Remarks by Senate Minority Leader Mitch McConnell (R-KY) to the U.S. Chamber of Commerce, Subject: Remainder of the 2007 Congressional Session

REMARKS BY SENATE MINORITY LEADER MITCH MCCONNELL (R-KY) TO THE U.S. CHAMBER OF COMMERCE, SUBJECT: REMAINDER OF THE 2007 CONGRESSIONAL SESSION

SEN. MCCONNELL: Good morning. Bright lights. It's good to be with you again.

Let me quickly give you a rundown on where we are and then throw it open for whatever questions you may have.

At the beginning of the year, I had hoped that we would take advantage of the opportunities that divided government frequently provides -- not that I was happy about being the Republican leader instead of the majority leader; I wasn't. But I certainly remembered that divided government frequently is the only government that can tackle big, complicated issues.

And I mentioned on the day I was elected that there were two issues that I thought this new divided government was particularly well-suited to deal with. One was Social Security. The other was immigration. We took a shot at immigration, but it ended up being much too complicated and had too many controversial measures to swallow the whole thing at one time.

I've been deeply disappointed, frankly, that our Democratic friends didn't realize the opportunity they had, really, to get some very tough things done. It provided an opportunity for them to do some tough things and blame it on Bush if they became a little bit controversial, something they're accustomed to doing.

It was the perfect opportunity to tackle Social Security, much in the way that Reagan and Tip O'Neill did in the '80s; and if you think of the '90s, Bill Clinton and the Republicans on welfare reform -- two good examples of how divided government was able to tackle issues that a unitary government probably wouldn't have been able to because of the political fallout.

So what have we had so far this year? We've had, I think, an entry in the Guinness book of political records for the fastest squandering of a mandate in the history of American politics. The Democrats won the Congress, took over in January, and have managed in a mere eight months to get down to an 18 percent approval rating, the lowest since the House banking scandal.

Why do you think that is? Why do you think that is? I think it's because of a preoccupation with one issue, the war, and excessive investigations. When the public looks at this Congress, what do they see? They see repetitious Iraq votes and investigations over and over and over again.

And I think that's not exactly what the Congress thought they were getting or what the people thought they were getting. In my view, it's not too late, but we've got a heck of a lot to do and we've done very little so far this year.

Among the items we haven't tackled, we've done basically three appropriation bills in the Senate. The fiscal year expires in a few weeks. I'm sure all of you remember the grief we were given last year for malfunctioning and not getting our work done. We gave them a lot of grief when they were in the majority in 2002 and did the same thing. They promised the American people they wouldn't do that again. They've done it again. Why are we so far behind? Because we've spent so much time on investigations and Iraq votes.

Taxes. There will be more than 50 tax provisions that'll expire this year -- 50. One of the examples of one of these that many of you care about is the R&D tax credit. The AMT is looming out there again, ready to bite increasingly large numbers of Americans. We've done AMT fixes the last three Congresses before July. Here we are in mid- September; no proposal, no markup, no nothing.

And, of course, with the new pay-go rules, it'll be interesting to see how they treat any of this tax relief consistent with the pay- go requirements that they've imposed upon themselves.

We also know, as a result of the budget they passed, they envision over the next five years a tax increase three times as large as the previous tax increase in history. I assume that means the tax relief of 2001 and 2003 will expire and everybody's taxes will go up. Capital gains taxes will go up. Dividends will go up. Marginal rates will go up. Child care credits will go down.

We're looking at a whopping tax increase -- not surprising, given the fact that our friends on the other side of the aisle are the party of taxation, litigation and regulation. That's what motivates them every morning. "Who can we tax, who can we regulate, and who can we sue?" It's at the very core. It's in their DNA. That's what they want to do.

We have a new attorney general to confirm. You might be interested to know that the average time for confirming a new attorney general over the last three decades or so has been about three and a half weeks. Our friends on the other side have been complaining all year about what they perceive to be a lack of leadership in the Justice Department. But now they're signaling that whoever is sent up won't be confirmed for months.

Free trade agreements, agreements pending with Peru, Colombia, Panama and South Korea; and I'm sure you noticed that trade promotion authority expired in June. They wanted to get rid of the secret ballot in labor union elections. We stopped that in the Senate -- a measure, by the way, that 80 percent of union members oppose. Eighty percent of union members think it's a bad idea to have either management or union leaders looking over their shoulders while they decide whether or not they want to be represented by a union.

