CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2008 -- (Senate - May 09, 2007)
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Ms. STABENOW. Will the Senator yield for a question?
Mr. CONRAD. I am happy to yield.
Ms. STABENOW. Mr. President, I first thank our esteemed budget chairman for raising what is so important in the context of this debate. I thank him for raising the chart that actually shows the majority of Americans are not seeing their incomes go up. They are seeing them go down.
As the chairman knows, we have lost 3 million manufacturing jobs in the last few years under this administration--3 million good-paying jobs with health care and with pensions. The reality is that, in listening to the debate with my colleagues on the other side, I don't know what they are describing. They certainly are not describing what is happening to the majority of Americans.
I did also want to thank the chairman for bringing up a building in the Cayman Islands he has shown us a number of times, a picture of a five-story building where there are over 12,000, I believe, different businesses that have filed that they are part of that building. In the Finance Committee, I used the chairman's chart and asked--I don't know if the chairman will remember this, but in the Finance Committee I actually asked the IRS and the Treasury if they had sent anybody down to look at that building. Has anybody walked through that building?
We have seen our distinguished leader on Budget point out a specific address, a specific address where we know there are not 12,748 different companies in that building. Yet, Mr. Chairman, to your knowledge, has anybody taken any legal action on this even now? You have raised this time and again.
This is the way we ought to be focusing on what happens on taxes. But the majority of people see their incomes going down, and what do we see? Ships, yachts where people can go offshore to live to avoid paying their taxes and avoid contributing to the war and the economy and schools and roads and everything that is important to us.
Then you have a building. I don't know if the chairman would want to speak to this. Has there, to the Senator's knowledge, been any action taken on this building and what is happening with over 12,748 companies?
Mr. CONRAD. Well, the Senator asked the witnesses before the committee. They seemed totally flummoxed by the question. It was pretty amazing. Here we have this building in the Cayman Islands, this five-story building. We have got 12,748 companies that claim it as their home.
Now, why did they do that? They do it because the Cayman Islands has no taxes. So guess what they do. They have subsidiaries in the United States
that report no earnings in the United States. Then they sell to a subsidiary in the Cayman islands at a reduced price, and they show their profits in the Cayman Islands.
When I was tax commissioner, I found this kind of tax abuse going on repeatedly. It was quite amazing. This was 20 years ago that companies were engaged in this kind of activity. It has absolutely exploded. That is what the Permanent Subcommittee on Investigations is telling us, that we are losing $100 billion a year to this kind of scam. Of course, the abusive tax shelters are on top of that. The tax gap, the difference between what is owed and what is paid, is on top of that.
But when you ask the relevant officials: Have you audited these companies to see if they really are doing business out of this building? Well, you got sort of--they were sort of in a trance. They had no answer.
I would say let's go after these people who are not paying what they owe legitimately and fairly in this country.
Ms. STABENOW. Well, I just want to thank the chairman again. I am very proud of this budget because it focuses on hard-working, middle-class families, people I represent in Michigan who will get the tax cuts in this budget. It addresses the kind of things we are talking about here. I am not interested in a tax policy that rewards this kind of tax evasion or folks moving offshore in their yacht to avoid being part of America and contributing to our way of life. I just want to thank the chairman.
Mr. CONRAD. Let me make one other point, if I can, that is with reference to the Gregg amendment. I will provide an alternative that insists on the tax relief that is provided in the budget resolution and asks our Senate conferees to fight for the tax relief that is provided. The tax relief that is in the budget resolution that passed the Senate provides for every dime required to extend the middle-class tax cuts, the 10-percent tax bracket, the child credit, the marriage penalty relief. Every dime of those middle-class tax cuts is provided for in the resolution that passed the Senate.
In addition, we provided for reform of the estate tax, to have $7 million a couple exempt from any estate tax. We index it for inflation. That will exempt 99.8 percent of the estates in America from paying any estate tax.
In addition, we provided for extension of the adoption tax credit, the dependent care tax credit, the treatment of combat pay for purposes of the earned-income tax credit. In addition, we insist that the Senate conferees support section 303 of the Senate resolution that provides for additional tax relief, including extensions of expiring provisions and refundable tax relief provided that such relief would not increase the deficit over the period of the total fiscal years 2007 to 2012.
In other words, we provide for all of the middle-class tax relief. We provide for estate tax reform. We provide for the appropriate treatment of combat pay. We provide for the dependent care tax credit, the adoption tax credit. And we say: You can have other tax relief if you pay for it. There is an interesting idea. Start paying for things around here.
