Tax Relief Extension Reconciliation Act of 2005

TAX RELIEF EXTENSION RECONCILIATION ACT OF 2005 -- (Senate - February 13, 2006)

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Mr. REED. Mr. President, I find myself, as I so often do, agreeing with my colleague, the Senator from Connecticut, Mr. Dodd. It is exactly about priorities. It is about whether the wealthiest, most affluent people in this country will enjoy a tax break or whether more fundamental needs of our Nation will be served.

Senator Dodd pointed to the issue of returning veterans. Again, I was pleased to travel with Senator Dodd last October to Iraq to visit with our soldiers: marines, airmen, sailors--all of our outstanding men and women in uniform. When they come home, they need the kind of support that the fund Senator Dodd identified would give them. But there is even a more immediate concern to our Armed Forces today: $50 billion in equipment that has to be rehabilitated, refurbished, brought up to operating conditions, so these men and women can continue their operations on behalf of America.

I can tell you, as someone who had the privilege of commanding a company of paratroopers, the most disconcerting concept, the most disconcerting and troubling aspect, is when your equipment is poorly maintained, will not operate, is inefficient, out of date. That drives morale down as rapidly as anything. We have--not unexpectedly because of the conflict in which we are engaged--seen our equipment stocks become overused, both aviation equipment and ground equipment: trucks, vehicles, humvees--all of them have taken a terrible beating in combat operations in Afghanistan and Iraq.

Just 2 weeks ago, this body agreed with my proposal to spend $50 billion to refurbish this equipment. But as Senator Dodd pointed out, they did not agree with the way we would pay for it. In fact, the proposal was really just oratory. It says: Let's spend $50 billion which we do not have to help the military refurbish their equipment. We have to do better than that because, as the Senator pointed out, without funding, that is all well-wishes without real results. And we need real results for the men and women of our military forces.

The administration is quick to point out that we are a nation at war. That is true, although in some respects we are simply an Army and a Marine Corps, the Department of Defense, at war because the American people have not been called upon to sacrifice very much, if anything. Here we are making the point--I think it is so obvious--that the wealthiest Americans, those who enjoy the benefits of this great country, I believe would be quite willing to give up their tax break on dividends and capital gains if they knew these funds would be directed to precisely the programs I am talking about: refurbishing military equipment or caring for veterans.

There are many reasons to oppose the extension of the lower tax rates and dividends and capital gains, many macroeconomic reasons, many reasons in terms of our fiscal problems and in terms of our growing deficit. But one of the reasons is just the way it is distributed. Forty-five percent of the tax cut goes to .3 percent of families with incomes of $1 million or more. Seventy-two percent of the tax cut goes to families with incomes of $200,000 or more.

Now, in a time when our troops are being sent into the field--at times they are complaining or have complained about inadequate equipment, insufficient equipment--at a time when they are looking around and seeing their equipment stocks being drawn down and being overused, I believe it is time to ask: What is our priority, the protection of our military forces in the field or providing additional benefits to those who have so much in society today?

I think it is more important to direct these funds to our military forces. We have to do it, particularly with respect to the equipment of the Army and the Marine Corps. As Senator Dodd indicated, I had the privilege of traveling with him last October, but I just came back from my seventh trip to Iraq and fourth trip to Afghanistan. Once you are there, you understand the professionalism, skill, valor, fidelity to duty and country of these marvelous men and women. You also understand that the equipment is wearing down. The equipment has to be fixed. Because they depend upon this equipment for their lives, we can't tolerate equipment that won't operate properly.

A recent article in USA Today noted that the war in Iraq has taken the biggest toll on military equipment since the Vietnam war. Two weeks ago, the National Security Advisory Group, chaired by former Secretary of Defense William Perry, released a report about the strain and risk to our military.

In their words:

Given the harsh environment of Iraq and Afghanistan, [resetting the force]--

that is, rehabilitating this equipment and repairing it--

is proving more extensive and expensive than in previous operations. Estimates of the costs of rehabilitating Army equipment coming back from operations overseas continues to grow ..... in addition, both the Army and the Marine Corps expect to see increasing costs associated with recapitalizing aging forces and transforming their capabilities for a broader range of 21st century missions.

Gary Motsek, the Army's deputy director for support operations at the U.S. Army Materiel Command, has stated that the Army has to repair virtually everything that goes to Iraq.