So what is their goal? Add it all up. I think they want to turn America into France -- (laughter) -- when even the French are having second thoughts; higher taxes, more unions, protectionism -- a great agenda for America's future. And, in fact, I think that next year's election is likely to be about the future, not the past, about where the Democratic nominee and the new Democratic Congress want to take America, not so much how people may or may not feel about the current president or may or may not feel about where we may be headed in Iraq. And it strikes me that we are heading in a new direction in Iraq as a result of the recommendations of General Petraeus.

So we're ready for next year. My preference would be to accomplish some great things and take advantage of the divided government. You know, there's always another election in America. How many times have you heard people say, "Well, we can't do that. We've got an election coming up."

I would remind you that we've had a regularly scheduled election in America every two years since 1788. There's always an election coming up in America. But periodically we've put aside the desire to come out ahead in the next election and done important things for the country. And in the last two decades, two great examples of that were Social Security under Reagan and O'Neill and welfare reform under Clinton and the Republican Congress.

With that, let me throw it open for whatever you all would like to talk about.

MODERATOR: Let me start by asking you about the energy bills that have passed both chambers that have huge differences in them. One has a punitive tax measure. One has an RPS title. One has a CAFE title. From our perspective, we look back, after five and a half years working with previous Congresses in a bipartisan effort, producing a bipartisan outcome that was enacted into law, the Energy Policy Act of '05.

These bills seem to take us backwards and certainly are not securing our energy independence. Do you see this coming together before the session ends? Conferees haven't even been named.

SEN. MCCONNELL: Yeah. Well, I voted against the bill. I have three automobile manufacturers in my state.

Could somebody get me a glass of water?

I have three automobile manufacturers in my state -- Toyota, Ford and GM. They were not excited about the corporate average fuel economy provision. Also the renewable portfolio standards -- or, put another way, the wind mandate -- doesn't work very well in the Southeast, where we don't have much wind. It may be great in places in the country where you have an adequate supply of wind. What it basically meant for us is a whopping rate increase.

We also saw that even when you have states that want to open up the Outer Continental Shelf, like Virginia -- Senator Warner and Senator Webb supported going into the Outer Continental Shelf off of Virginia, but the rest of the Senate wouldn't let them.

So as you look at the bill as a whole, from my point of view, we can't conserve our way out of this problem. We've got to have a mix of conservation and production. And I am at a loss to think of anything in the Senate version on the production side. So it struck me as an energy bill not worth passing.

As to its future, I don't have a clue what may be done. But if we're going to pass an energy bill, it ought to have some relation to doing something about improving our position. I do think the '05 bill was a good bill; probably could have been better, but at least a good bill. I think it was a step in the right direction last summer to open up additional parts of the Gulf for oil and gas. That was a step in the right direction. I don't find much in this energy bill to recommend it, and I don't know what its future is.

MODERATOR: There's been a lot of activity on the Hill recently in response to the unfortunate bridge collapse in Minneapolis that killed 13 people. At the same time, 42,000 people die annually on the nation's highways; 13,000 of those die due to lack of repair or poor design that needs to be renovated in the national highway system.

The entire platform and foundation that the economy runs on, as you know, is highways, bridges, inland ports, rail, air, seaports, all of which are stressed, all of which are running out of capacity, and all of which seriously demand huge investment to continue to remain as a competitive economy.

Where do you see the larger infrastructure debate going, recognizing ours is about 50 years old?

SEN. MCCONNELL: Well, I think after an incident like the bridge collapse, everybody's taking a look at their bridges and paying more attention to the infrastructure. If you're asking me, Bruce, am I ready to sign on to a big gas tax increase, I'm not ready to do that today. But I do think a serious look at the infrastructure is appropriate. And we'll see what people think needs to be done.

MODERATOR: SCHIP, another big issue -- two very, very different bills between the chambers, significant differences in tens of billions of dollars between them, a program started by Republicans to provide health care insurance for underprivileged children. Do you see this one getting resolved before the session ends?