The difference between my amendment and the amendment of the Senator from New Hampshire is he puts another $250 billion on the charge card, adds to the debt, sticks it on our kids. We say: No, let's start paying for things. That is the difference. We insist on the Senate position that any additional revenues meet these tax policies that are achieved by closing the tax gap, shutting down abusive tax shelters, addressing offshore tax havens, and without raising taxes. That is the resolution that passed this body. That is the resolution that is before the conference committee. It does not raise taxes by one thin dime.
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Ms. STABENOW. Madam President, this provision will clear the way for the Senate to pass legislation that will ultimately lower gas prices. This is an issue right now of great concern, I know, to people throughout Michigan and throughout the country, as we see prices going up and up and up. This provision does that by putting into place a reserve fund that will reduce our Nation's dependence on foreign sources of energy and expand production and use of alternative fuels and alternative fuel vehicles.
This is a very important part of the budget resolution, and I wish to commend the chairman for putting aside a reserve fund so we can create revenues to do a number of things that will create energy independence and that will create competition, frankly, for the oil companies in this country so we can lower gas prices.
Today, in Michigan, the average price of a gallon of gas is $3.15, and it goes up as high as $3.24. I know it is going to go up and up. We are constantly hearing, of course, it is not arbitrary, that it is all based on competition. Yet I will bet you that right before Memorial Day, in Michigan--a great tourism State, and people want to have an opportunity to travel and see our Great Lakes--the prices are going to continue to go up even further. This summer, again because we are a great tourism State, prices are going to go up, and they will go down when it is not a peak season for driving. We all know that this is a serious issue, and, frankly, it affects every single family in their wallet or in their pocketbook.
A couple years ago, I offered, successfully, a provision in the Energy bill that required the Federal Trade Commission to do a study, an investigation into whether there was price gouging. They came back basically and said there wasn't and that they didn't have the authority because we didn't define what price gouging was. I am pleased to say that as a result of our presiding officer and her legislation, we can address what is happening as it relates to the definition of price gouging, which anyone in Michigan can tell you what it is, and also to be able to give the authority to the FTC to do something about it.
I see my colleague on the floor whom I basically jumped ahead of, so I think if he is ready, I will turn it over to him and will later proceed to talking about gas prices and how we are going to bring them down and how the budget resolution lends itself to that.
I yield to my colleague from Texas.
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Ms. STABENOW. Madam President, first, following the debate we have just been engaged in, let me say that I am very proud of this budget resolution because we are not only not raising taxes, but we are focused on lowering taxes, tax cuts for the middle class. That is what I am most proud of in this budget. Our budget is focused on middle-class families, what families need who are feeling the crunch at every turn right now in their lives. So we specifically focus on tax cuts for middle-class families.
We also focus on what I want to talk about now as it relates to the motion to instruct; that is, an energy reserve fund that puts in place a set of policies and allows us to move forward to lower gas prices. I mean, ultimately, that is what it is about. Let's get off of foreign oil. Let's become energy independent. Let's focus on alternatives.
We have a whole range of things we can and should do together, but the bottom line is what people are asking me about right now in Michigan is why in the world gas prices today are $3.15 per gallon on average. They ask it in the context of another very important question; that is, since this President, President Bush, has taken office, gas prices in my State have increased by $1.75 per gallon--$1.75 per gallon, an increase of 123 percent. This is according to the Federal Highway Administration. Right now in Michigan, families, businesses, farmers will spend $789 million more this month than they did in January of 2001. That is according to the Department of Energy motor gasoline consumption, price, and expenditures.
Now, what is happening, though? What is wrong with this picture? While I have been seeing my constituents, and I know the Chair shares this concern, that while we see these prices going up, what has happened on the other side with the oil companies? Well, last year, ExxonMobil had $39.5 billion in profits, the largest annual corporate profit in U.S. history, the largest corporate profit in U.S. history, while the people in my State--the farmer planting in the fields, the businesspeople who are doing their jobs, the families, the folks going back and forth to work, taking the kids to childcare, the students trying to go back and forth to school--saw their gas prices go up.
In fact, they will go up higher right before Memorial Day. I will bet you they are going to go up higher in a beautiful State like Michigan, where we want everyone to come in and swim in our Great Lakes and boat and fish and enjoy what is beautiful about Michigan. When the tourism season comes--you can count it on your watch--gas prices are going to go up.
We hear all about how there is competition when, in fact, we know there is not competition. When you are driving down the road, this gas station says one thing and the one on the other side says the same thing.