Last week, General Schoomacher, the Chief of Staff of the Army, appeared before the Armed Services Committee. When I asked him what the reset and recap cost for the Army was, he replied: $4 billion per year over the next 6 years. What I have since discovered--and this might be of some confusion in terms of trying to interpret a difficult and complicated budget--is that his reply doesn't cover the whole situation and doesn't provide an entire explanation of what is going on.

First, I believe the Chief of Staff was discussing the repair and replacement cost, which is projected to be $24 billion over the next 6 years. He did not include recapitalization which is an additional $12 billion over the next 6 years. So the actual projected cost over 6 years is $36 billion. Second, this projection assumes a significant drawdown of troops beginning at the start of fiscal 2007 and ending in December 2008, when there are, according to the projections, no troops in Iraq. I believe this assumption is rather unrealistic and, therefore, we must assume that the reset and recapitalization costs will be significantly higher. Again, it is very difficult to parse out all of the different assumptions and other notions that are included in the budget, but the sense is that they are assuming, at least when it comes to maneuver units, that these units will essentially be drawn down within 2 years. That is a highly problematic assumption, but one that is within the President's budget.

In addition, General Schoomacher's number assumes that we do not leave a single piece of equipment behind for the Iraqis. Yet I have been privy to discussions here in Congress and elsewhere in which there is a notion that we will leave significant equipment behind in Iraq to provide their security forces with the kind of equipment they need to operate. If we do leave equipment for them, the replacement costs, which are an element of reset and recap costs, will increase.

A much more accurate picture of this notion of what we must do to repair and rehabilitate our equipment, or reset and recap, is the actual bill we have for fiscal year 2006, what we are paying for in this fiscal year. The Army has determined that the cost of resetting, recapping, and replacing equipment lost in battle for fiscal year 2006 is $13.6 billion. As long as we have approximately the same number of troops in Afghanistan and Iraq as we do today, and we have the same tempo of operation, then that $13.6 billion cost will be an annual occurrence. As troops draw down, that funding level could go down from $13.6 billion, but significant costs will continue to accrue until 2 years after the end of the conflict. So the annual $13.6 billion price tag supports the opinion of GEN Paul Kern, who just retired as head of the Army Materiel Command. He stated that fixing and replacing Army equipment alone could run from $60 to $100 billion.

If you step back and look at what we are encountering today in terms of costs, it is about $13 billion. Every year we are in Iraq at this level of operational strength, it will be roughly that. That is a lot more money than this budget anticipates. And so we have a huge unmet need to fund simple recapitalization and reequipment, rehabilitation, whatever term you want to use. But essentially, so that we understand it, it is simply going back and fixing all the equipment we have been using so aggressively in these different theaters. That doesn't buy you a new Army. It doesn't buy you a transformed Army with new, modern equipment. It simply gives you back the equipment you brought into battle in a condition that you can use it in other hostile environments.

This $13 billion seems to be the kind of level of spending we are going to have to face year in and year out, as long as we are deployed, as we are, in Iraq and Afghanistan. That is the figure we have to react to. As a result, it is only prudent and sensible that for this $50 billion total we talked about for a 5-year period, that people support the concept of spending that kind of money. But, of course, what they refuse to do is put real assets, real resources to pay the bills. And that is the thrust of my proposal.

I tried previously, in our debate a few days ago, to say that not only must we spend this money, we have to set priorities. We have to take those funds from the capital gains and dividends taxes and apply them to this fundamental need of our men and women in uniform.

That is the Army I was just talking about. Let's turn to the Marine Corps. Last November, the Marine Corps estimated it would cost $11.7 billion to repair and replace their equipment over the next 5 years. These are, again, costs that have already been incurred. These costs are not included, as far as we can determine, in the President's

budget request. We have also discovered that the Air Force is concerned about the cost of additional flying hours and the wear and tear on their equipment. Again, we could not find explicit recognition of these costs in the President's budget.

Last October, the GAO released a report on military readiness. It assessed the state of 30 pieces of equipment, predominantly tanks, vehicles, helicopters, and aircraft. It made several disturbing observations, stating:

GAO's analysis showed that the reported readiness rates declined between fiscal years 1999 and 2004 for most of these items. The decline in readiness, which occurred more markedly in fiscal years 2003 and 2004, generally resulted from 1. the continued high use of equipment to support current operations and 2. maintenance issues caused by the advancing ages and complexity of the systems. Key equipment items--such as Army and Marine Corps trucks, combat vehicles, and rotary wing aircraft--have been used well beyond normal peacetime use during deployments in support of operations in Iraq and Afghanistan.