SEN. MCCONNELL: Republicans, who did, as you indicate, start the program, are in favor of providing health insurance for low-income children. What we're not in favor of is providing health insurance for high-income children and adults. And what has happened to this program -- and part of it's the fault of the administration through the granting of waivers -- is it's evolved in many states into a program that is taking people off of private insurance and putting them on government insurance.

So our goal is to extend SCHIP but to have it apply to children, I believe, up to 200 percent of poverty is the line that's generally agreed upon. We're all for that. We're not in favor of using it as a way to gut Medicare Advantage. We're not, most of us, in favor of using it as a way to raise taxes.

It struck me that in both bodies it tended to morph into something beyond what it was intended to do, and there's an effort underway for it to become a vehicle to make changes in Medicare or to raise taxes. And I think that's what's making it controversial.

Where it goes from here is a little unclear. There are differences among Democrats, as you know. Among House Democrats, the Blue Dogs apparently are not excited about raising tobacco taxes. The Congressional Black Caucus is not excited about gutting Medicare Advantage. There are differences among Democrats about how to go forward.

As of today, Senator Grassley and Senator Baucus are not anxious to go to conference yet either. So there are big, big differences within the Democratic Party and some within our party about how to structure this and how to go forward. At the end of the month, we ought to extend the current program, because I believe it expires September 30th, while we have this ongoing discussion of what, if anything, we ought to do in these other areas as add-ons to SCHIP.

MODERATOR: You mentioned taxes and touched on what I would describe as almost a perfect-storm scenario in 2010 if everything expires or, under pay-go, is paid for through a tax increase because you have the same result -- the largest tax increase, by a significant factor, in the history of the country. By the way, it'll be about eight and a half years, which would be about the longest economic recovery the country has experienced as well in that time frame, so the outlook is not bright.

Yet there are these continuing debates on the Hill, one of which is AMT, and a very different viewpoint between Mr. Rangel and Mr. Baucus, as you know. But there's this new debate on partnerships and private equity and carried interest that seems to be triggered because of the birthday of one head of one private equity firm, at least in part, yet affects real estate, oil and gas, the construction industry, the housing industry, and a host of others. And as you well know, this provision was put in law in the outcome of the '86 recession to spur the use of venture capital.

How do you see this debate being resolved in the near term?

SEN. MCCONNELL: Well, you can tell Democrats have taken over the Senate when all the discussion is about which taxes to raise. You know, they get up every morning trying to figure out whose taxes they can raise; at the risk of being redundant again, taxation, regulation, litigation.

I don't think America has any problems right now because it's undertaxed. I'm not interested in passing tax increases. I'm interested in extending the tax relief that you referred to, Bruce, because if we don't do that, we're going to have a whopping tax increase. And the scary thing is, the new majority, if it's still the majority in 2010, can accomplish that result by doing nothing, by simply failing to act.

There are a lot of bad things that 41 members of the Senate can prevent, and we do that from time to time. But this tax increase is looming with no action on the part of Congress. I think it'll be a big blow to the economy if it occurs, and I'm going to be opposing it vigorously.

MODERATOR: Terrorism reinsurance -- a controversial issue, yet, at the same time, if we have a nuclear, biological, chemical or radiological attack, the insurance industry clearly does not have the capacity that they do to predict magnitude or frequency, as they have learned over decades with mother nature.

The House is expected to complete marking up TRIA next week. Do you see the Senate coming forward with an extension for that act?

SEN. MCCONNELL: Yeah, I think there's a bipartisan desire to extend TRIA. I will give you just one little bit of history. When we first did this proposal back in late '01 or '02, I can recall myself offering an amendment to prevent the victims of a terrorist attack from being sued for punitive damages.

Let me say that again -- to prevent the victims of a terrorist attack from being sued for punitive damages. The Democrats, who were in the majority in the Senate at that particular moment, were willing to walk away from TRIA over that issue. And so we ended up having to drop it. I bring it up again. They never miss an opportunity to look for some way to create a new opportunity for somebody to sue somebody, no matter what the bill is.

Yeah, I think TRIA will be extended for some period of time on a largely bipartisan basis.

MODERATOR: Farm bill, another huge piece of legislation that seems to, at this point, have gone far, far beyond, at least in my view, being a farm bill reauthorization markup. It seems to be a bit of a tax bill, a little bit of an energy bill, a little bit of a farm bill, and several other things. Do you see this one getting done?

