Family Smoking Prevention And Tobacco Control Act

Floor Speech

Family Smoking Prevention And Tobacco Control Act

BREAK IN TRANSCRIPT

Mr. DURBIN. Mr. President, yesterday I reintroduced the Credit Card Fair Fee Act. This legislation will provide fairness and transparency in the setting of credit card interchange fees.

Several weeks ago, the Senate passed legislation that will crack down on abusive fees and practices that credit card providers impose on consumers and cardholders. It is landmark legislation. It was 20 years in the making. I was pleased to support it and glad it passed.

We also need to take a hard look at the fees and the restrictions credit card providers impose on retailers. Retailers such as the restaurant down on the corner, the grocery store, the shop, these have to be looked at as well.

Currently, banks and credit card companies impose a system of fees and restrictions on retailers that accept their cards as a form of payment. There is a growing recognition that many of these fees and restrictions are anticompetitive and unfair to businesses and consumers.

Many people assume credit cards make their money off the customers who use them in direct payment, interest charges, and penalties. It turns out there is a whole level of fees that is imposed on retailers which, obviously, is passed on to consumers but have a direct impact on sales in America. If we do not address flaws in the system, many businesses will find it hard to make a profit, and the credit card fees cause consumer prices to go up as well.

The most flawed element of the current system of merchant fees is the interchange fee. It is a fee merchants pay to card issuing banks on each debit or credit card transaction.

Under the current system, card networks, such as Visa and MasterCard, unilaterally set the rates for these interchange fees. These fees vary from card to card, but they average about 2 percent of the transaction they cover. Card companies don't let their member banks negotiate with merchants over the fee rates, and they prevent merchants from encouraging customers to use cards that carry lower fees.

Yesterday, the Secretary of the Treasury was in before my appropriations subcommittee. It turns out, we accept credit cards for some 200 different agencies in the Federal Government. I asked the Secretary how much we pay in interchange fees to these credit card companies--as we accept credit card payments for everything from taxes to purchases at the Government Printing Office. It turns out it is well over $200 million a year. The GAO did a study in which it was asked whether, in fact, the Federal Government bargains for lower interchange fees because of the volume of business we do. It turns out there is virtually no bargaining allowed, not even with the Federal Government.

If merchants want to accept credit cards, those merchants simply have to abide by the rates, just like the Federal Government, that the card networks set, even when the rates are increased.

In fact, card companies regularly increase their interchange rates. A report by the Federal Reserve Bank in Kansas City found that between 1996 and 2006 Visa and MasterCard interchange rates increased from approximately $1.30 per $100 transaction to $1.80. That is about a 40-percent increase over that 10-year period of time. The rates have gone up even further for cards that have rewards programs. The total amount of interchange fees collected last year was $48 billion, according to estimates of the National Retail Federation. It is a huge increase from 2001, when the figure was $16.6 billion.

Despite these rising fees, many merchants have no real choice but to accept these cards as a form of payment. Consumers use their credit and debt cards for over 40 percent of all transactions. Interchange fees cut into retailer profits and force many merchants to raise consumer prices or go out of business.

As you think about it, what does it mean for the profitability of a company if the business is required to pay the credit card company 2 percent of the sale price on every sale? Well, for some companies that operate on a very tight margin, it can be significant. Best Buy, the large and successful electronics retailer, has a net profit margin of only 2.2 percent. Whole Foods, a well-known grocery store, has a profit margin of 1.4 percent. The food and drugstore retail sector has a profit margin of only 1.5 percent, according to Fortune magazine.

How can these companies continue to be profitable if rising interchange fees paid to credit card companies cut into their already small operating margins? In 2007, the National Association of Convenience Stores reported the entire convenience store industry had profits of $3.4 billion dollars; however, they paid credit card interchange fees of $7.6 billion. Over twice the amount of industry profit was paid to credit card providers.

Of course, it has an impact on smaller businesses. Rich Niemann, a friend of mine, who is coming by my office this afternoon in Washington, runs Niemann Foods, a chain of 65 grocery stores based in Quincy, IL. Every year I meet with him, and every year he asks me for help with interchange fees. Last year, Niemann Foods made $6 million in profits but paid $3 million in interchange fees. Those fee payments are going up every year. He has no ability to negotiate any change in those fee amounts. It is a growing expense he can't control.

