Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I rise to speak on an amendment I have offered, 1021. It will have Democratic and Republican cosponsors. This substitute amendment gives the Government Accountability Office authority to audit the Federal Reserve. However, this version limits the Government Accountability Office's new authority to matters involving the Federal Reserve's participation in the TARP or its emergency action under section 13(3) authority. This is a much narrower version of the original amendment. It is intended to address the Federal Reserve's concern that its core monetary policy functions remain independent of the Government Accountability Office scrutiny. For over 90 years, the Fed has conducted monetary policy through a combination of open-market operations and changes in banking reserve requirements. On rare occasions, the Fed has invoked its authority under section 13(3) to take extraordinary action to address what they would decide was a very short-term crisis. While these actions are intended to be temporary, they can have a lasting impact on specific institutions and on the long-term credibility of the Fed. The Fed has created a number of facilities that are making nonrecourse loans or buying and selling assets through a subsidiary of the Fed. These transactions involve undisclosed counterparties. Without adequate oversight, no one will ever know the terms or conditions of these transactions: Who received what from the Fed and what did the Fed receive in return? How much did each of those entities profit and how much did the taxpayers lose? This amendment is simply about accountability, not monetary policy, because I do not want to interfere in Fed monetary policy. But I do think that when we are helping out businesses, the way we are, sometimes through appropriations from Congress, sometimes through facilities and powers of the Fed, we are talking about taxpayers' money. If you think the Fed does not have anything to do with taxpayers' money, remember that last year they returned, I think it was, $38 billion to the Federal Treasury--I know it was in the mid-30s that it returned to the Federal Treasury in year-end operations. They are not going to be able to do that this year, but that $38 billion goes into the general fund to be used, like money being fungible. It is not seen by the taxpayers any differently from the income tax or the payroll taxes that are paid. There is an interest in protecting the taxpayers' money. It is not an interest in doing anything with the independence of the Fed, it is just a matter of knowing who is getting helped, what is being helped, are they profiting, how much are they profiting, and the extent to which the taxpayers are being protected, the instruments the Fed takes in as collateral. These are things that it is good to know. We need to know. We need to know them. Why? Because there are a lot of facilities, institutions, companies being helped that would be belly up--well, I guess you would say they are belly up or they would not need the help-- but belly up and they exist because of either Congress appropriating money or because of the Fed intervening. All good reasons maybe but they operate. So, in my judgment, the public's business ought to be public. Oh, there are some exceptions, such as intelligence information, national security, some privacy. But everything else ought to be public. That is what this amendment is all about. It is all about making sure money is handled responsibly. The Fed is only supposed to lend money against good collateral. Their authority to conduct monetary policy must not be allowed to degenerate into a taxpayer-funded bailout for those who engage in reckless lending. I hope people who are going to be voting on this amendment tomorrow will consider what we are trying to do. We are trying to do everything this President said in his campaign--the President has not spoken on this issue, but I am speaking in a general way about what the President said in his campaign--that he wanted more transparency in Government, he wanted more accountability in Government. For the most part, the President, through various things, maybe not completed yet, has tried to deliver on that promise--putting TARP expenditures on the Internet, for instance, so anybody in the United States can know, maybe not today but eventually, where every penny went--because it is the taxpayers' money. This Government belongs to the American people. What this Government does that affects the pocketbooks of Americans ought to be made public. This amendment is not something to try to destroy anything. It is not something trying to get involved in that which affects the monetary policy of the Fed. We are just trying to get information out and make sure people are accountable. We have to have this information to know that. It doesn't hurt one iota to make sure the public has access to this information. I hope Members will support amendment No. 1021 tomorrow. There is another amendment which, it is my understanding, the managers will accept. But 1021 we will have to have a vote on. I have given my reasons. I may take a minute in the morning to expand on that and remind Senators, but I hope we can move forward and get this agreed to. I yield the floor.