The report then goes on to say:

Until the DOD ensures that condition issues for key equipment are addressed, DOD risks a continued decline in readiness trends, which could threaten its ability to continue meeting mission requirements. The military services have not fully identified near and long term program strategies and funding plans to ensure that all of the 30 selected equipment items can meet defense requirements.

I don't think there is anything startling in the sense of their conclusion. They are stating what should be obvious. We have committed our Army and Marine Corps to battle in a very harsh environment, Iraq and Afghanistan. We are operating at robust tempos of operation. This equipment is seeing the results. We have to provide for that. What is disturbing to me is that this readiness trend portends danger in the future. If readiness is declining, if it is not reversed, if we are asking the soldiers and marines to operate equipment that is not 100 percent, that is not fully supported by ample spare parts, that has not been rehauled, overhauled, rehabilitated, then we are putting our troops in a precarious position which we should not.

The response, the answer? This one is relatively straightforward. Give them the money to do the job and give them sufficient resources to do so.

Another GAO report states that more than 101,000 pieces of National Guard equipment, including trucks, radios, and night vision devices, have been sent to soldiers in operations overseas. This means the Guard does not have the equipment it needs to respond to crises here. This problem was exemplified during Katrina when the Guard stated that its communications equipment had been abroad and, therefore, it was unable to operate effectively in the aftermath of that disaster.

Another impact that we all hear about is the condition of National Guard equipment. Their equipment has been sent overseas and left overseas. Their equipment is also being used intensively in these operations. We have to restore and rehabilitate the National Guard equipment also. They have several missions. One critical mission is not only homeland security but preparedness for natural disasters and consequent management.

This week, Wednesday, the other body will release a report on Katrina. I am interested to see what it will say in terms of the National Guard's ability to respond, their equipment, the fact that they have been tasked to go overseas, personnel and equipment. But we have to remind ourselves that we can't neglect the Guard also. These reports, the GAO reports particularly, should have us thinking seriously about what we must do today. Again, it comes down to priorities. Secretary Rumsfeld is right about the fact that our troops are performing magnificently well. They are superb professionals doing a remarkable job. But in order to keep that edge, they have to have the equipment and the support to be the best they are.

Secretary Rumsfeld says that Perry report and another report by Andy Krepenevich, which the Pentagon paid for, were looking at all material when they found that the military was strained. We are not looking at all material. We are looking today at what we believe, based upon review of the budget, based upon discussions with military personnel, is the condition of this equipment, and the need exists to fix it. We do have the finest fighting force in the world, but we have to make sure it has the finest equipment in the world.

Secretary Perry made the following recommendation at the conclusion of his report:

In order to restore the health of U.S. ground forces in the wake of Iraq, the nation must step up and invest substantial resources to reset, recapitalize, and modernize the force ..... Restoring the health of both services is not a matter of simply returning them to the status quo; it is a matter of that they are organized, trained, equipped, and restored to meet the full range of traditional and nontraditional challenges in the future.

Next year alone the Army needs about $13.6 billion and the Marine Corps needs about $7.5 billion for reset and recap, as they call it, of their equipment. This was not included in the President's budget request. If it is not paid for with supplemental funding, the troops will have to go without, which we can all agree is not acceptable. Nothing makes our troops more vulnerable or lowers morale more rapidly than working with inadequate equipment. If the $20 billion reset and recap bill for this year alone is paid for with supplemental funding, this will add directly to our deficit. I believe with the growing size of this deficit, we should not add to it, that we should do what we can to try to prevent increased deficits.

This is a time for Americans to come forward to share in the sacrifice of our men and women overseas. Particularly when it comes to a tax proposal that benefits the wealthiest Americans, I think we would be more than willing to do so, knowing that these funds could be used directly for the welfare of our soldiers in the field and for the security of the United States.

Our men and women have volunteered to risk their lives. I believe we have to risk perhaps a little political capital and instead of providing these tax cuts to the very wealthiest Americans, provide a dividend to our soldiers and marines in the form of better equipment. Fifty billion in funding retained from not extending capital gains cuts and dividends cuts could pay for this. That is the essence of my instruction.

It is one thing to stand on this floor as a huge majority and say: We understand our troops need $50 billion to rehabilitate their equipment. It is something else to stand up and make a tough choice, set a priority, pay for it. My instruction will do that.

I yield the floor.

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