SEN. MCCONNELL: Well, we had an unusual occurrence in the House. You had a basically partisan vote on a farm bill, and the reason for that was the farm bill in the House morphed into a tax increase. Again, to illustrate the point, they never miss an opportunity to raise somebody's taxes, create some opportunity to sue, or give a new opportunity to regulate.

It's certainly my hope that the Senate will not turn the farm bill into a tax increase. I do think, when we turn to it -- and I'm not sure when that's going to be, because we don't have any floor time as a result of spending so much time having Iraq votes; we're way behind on everything else -- I think it will be an opportunity to revisit parts of immigration.

I come from a relatively important agricultural state, and we use the H-2A worker program, which is an ag program -- it's not very good, frankly, and needs a lot of revision; makes it very, very tough for our farmers who are trying to bring in workers legally to function.

So I think it could become an opportunity for immigration measures. It's likely to be an energy bill as well. It's increasingly an environmental bill as well. The farm bill will be a big, complicated, difficult debate. What I hope it is not in the Senate is an opportunity to raise taxes.

MODERATOR: Well, I hope you're right about immigration. As you recently read, what we're seeing in California is farmers actually beginning to outsource their entire farms, renting in Mexico as a result of the shortage you just talked about. We have the same problem, as you well know, in the H-1B and the H-2B.

SEN. MCCONNELL: Yeah, let me touch on H-1B. I mean, there's an example of something we need to do because of the deficiencies, frankly, of American education. We are not producing math and science young people. And so we're confronted with the following dilemma. We either take our high-tech industries and push them offshore so they can find the math and science workers that they need or we have an H- 1B program with an adequate quota in order to bring the workers here.

I assume you, like I, would rather do the latter. We're proud of our high-tech industries. We don't want them to go offshore. And so we ought to have a much larger H-1B quota, which I gather this year was gone in one day. Is that right? Gone in one day. That's how great the demand is.

So, yeah, we need to do H-1B. I'd be happy to do it as a separate, free-standing bill. We tried to do it as a free-standing bill last year, but those who wanted us to do immigration in a comprehensive way wanted to keep it in the queue, in the mix, feeling it would be one of the drivers that would -- you know, I think we can do pieces of the immigration bill but just forget the amnesty part of it. And that applies to the ag worker thing, too, because the ag jobs bill has some provisions that a lot of people feel, maybe correctly, that gives people preferential treatment toward citizenship.

We really ought to separate out ultimate citizenship from a guest worker program and not link the two. I think if we could do that, we could get relief on the ag jobs proposal.

MODERATOR: You mentioned, I think expressed your concern, about four free trade agreements kind of sitting, going nowhere fast; interesting that we seem to be backsliding as a country. We've let trade promotion authority, as you noted, expire. We've got these significant trade agreements. Doha is trying to be resuscitated.

I was participating in a group the other day and pointed out that there are 300 free trade agreements worldwide today. EU is a participant in 28; China, 21. There is a race to do free trade bilateral and multilateral trade agreements on a global basis. In '94, we were a partner to a mere four, today 14.

And if you look at NAFTA and come forward, our exports in the regions in the past 10 years where we have signed those agreements, our exports are up 43 to 100 percent. After a while you start to wonder what some people in Congress don't get. And if we look ahead at the revenue needs of the government, one of the continuing things we've got to do is open markets for American goods and services.

How do we get out of the box we seem to be trapped in?

SEN. MCCONNELL: Elect a Republican Congress. I mean, elections have consequences. Even though trade agreements were not something uniformly supported by Republicans, we had a lot more Republicans supporting them than not. You switch the control of Congress and what do you get? Expiration of TPA, no Peru, no Panama, no Colombia, no Korea. Elections have consequences.

MODERATOR: Yeah, we had an agreement on May 10th. It seemed about May 12th we no longer had an agreement after my friends on the other side of 16th Street reared their heads to the leadership in Congress. But we can't let these things stand. As you point out, there is a consequence of inaction, and we're going to pay the price for it as a country.

Let me thank you very much, Leader. I know you've got to get back. The Senate's in session.

SEN. MCCONNELL: Yeah, I'm getting the hook over here. Thanks, everybody. I enjoyed being here.

MODERATOR: Thank you. (Applause.)

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