Rising interchange fees cause many merchants to raise the price of their goods to cover these interchange fees. I don't want to drive small grocery stores out of business or small convenience stores. We don't want prices to go up for consumers across the board because of nonnegotiable credit card fees. The Credit Card Fair Fee Act will help restore fairness. The goal is simple. It incentivizes companies that provide credit cards and the merchants that accept them to sit down together and negotiate fees and terms both sides can live with.

The bill establishes a framework for negotiations and gives both sides a legitimate voice at the table. Under the bill, merchants would receive limited antitrust immunity to negotiate collectively with the providers of card systems over the fees and terms for access to the system. The bill then motivates the merchants and card providers to work out voluntary agreements. It establishes a mandatory period for negotiations.

If they fail to reach a voluntary agreement, the matter would then go to an arbitration-style proceeding before a panel of judges appointed by the Justice Department and the Federal Trade Commission. The judges would collect and disclose full information about credit card fees and costs and then order a mandatory settlement conference to attempt to facilitate a deal. If that fails, the judges would conduct a hearing where the merchants and card providers would each propose what they think is a fair set of fees and terms. The judges then would select the proposal that most closely represents what would be fairly negotiated in a competitive market. This set of fees and terms would govern access to the card system by merchants for a period of 3 years.

The bill contains safeguards to ensure the judges can only select a set of proposed fees and terms that is fair and pro-consumer. But the ultimate goal is to reach a deal before the process gets to the point where the judges would need to issue a ruling.

This is an archaic element of commerce in America that has a direct impact on consumers, the money we pay for goods and services, as well as the profit margins of a lot of businesses that are struggling. The credit card companies have been unable to justify their interchange fees in terms of the actual cost of processing credit card payments. It is a profit margin on their side for which they are not accountable.

My legislation is supported by the Merchants Payments Coalition, a coalition of retailers, supermarkets, convenience stores, drugstores, fuel stations, online merchants and other businesses. The coalition's member associations collectively represent about 2.7 million stores nationwide, with approximately 50 million employees.

I ask my fellow colleagues in the Senate to take a look at the legislation. I warn them in advance, if they are interested in looking at this issue of credit cards and interchange fees, be prepared. You are going to hear from every bank that issues a credit card, and they are going to tell you the Durbin legislation is the end of the world. But I hope you will also listen to the merchants and retailers in the States you represent. They will tell you this system is unconscionable and unsustainable.

To have the credit card companies dictate these fees to their retailers all across America is fundamentally unfair. We should have arm's length negotiation. We should also have at the Federal Government level a negotiation to determine what is the best arrangement for taxpayers when it comes to paying these credit card fees to the companies that provide credit cards for transactions with the Federal Government. It is not an unreasonable approach.

I hope my colleagues will take a look at this issue, and I hope they will listen to their merchants and retailers back in their States.

GUANTANAMO

Mr. President, I wish to commend the Obama administration for the progress they have made to date on closing the detention facility at Guantanamo Bay. According to media reports today, the Obama administration has reached a historic agreement with the Government of Palau to transfer 17 Guantanamo detainees to this Pacific island. These 17 detainees are Uighurs from China.

The Bush administration determined that all 17 are not enemy combatants and do not pose any risk to U.S. national security. The Bush administration had determined the Uighurs couldn't be legally returned to China, for fear they would be imprisoned and tortured. A Federal Court looked at all the classified evidence against these 17 Uighurs and found there was no legitimate reason to hold them and ordered them released. The President, this administration, is going to follow that court and follow the law.

I commend President Obama and those working with him for finding a solution to what has been a vexing problem by convincing the Government of Palau to accept Uighur detainees. This is the kind of diplomacy we need to achieve a better standing in the world and a more peaceful and secure situation for the United States.

