. They are going to go with nuclear, much like this country should be doing, except we don't have the wisdom to do that.

The fact is, we will be subsidizing the difference in the rate. Loans for nuclear powerplants are high-risk loans. There are not many commercial lenders that will lend for that, and when they do lend for it, you pay a premium. This is going to be a subsidized loan that will cost somewhere between $50 million and $100 million per year to the American taxpayer. What could we do with another $50 million or $100 million to produce jobs? I am all for producing jobs. I want Westinghouse to produce lots of nuclear plants. I believe it is safe and smart for us to use nuclear power. Every time we have seen a problem in this country, the power systems and safety systems have worked.

The debate is not whether I want nuclear power. I have been on record for nuclear power for a long time. I am not an advocate of us subsidizing the British Government, the Japanese Government, and their businesses, and having the American taxpayers pay for it.

Mr. SANTORUM. Will the Senator yield for a question?

Mr. COBURN. I am happy to yield for a question.

Mr. SANTORUM. My staff has been checking this. We cannot figure out where the Senator is coming up with the $50 million to $100 million figure, since the Ex-Im Bank has not decided how they are going to structure the transaction yet.

Mr. COBURN. The assumption is, if this becomes an Export-Import Bank loan, then it, in fact, will be at a rate less than what China could borrow in the international markets for the same thing. If you go out and check loans on nuclear powerplants, what you see is they are high-premium loans because there is a lot of risk. Whatever they do, if they, in fact, finance it, or if they, in fact, guarantee it and don't finance it, the rate is going to come down, so that builds the risk for the American people. I agree, they probably will pay it back. My argument is, whatever it is, if we are subsidizing it, either through the auspices of a guarantee or a loan through a reduced rate, what could we be using that same buying power for here?

So there is an economic cost. If we put $5 billion over here, it is going to cost us by not putting it somewhere else in terms of loan guarantees. The question is not whether we ought to have a vibrant nuclear power industry in this country. The question in my mind is this. I understand the global economy. You are talking about the vast majority of the major players in this not being American companies--the vast majority. Although Westinghouse employs Americans, the profits that inure to Westinghouse through a loan guarantee for subsidy go to the British, not to Americans. That government owns it through

the nuclear power unit, the research fuels unit of the British Government, British Nuclear Fuels. They own it 100 percent.

We can muddy the water on who owns it. The fact is, American taxpayers should not be on the hook for subsidizing or guaranteeing what should be subsidized or guaranteed by the Japanese and British Governments. If they think this is a great deal--and I am all for reducing our deficit with China. I voted for looking at the floating of the currency, so I am with the Senator from Pennsylvania; but I don't believe we should put our grandchildren and our children at risk when we can use the money much more wisely and our credit rating more wisely.

Mr. SANTORUM. Will the Senator yield?

Mr. COBURN. Mr. President, I inquire how much time remains?

The PRESIDING OFFICER. There remains 3 minutes 10 seconds.

Mr. SANTORUM. Mr. President, I ask this question. You are aware that there is an exposure fee that is paid by the company to the Ex-Im Bank, which is calculated to cover the credit risk of the transaction, so the credit cost to the taxpayer would be zeroed out through this exposure.

Mr. COBURN. Would the Senator like to yield back to me?

Mr. SANTORUM. I am asking a question.

Mr. COBURN. The fact is, there should be no risk to the American people on this deal, period. There is risk. There is a guarantee for the full faith and credit of the United States through the Export-Import Bank to finance the vast majority of a British-owned company--a British-Government-owned company, not by the taxpayer, but a British-owned company and a Japanese company and a smaller American company. So my basic position is we should not have that risk placed on our children or grandchildren.

The other issue that is important is that they have already said they are going to take the technology at the end of 10 years. I cannot believe we are saying at the end of 10 years whatever advantage we have they are going to get. We agreed in this deal that they get it. They are going to be turning around and selling nuclear powerplants to us.

We ought to be doing something different. If this is the only way we can put jobs out there, by competing on subsidies with the French and Russians, we have lost the innovative spirit of America. We need to get back to investing in hard reserve, entrepreneurship, and in small business. We will create more jobs and more industries. If we keep playing the game of government-run subsidies and guarantees to buy business--because that is what we are doing. Why did the Chinese choose this one over the others? Because it is the best economic deal. They are essentially equivalent as to what they can buy. We are buying business. When you start buying business, it marks the end of your ability to compete.

With that, I reserve the remainder of my time.


Mr. COBURN. Mr. President, I ask our colleagues to look at this for what it is. In the long run, we don't win; we lose. Even if it costs us nothing in terms of finance charges, in the long run the technology goes to China. We need to be investing in real jobs, real science, real entrepreneurs, and small business. We can create high-paying jobs. We have done that. I hope the body will do that.

I yield back the remainder of my time.



Mr. COBURN. Mr. President, we are about to have a vote on the Coburn-Boxer amendment. It is a very straightforward amendment that says the U.S. Export-Import Bank should not subsidize a $5 billion loan for the sale of nuclear powerplants to China. We are opposed to it. I am personally not opposed to nuclear power. I am not opposed to the Chinese having nuclear power. But I am opposed to financing a company owned by the British Government through the British Nuclear Fuels Company, which is wholly owned by the British Government, which wholly owns Westinghouse Nuclear Powerplant Division. This Export-Import Bank financing will also finance Mitsubishi Steel out of Japan.

The question that has been raised in the debate is if we don't do it, the French or Russians will. The fact is, if we have the best technology and the best quality, then we ought to earn it on the merits. The American taxpayers should not be put on the hook for financing.

The second issue is that when we buy business in this country--which is what we are doing; we are buying business by subsidizing and giving a deal to compete--what we are doing is taking away moneys and Export-Import financing that could be used elsewhere. This is by far the largest, by 250 percent, of any Export-Import Bank loan in the history of the Export-Import Bank. I don't believe our grandchildren should be on the hook for it, but I also don't believe this is the best use of that money.

I am an advocate of nuclear power both in this country and around the world. I think it can be used safely. These are great companies, but it is time we get out of the idea of buying business and out of the idea of putting our kids and our grandkids at risk for something that fully should be subsidized by the governments that are going to benefit the most from it.

I yield my time.


Mr. COBURN. Mr. President, the claim is that this is micromanagement of USAID. USAID's role is to deliver goods, health care, and support to the needy people around the world. What this amendment does is negate what they have already said they are going to ignore anyway. I will read: USAID has the authority to use program and regular operating expense funds for entertainment under the necessary expense doctrine. GAO decisions to the contrary are not binding on this Agency.

This is a small amount of money, but it should send a signal to USAID, their job is to deliver what we want as American taxpayers in terms of health care and food and medicine to people in need. The best example of that is not to spend the money on furnishings, not on live recording artists, not on gifts for other bureaucrats but on food and medicine for those people who need it. That is what this amendment is about. It is not about micromanaging. It is about sending a signal: Do what you are expected to do.

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