Mr. GRASSLEY. I thank the Senator.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I want to first start off by thanking the Senate and in particular the Senate Agriculture Committee for addressing a new cause of action in Federal court for those African- American farmers who may have been discriminated against and who were denied entry in the Pigford v. Glickman Consent Decree. The Food, Conservation, and Energy Act of 2008 including a provision entitled Determination on Merits of Pigford Claims. For those who do not know, the Consent Decree was a settlement that resulted from a class action lawsuit initiated by a class of African- American farmers who had for decades been discriminated against by the U.S. Department of Agriculture in the administration of its FSA loan program. The discriminatory treatment was well-documented by both the USDA's own Inspector General and an internal task force appointed by then USDA Secretary Glickman. We had some unanticipated consequences in the Consent Decree's implementation. There was denial of approximately 77,000 African- American farmers into the Decree even though these farmers filed petitions by the late-claim deadline. More than half of these late- claim petitioners didn't even know about the Consent Decree. The Court said the lack of notice was not a sufficient reason to allow them into the Consent Decree. Thus, these individuals were denied entry and their discrimination complaints went unresolved. This was not a fair outcome for farmers or those attempting to farm at that time. The farm bill did the right thing by allowing late filers to have their claims heard and judged on the merits. These farmers deserve justice and at least the opportunity to have their claims heard. Unfortunately, it has been very difficult to determine how many of the 77,000 actually have valid claims. Lots of different folks have lots of different calculations. Either way, it's likely to be expensive. Because of the budget constraints, the Farm Bill only could put $100 million towards the endeavor. I think we can and must do better than that. That is why today I am introducing bipartisan legislation with Senator Hagan of North Carolina. This bill will make 3 changes to the farm bill. First it will allow the claimants to access the $100 million already appropriated in the farm bill, but once that is expended gain access to the Department of Treasury permanent appropriated judgment fund. Second, it will allow reasonable attorney fees, administrative costs, and expenses to be paid from the judgment fund in accordance with the 1999 consent decree. Finally, it includes a section making fraud related to claims a criminal offense with punishment of a fine or up to 5 years in prison or both. The claimants, who were able to timely file, were allowed access to the judgment fund and so it makes sense that we treat these new claimants the exact same way. The Department of Justice was treating the $100 million included in the farm bill as a cap, but Congress simply viewed it as a down payment to rectify the damage done. The farm bill we passed last year does one thing right. It focuses a considerable amount of resources on new and beginning farmers and ranchers. Well, many of the Pigford claimants were in that same boat 20 years ago. It is time to rectify that. The farm bill has simply opened up the door so that claims can be heard. If a person brings a claim and can not meet the burden of proof, then no award will be given. However, we know USDA has admitted that the discrimination occurred, and now we are obligated to do our best in getting those that deserve it, some relief. That is why I am introducing this legislation with Senator Hagan and I urge my colleagues to support the bill. It is time to make these claimants right and move forward into a new era of civil rights at the Department of Agriculture. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY. Mr. President, the Federal Inspectors General are the frontline of protection for taxpayer dollars, ensuring that Federal agencies spend taxpayer dollars in an effective, efficient, economical manner that is in accordance with all applicable law. The Inspectors General root out fraud, waste, and abuse in Government programs by auditing, evaluating, and investigating how Federal agencies spend taxpayer dollars and how Government programs utilize funds. The Inspectors General occupy a unique position within our government. Created by the Inspector General Act of 1978 and by various subsequent statutes, the Inspectors General at Executive Branch agencies also report directly to the Legislative Branch. They were created to keep tabs on the government bureaucracy to make sure that agencies follow the spirit and intent of the laws while protecting taxpayer dollars. I have been an outspoken advocate for Inspectors General during my time in the Senate and I was proud to be a cosponsor of the Inspector General Reform Act of 2008, which was signed into law by President Bush last year. That legislation ensures that Inspectors General are truly independent of the Federal agencies they oversee. The independence of Inspectors General is a critical requirement to their ability to get the job done. If Inspectors General lack independence from the agency they oversee, the quality of their work is impacted negatively and their reputation as independent watchdogs is tarnished. Over the years, I have seen a number of Inspectors General come and go. It is a tough job to be an Inspector General. You can not go along to get along. You must buck the system, dig deep into the books of the agency, find where the secrets are hidden, and then report the truth to Congress, the President, and the American people. Unfortunately, Inspectors General must do all this with the agencies that often fight their every move. These entrenched bureaucracies have an interest in not seeing Inspectors General succeed--they do not want egg on their face. That is why we in Congress must make sure they have all the tools they need to get the job done and ensure that there is accountability for the billions in taxpayer dollars that are spent annually on the operation of the Executive Branch. One growing area of concern I have seen over the years is procedural roadblocks being placed before Inspectors General to limit or prohibit their ability to do their job of protecting taxpayer dollars. One recent example relates to the Special Inspector General for the Troubled Asset Relief Program SIGTARP, Neil Barofsky. Inspector General Barofsky