Something else happened yesterday as well. There was an important development. The administration transferred Ahmed Ghailani to the United States to be prosecuted for his involvement in the 1998 bombings of our Embassies in Kenya and Tanzania. Those bombings killed 224 people, including 12 Americans. I have been to Kenya. I saw the bombed building. It was devastating. It is hard to imagine what happened inside that building and nearby when those bombs were detonated. We know 224 people died, including 12 of our own.

I wish to commend President Obama for his determination to hold Ahmed Ghailani accountable for his alleged crimes. For 7 long years, the Bush administration had failed to convict any of the terrorists who planned the 9/11 terrorist attacks. For 7 long years, only three individuals were convicted by military commissions at Guantanamo. Two of those individuals, incidentally, have been released. President Obama has been clear, it is a priority for his administration to bring to justice the planners of 9/11 and other terrorists who have attacked our country, such as Ahmed Ghailani.

Unfortunately, this issue has become very political and very complicated over the last several months. Some of my colleagues on the other side of the aisle have expressed some things on the Senate floor which I don't think are consistent with the security of the United States. Senator McConnell, the distinguished minority leader, and Senator Kyl, the distinguished assistant minority leader, have argued we should not transfer suspected terrorists from Guantanamo to the United States in order to bring them to justice. They have argued we cannot safely hold any of these detainees in prison in the United States, even--one of their arguments--during the course of the trial.

When you look at the failed track record of prosecuting terrorists at Guantanamo, it is pretty clear if Ahmed Ghailani isn't prosecuted in the U.S. courts, there is a good chance he will never be punished for his crimes. President Obama made it clear when he said:

Preventing this detainee from coming to our shores would prevent his trial and conviction. And after over a decade, it is time to finally see that justice is served, and that is what we intend to do.

Even Senator Kyl appears to have softened his position. On the floor of the Senate yesterday, he spoke about Ahmed Ghailani and said:

Everybody acknowledges that there are some people who need to be tried for serious crimes, in effect, like war crimes, and they should be tried in the United States.

I commend Senator Kyl for this statement. I think it is a sensible, reasonable position. But let us acknowledge the obvious: If we are going to try these Guantanamo detainees in the United States, we are going to incarcerate them while we try them. There is no other reasonable alternative. If they are found guilty and face imprisonment, what will we do with them? I am glad Senator Kyl acknowledged the obvious. Of course, we have to bring these terrorists to justice, and an American court is the best place to do it.

The U.S. Government frequently brings extremely dangerous individuals to the United States for prosecution. Ramzi Yousef--the mastermind of the 1993 World Trade Center bombings, captured in Pakistan--was brought to trial in the United States, convicted, and is now being held in a Federal supermaximum security prison, a convicted terrorist.

Some of my colleagues on the other side of the aisle continue to argue we should not prosecute Guantanamo detainees in U.S. courts because no prison in America is safe to hold them. Ramzi Yousef was held in the Metropolitan Corrections Center in New York during the course of his trial for over 2 years--safely. My colleagues seem to think American corrections officers are not capable of safely holding terrorists. Republican Senator Lindsey Graham, who is a military lawyer, said:

The idea that we cannot find a place to securely house 250-plus detainees within the United States is not rational.

What is the record? Today, our Federal prisons--and this is the most updated number from the Justice Department--hold 355 convicted terrorists, including al-Qaida leaders such as Ramzi Yousef, who masterminded the World Trade Center bombing in 1993. No prisoner has ever escaped from a Federal supermaximum security facility. Clearly, we know how to hold these terrorists safely and securely so no one in America is at risk.

Unfortunately, some on the other side of the aisle continue to argue that we should keep Guantanamo open at all costs. I disagree. I believe, President Obama believes, and I think many Americans believe that closing Guantanamo is an important national security priority. But it isn't just the President--and President Bush, for example--who want to close Guantanamo. Among those military and security leaders calling for the closing of Guantanamo are: GEN Colin Powell, the former Chairman of the Joint Chiefs of Staff and former Secretary of State; Republican Senators John McCain and Lindsey Graham; former Republican Secretaries of State James Baker and Henry Kissinger and Condoleezza Rice; Defense Secretary Robert Gates, first appointed by President Bush; ADM Mike Mullen, the Chairman of the Joint Chiefs of Staff; and GEN David Petraeus.