Now, this has to stop. We are seeing, not only last year--I am speaking about ExxonMobil, but let me just say there are others. Chevron had an 18-percent increase in the first quarter this year--an 18-percent increase. But we are seeing with Exxon that they kicked off a 10-percent rise in profits, the best ever first quarter, ever, in net profit. To put it another way, with Exxon, their take-home pay equals $1,080 every time the second hand ticks on your clock--every second, $1,080--while the folks in Michigan today are paying $3.15. If you happen to be up north, it is $3.24. This is not right. I know you agree with this. This is not right.
There are a number of things we need to do about it. In the short run, we need to make sure the Federal Trade Commission has the authority--and understands that we expect them to use it--to define price gouging.
Now, in the Energy bill that passed in 2005, a requirement that I offered was put into the Energy bill that the FTC had to investigate price gouging. They came back and said they did not have the authority, we had not defined what it was. They made some general statements that really did not reflect what was going on. So now I am very pleased that Senator Cantwell from Washington State and others have introduced legislation that will clearly define what price gouging is, although I have to say, after years and years of witnessing it, if it walks like a duck and quacks like a duck, I think most people in Michigan, anyway, would call it a duck. So we find ourselves in a situation where the FTC says they do not have the authority or the definitions to use. So we want to give them that. We want to give them that in the short run to make sure they can address what is clearly an unfair situation.
Families are seeing increases on all sides, not just gas prices; it is the cost of college; it is the costs that relate to health care in my State. In fact, I should just remind folks that when we hear about all of the rosy pictures in the last 6 years, we have lost 3 million manufacturing jobs since this President has taken office--3 million. Those were good-paying jobs with health care and pensions, and those families now, those workers, are out working other kinds of jobs. Maybe it is two jobs now to try to make up that salary or maybe it is three jobs. They are paying more for health care, if they have it, and worrying about whether they will have their pension.
So that is the backdrop to what I see now happening as it relates to gas prices. One more time, people see those prices going up as they are trying to get to work, as they are trying to take care of their families. This motion to instruct focuses on the fact that we have put aside a reserve fund that gives us the opportunity to address it throughout the budget.
In addition to the fact that we have legislation to stop price gouging right away, and that is very important, I am very pleased our majority is focused on going after those who are price gouging and bringing down gas prices, but we also know we have to look more long term.
There is some wonderful work being done in the Senate by our Energy Committee, Environment Committee, and Finance and Agriculture Committees as it relates to the farm bill and what can be done with alternative fuels, and so on. We are committed to that as well. The structure of this budget allows us to be able to do those things without procedural motions and hoops getting in the way to stop us from going forward. We all know we need to invest more in ethanol and cellulosic ethanol and biodiesel. We want to be
able to say: Buy your fuel from Middle America, not the Middle East. That is what I am hoping. I know we are committed to doing that.
We also know there is much we can do to together, and, in fact, there are many exiting things that are already happening. I am very proud of our American domestic auto companies that are moving very aggressively. In less than 5 years, we expect that our alternative-fuel vehicles will constitute more than 50 percent of the vehicles that are being produced. That is very positive. I commend them for that.
GM has installed displacement-on-demand technology where the cylinders shut off when not needed, consuming less fuel. DaimlerChrysler has taken the lead on clean diesel and biodiesel. There is excellent work being done in Michigan. Next Energy and other critical research organizations are doing excellent work that would deliver 20 percent to 40 percent more fuel efficiency than conventional automobiles. The Ford Escape hybrid and the work that is being done through hybrids is very significant. Our plug-in hybrids, technology we see being worked on that relates to plug-in electric vehicles, and so on, that is so important. I am excited about the Volt by GM, which will be configured in a way that it will be able to run on electricity, gasoline, E85, or biodiesel. The work goes on on hydrogen and other kinds of things.
But we know that in the end, in addition to focusing on these long-term strategies which are very significant, very important to the environment, to address climate change, to address energy independence, we have an issue right now we have to address; that is, the fact that we continue to see, quarter by quarter, record profits by the oil companies because of the lack of competition. We are seeing, quarter by quarter, increases that end up with those increases and profits, that do not cause them to lower prices for people. They are making more dollars. They do not lower the price. The price goes up as the profits go up.
More and more of our families, our workers, our businesses are feeling squeezed on all sides. We have to make sure the FTC has the ability to call price gouging for what it is, that it is defined and they are given the authority to do something about it.
The American people, unfortunately, are forced to be in a situation right now of choosing between stations and pumps where the prices look awfully much the same. We need to create more competition. We are going to do that in the long run. We are going to create competition in the short run. We need to start putting consumers first, our consumers first. That is what we do in this budget.
I yield the floor.