notified me on January 22, 2009, that he intended to begin an oversight initiative that would have improved the transparency of the Troubled Asset Relief Program, TARP. Inspector General Barofsky's plan was to collect data from TARP recipients asking them for a response outlining the use of TARP funds, copies of support documents, a description of plans to comply with executive compensation restrictions, and certification by a senior executive officer of the accuracy of the statements they make. This sounded like a legitimate plan from the Inspector General tasked by Congress with ensuring that the $700 billion handed out by the TARP program wasn't lost to fraud or abuse. However, it was shortly after this letter that Mr. Barofsky ran into procedural hurdles erected by the Office of Management and Budget, OMB. On January 30, 2009, I asked the Inspector General for an update on his initiative when he informed me that OMB had advised the SIGTARP that he could not initiate his effort due to the restrictions in the Paperwork Reduction Act of 1980, PRA. As a result, SIGTARP requested ``emergency processing'' by OMB to consider the impact of its letter to TARP recipients. It is my understanding that OMB initially responded favorably finding that SIGTARP would not be limited by the PRA. However, OMB reversed course and withdrew the emergency approval right after it was granted. OMB then informed SIGTARP that the PRA required he post his proposed letter online for TARP recipients to review for 15 days, wait for comments from the recipients, and then require that the SIGTARP justify to OMB that it has taken into account all the public comments. This was a significant, unnecessary roadblock that was erected at a time when American Taxpayers were asking everyone ``where did the money go.'' This type of procedural hurdle to an audit and investigation by the SIGTARP is unacceptable. Can you imagine what the very corporations that took taxpayer money would write during the comment period? It is my view that corporations that took Government money should be subjected to oversight by Inspectors General and they should not have a say in drafting or amending a letter from the Inspector General that they must respond to. This is exactly what OMB was asking of the SIGTARP. I am glad to report that later that same week SIGTARP Barofsky was given approval from OMB to send the letter requests to the TARP recipients without delay. However, around the same time that the letters were approved and sent, the Department of Treasury posted a comment request in the Federal Register about the SIGTARP request. Those responses were due to Treasury by April 13, 2009. While SIGTARP Barofsky was ultimately able to send his request, this uncertainty about the application of the PRA to audits, evaluations, inspections, or investigations by Inspectors General remains a significant question. This whole saga was a wakeup call for many Inspectors General. As a result, many Inspectors General have reached out to my office about this issue and the dangers the PRA could pose to their audits and investigations. That is why I am here today to introduce legislation that will clarify the impact the PRA has on official audits, evaluations, inspections, and investigations conducted by Inspectors General. This legislation is narrowly tailored to ensure that Inspectors General are not subject to bureaucratic hurdles erected by OMB, which could be used to limit the independence and authority of Inspectors General, and most importantly information that we can garner through their work. Specifically, the PRA currently states that agencies must receive approval for each collection request before it is implemented. Failure to get this approval provides the recipient of the request the protection to not comply with the request without penalty. The current PRA does not apply to criminal investigations, administrative actions, or investigations involving an agency against a specific individual or entities. However, it does apply to ``general'' investigations. The PRA is also silent as to whether it was intended to apply to Inspectors General and defines agency as any ``executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government including the Executive Office of the President, or any independent regulatory agency. The PRA does expressly exclude the Government Accountability Office and the Federal Election Commission, but not the Inspectors General. The PRA was passed with the noble goal of reducing the impact Federal Government regulatory agencies have on small businesses and other private individuals. However, over the years the investigative and audit roles of the Inspectors General have expanded to ensure that taxpayer dollars are not lost to fraud, waste, or abuse. As a result, the important work of the Inspectors General may run directly into the PRA resulting in a slower process for audits, evaluations, and investigations, as well as potentially tipping off those being investigated by the Inspectors General and providing them time to, for example cover-up potential wrong doing. The legislation I'm introducing today is designed to protect the PRA as well as the Inspectors General by trying to head off a potential conflict among the two statutes before it has to be decided by the courts. It simply states that the PRA shall not apply to the collection of information ``during the conduct of any investigation, audit, inspection, evaluation, or other review conducted by'' any Federal office of Inspector General. It further defines the definition of Inspector General to include: statutory Inspectors General, Federal entity Inspectors General, and any Special Inspector General. This definition also includes the Council of the Inspectors General on Integrity and Efficiency, CIGIE, created by the Inspector General Reform Act, and the Recovery, Accountability, and Transparency Board created by the stimulus bill signed into law earlier this year. These two entities have some audit and evaluation roles provided to them and should also not face procedural hurdles under the PRA when they are overseeing the various Inspectors General or Recovery programs. All in all, this is a simple piece of legislation that I encourage all my colleagues to support. It picks up on the great work of the Inspector General Reform Act to ensure that Inspectors General are independent and free from any undue influence--procedural or substantive--when conducting audits, evaluations, inspections, or audits on behalf of the American people. I hope this legislation will receive expedited consideration and swift passage. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I want to first start off by thanking the Senate and in particular the Senate Agriculture Committee for addressing a new cause of action in Federal court for those African- American farmers who may have been discriminated against and who were denied entry in the Pigford v. Glickman Consent Decree. The Food, Conservation, and Energy Act of 2008 including a provision entitled Determination on Merits of Pigford Claims. For those who do not know, the Consent Decree was a settlement that resulted from a class action lawsuit initiated by a class of African- American farmers who had for decades been discriminated against by the U.S. Department of Agriculture in the administration of its FSA loan program. The discriminatory treatment was well-documented by both the USDA's own Inspector General and an internal task force appointed by then USDA Secretary Glickman. We had some unanticipated consequences in the Consent Decree's implementation. There was denial of approximately 77,000 African- American farmers into the Decree even though these farmers filed petitions by the late-claim deadline. More than half of these late- claim petitioners didn't even know about the Consent Decree. The Court said the lack of notice was not a sufficient reason to allow them into the Consent Decree. Thus, these individuals were denied entry and their discrimination complaints went unresolved. This was not a fair outcome for farmers or those attempting to farm at that time. The farm bill did the right thing by allowing late filers to have their claims heard and judged on the merits. These farmers deserve justice and at least the opportunity to have their claims heard. Unfortunately, it has been very difficult to determine how many of the 77,000 actually have valid claims. Lots of different folks have lots of different calculations. Either way, it's likely to be expensive. Because of the budget constraints, the Farm Bill only could put $100 million towards the endeavor. I think we can and must do better than that. That is why today I am introducing bipartisan legislation with Senator Hagan of North Carolina. This bill will make 3 changes to the farm bill. First it will allow the claimants to access the $100 million already appropriated in the farm bill, but once that is expended gain access to the Department of Treasury permanent appropriated judgment fund. Second, it will allow reasonable attorney fees, administrative costs, and expenses to be paid from the judgment fund in accordance with the 1999 consent decree. Finally, it includes a section making fraud related to claims a criminal offense with punishment of a fine or up to 5 years in prison or both. The claimants, who were able to timely file, were allowed access to the judgment fund and so it makes sense that we treat these new claimants the exact same way. The Department of Justice was treating the $100 million included in the farm bill as a cap, but Congress simply viewed it as a down payment to rectify the damage done. The farm bill we passed last year does one thing right. It focuses a considerable amount of resources on new and beginning farmers and ranchers. Well, many of the Pigford claimants were in that same boat 20 years ago. It is time to rectify that. The farm bill has simply opened up the door so that claims can be heard. If a person brings a claim and can not meet the burden of proof, then no award will be given. However, we know USDA has admitted that the discrimination occurred, and now we are obligated to do our best in getting those that deserve it, some relief. That is why I am introducing this legislation with Senator Hagan and I urge my colleagues to support the bill. It is time to make these claimants right and move forward into a new era of civil rights at the Department of Agriculture. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, the Federal Inspectors General are the frontline of protection for taxpayer dollars, ensuring that Federal agencies spend taxpayer dollars in an effective, efficient, economical manner that is in accordance with all applicable law. The Inspectors General root out fraud, waste, and abuse in Government programs by auditing, evaluating, and investigating how Federal agencies spend taxpayer dollars and how Government programs utilize funds. The Inspectors General occupy a unique position within our government. Created by the Inspector General Act of 1978 and by various subsequent statutes, the Inspectors General at Executive Branch agencies also report directly to the Legislative Branch. They were created to keep tabs on the government bureaucracy to make sure that agencies follow the spirit and intent of the laws while protecting taxpayer dollars. I have been an outspoken advocate for Inspectors General during my time in the Senate and I was proud to be a cosponsor of the Inspector General Reform Act of 2008, which was signed into law by President Bush last year. That legislation ensures that Inspectors General are truly independent of the Federal agencies they oversee. The independence of Inspectors General is a critical requirement to their ability to get the job done. If Inspectors General lack independence