Yesterday, Senator Kyl made a statement taking issue with some of
my earlier comments about Guantanamo.

Senator KYL asked: ``What is wrong with the prison at Guantanamo?''

Let me respond to Senator KYL's question. What is wrong with Guantanamo is that it is a recruiting tool for al-Qaeda and other terrorists.

That is not just my opinion. That is the opinion of our military leaders, based on their experiences fighting the wars in Iraq and Afghanistan.

Chairman of the Joint Chiefs of Staff Mike Mullen said:

The concern I've had about Guantanamo is it has been a recruiting symbol for those extremists and jihadists who would fight us. That's the heart of the concern for Guantanamo's continued existence.

General David Petraeus said Guantanamo is, ``a symbol that is used by our enemies to our disadvantage. We're beat around the head and shoulders with it.''

And Defense Secretary Robert Gates said:

Closing Guantanamo is essential to national security. It has become a rallying cry and recruitment tool for our enemies--endangering the lives of our soldiers in the field, diminishing the willingness of American allies to help wage the fight against al-Qaida and undermining the moral authority of the country.

Of course, Senator KYL is entitled to his point of view and I respect him and count him as a friend. But he offers no evidence to support his view, certainly no evidence that compares with those I have quoted here, starting with Gen. Colin Powell.

Not only is Guantanamo a recruiting tool for terrorists in the Middle East. There is evidence that al-Qaida is actually recruiting terrorists in Guantanamo itself. McClatchy Newspapers conducted an extensive investigation and concluded:

Instead of confining terorists, Guantanamo often produced more of them by rounding up common criminals, conscripts, low-level foot soldiers and men with no allegiance to radical Islam ..... and then housing them in cells next to radical Islamists.

McClatchy found that, ``Guantanamo became a school for jihad'' and ``an American madrassa.''

Rear Admiral Mark Buzby, the former commander of Guantanamo's detention facility, said, ``I must make the assumption that there's a fully functioning Al-Qaeda cell here at Guantanamo.''

Senator KYL also continues to claim that no one was abused at Guantanamo and that there is no connection between the abuses at Abu Ghraib and Guantanamo. I commend him for his reading of the Senate Armed Services Committee Report.

But the Senate Armed Services Committee issued a bipartisan report that reached a different conclusion. Senator LEVIN, the chairman of the Armed Services Committee, and Senator MCCAIN, the ranking member of the committee, found, ``Secretary of Defense Donald Rumsfeld's authorization of aggressive interrogation techniques for use at Guantanamo Bay was a direct cause of detainee abuse there.''

Senators LEVIN and MCCAIN also concluded, on a bipartisan basis, that there was a connection between the abuses at Abu Ghraib and Guantanamo. They said:

The abuse of detainees at Abu Ghraib in late 2003 was not simply the result of a few soldiers acting on their own. Interrogation techniques such as stripping detainees of their clothes, placing them in stress positions, and using military working dogs to intimidate them appeared in Iraq only after they had been approved for use in Afghanistan and at GITMO.

And, as I said yesterday, Susan Crawford, a top Bush administration official, concluded that Mohammad Al-Qahtani, the so-called 20th hijacker, could not be prosecuted for his role in the 9/11 attacks because he was tortured at Guantanamo Bay.

For many years, President Bush said that he wanted to close the Guantanamo detention facility, and there were few, if no complaints from the Republican side. But the President never followed through on his commitment.

Now that President Obama has made that same call, we hear this chorus of opposition. I think President Obama has accepted the challenge--the challenge to make certain that these detainees are treated in a responsible way; that those who should stand trial will stand trial for their crimes and war crimes; that those who cannot be brought to article 3 courts in America should be tried before reformed military tribunals that have rules of evidence and procedure more consistent with our values and laws; that some will be returned, like the Uighurs, if they pose no threat, to places where they cannot threaten the United States and that some will be kept in detention because they continue to be a threat to our Nation. That is a responsible course of conduct. It deserves bipartisan support.

I yield the floor.

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