from the agency they oversee, the quality of their work is impacted negatively and their reputation as independent watchdogs is tarnished. Over the years, I have seen a number of Inspectors General come and go. It is a tough job to be an Inspector General. You can not go along to get along. You must buck the system, dig deep into the books of the agency, find where the secrets are hidden, and then report the truth to Congress, the President, and the American people. Unfortunately, Inspectors General must do all this with the agencies that often fight their every move. These entrenched bureaucracies have an interest in not seeing Inspectors General succeed--they do not want egg on their face. That is why we in Congress must make sure they have all the tools they need to get the job done and ensure that there is accountability for the billions in taxpayer dollars that are spent annually on the operation of the Executive Branch. One growing area of concern I have seen over the years is procedural roadblocks being placed before Inspectors General to limit or prohibit their ability to do their job of protecting taxpayer dollars. One recent example relates to the Special Inspector General for the Troubled Asset Relief Program SIGTARP, Neil Barofsky. Inspector General Barofsky notified me on January 22, 2009, that he intended to begin an oversight initiative that would have improved the transparency of the Troubled Asset Relief Program, TARP. Inspector General Barofsky's plan was to collect data from TARP recipients asking them for a response outlining the use of TARP funds, copies of support documents, a description of plans to comply with executive compensation restrictions, and certification by a senior executive officer of the accuracy of the statements they make. This sounded like a legitimate plan from the Inspector General tasked by Congress with ensuring that the $700 billion handed out by the TARP program wasn't lost to fraud or abuse. However, it was shortly after this letter that Mr. Barofsky ran into procedural hurdles erected by the Office of Management and Budget, OMB. On January 30, 2009, I asked the Inspector General for an update on his initiative when he informed me that OMB had advised the SIGTARP that he could not initiate his effort due to the restrictions in the Paperwork Reduction Act of 1980, PRA. As a result, SIGTARP requested ``emergency processing'' by OMB to consider the impact of its letter to TARP recipients. It is my understanding that OMB initially responded favorably finding that SIGTARP would not be limited by the PRA. However, OMB reversed course and withdrew the emergency approval right after it was granted. OMB then informed SIGTARP that the PRA required he post his proposed letter online for TARP recipients to review for 15 days, wait for comments from the recipients, and then require that the SIGTARP justify to OMB that it has taken into account all the public comments. This was a significant, unnecessary roadblock that was erected at a time when American Taxpayers were asking everyone ``where did the money go.'' This type of procedural hurdle to an audit and investigation by the SIGTARP is unacceptable. Can you imagine what the very corporations that took taxpayer money would write during the comment period? It is my view that corporations that took Government money should be subjected to oversight by Inspectors General and they should not have a say in drafting or amending a letter from the Inspector General that they must respond to. This is exactly what OMB was asking of the SIGTARP. I am glad to report that later that same week SIGTARP Barofsky was given approval from OMB to send the letter requests to the TARP recipients without delay. However, around the same time that the letters were approved and sent, the Department of Treasury posted a comment request in the Federal Register about the SIGTARP request. Those responses were due to Treasury by April 13, 2009. While SIGTARP Barofsky was ultimately able to send his request, this uncertainty about the application of the PRA to audits, evaluations, inspections, or investigations by Inspectors General remains a significant question. This whole saga was a wakeup call for many Inspectors General. As a result, many Inspectors General have reached out to my office about this issue and the dangers the PRA could pose to their audits and investigations. That is why I am here today to introduce legislation that will clarify the impact the PRA has on official audits, evaluations, inspections, and investigations conducted by Inspectors General. This legislation is narrowly tailored to ensure that Inspectors General are not subject to bureaucratic hurdles erected by OMB, which could be used to limit the independence and authority of Inspectors General, and most importantly information that we can garner through their work. Specifically, the PRA currently states that agencies must receive approval for each collection request before it is implemented. Failure to get this approval provides the recipient of the request the protection to not comply with the request without penalty. The current PRA does not apply to criminal investigations, administrative actions, or investigations involving an agency against a specific individual or entities. However, it does apply to ``general'' investigations. The PRA is also silent as to whether it was intended to apply to Inspectors General and defines agency as any ``executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government including the Executive Office of the President, or any independent regulatory agency. The PRA does expressly exclude the Government Accountability Office and the Federal Election Commission, but not the Inspectors General. The PRA was passed with the noble goal of reducing the impact Federal Government regulatory agencies have on small businesses and other private individuals. However, over the years the investigative and audit roles of the Inspectors General have expanded to ensure that taxpayer dollars are not lost to fraud, waste, or abuse. As a result, the important work of the Inspectors General may run directly into the PRA resulting in a slower process for audits, evaluations, and investigations, as well as potentially tipping off those being investigated by the Inspectors General and providing them time to, for example cover-up potential wrong doing. The legislation I'm introducing today is designed to protect the PRA as well as the Inspectors General by trying to head off a potential conflict among the two statutes before it has to be decided by the courts. It simply states that the PRA shall not apply to the collection of information ``during the conduct of any investigation, audit, inspection, evaluation, or other review conducted by'' any Federal office of Inspector General. It further defines the definition of Inspector General to include: statutory Inspectors General, Federal entity Inspectors General, and any Special Inspector General. This definition also includes the Council of the Inspectors General on Integrity and Efficiency, CIGIE, created by the Inspector General Reform Act, and the Recovery, Accountability, and Transparency Board created by the stimulus bill signed into law earlier this year. These two entities have some audit and evaluation roles provided to them and should also not face procedural hurdles under the PRA when they are overseeing the various Inspectors General or Recovery programs. All in all, this is a simple piece of legislation that I encourage all my colleagues to support. It picks up on the great work of the Inspector General Reform Act to ensure that Inspectors General are independent and free from any undue influence--procedural or substantive--when conducting audits, evaluations, inspections, or audits on behalf of the American people. I hope this legislation will receive expedited consideration and swift passage. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, it is no secret that I have worked for decades to bring greater transparency and accountability to all facets of government operations. If there is one thing that I have learned over those years it is that you cannot achieve the goal of greater transparency and accountability without access to information. During this financial crisis, we hear daily about the need for many more billions in Federal funds to save this bank or that financial firm. In response to the crisis the Treasury Department is buying stakes in banks and other companies. That program is known as the Troubled Asset Relief Program or TARP. It is costing the American taxpayer nearly three quarters of a trillion dollars. Transparency and accountability has never been more important than with a program that big. In an effort to provide some accountability to the American people for TARP funds, the Government Accountability Office, GAO, the investigative arm of Congress, was required by legislation to conduct oversight of the TARP program. The GAO's mission is to look at the overall performance of the initiative and its impact on the financial system. The GAO is also required to prepare regular reports for Congress. However, GAO cannot do its job effectively without access to information about how the funds are used. This should be obvious. Unfortunately, however, the bill that created the TARP and told GAO to oversee it, did not give them the authority to access books and records of the private firms that receive TARP money. In January, Senator Baucus and I introduced a bill, S. 340, to provide the GAO the ability to access the books and records of firms who received money from the TARP. Senator Snowe is also a cosponsor of the bill, known as the TARP Enhancement Act. Unfortunately, my colleagues on the Banking Committee have not yet taken any action on the bill. Amendment No. 1020 is simply the text of S. 340. It would ensure that companies that receive assistance from the American taxpayer are required to cooperate with requests for information from the Government Accountability Office about how they used taxpayer money. The GAO is supposed to be the ``eyes and ears'' of Congress. Well it can't do that job wearing blinders and ear plugs. So I urge my colleagues to support amendment No. 1020, to ensure that GAO has access to TARP recipients' books and records. Mr. President, in March the Finance Committee held a hearing on the progress and oversight of the Troubled Assets Relief Program, TARP. At that hearing, we heard testimony from acting Comptroller General, the head of the Government Accountability Office, GAO. He testified that in addition to the problem that S. 340 is intended to fix, there is another major gap in GAO's access to information about the TARP. It is not just firms that take taxpayer money who can say ``no'' to GAO's requests for information. The Federal Reserve can too. The GAO is prohibited by law from auditing the the Federal Reserve. Perhaps that restriction was defensible back when the Federal Reserve focused on monetary policy. However, today it is routinely exercising extraordinary emergency powers to subsidize financial firms far above the levels Congress is willing to authorize through legislation. The Federal Reserve is taking on more and more risk in complicated and unprecedented ways. That risk is ultimately borne by the American taxpayer, but the elected representatives of the taxpayers have not had a say in the Federal Reserve's activities or even a reasonable level of transparency to make sure we understand how much risk taxpayers are on the hook for. The GAO testified at our hearing that the Federal Reserve is heavily involved in two new TARP programs announced since March of this year. It is also responsible for managing huge portfolios of troubled assets it took on in the bailouts of Bear Stearns and AIG. According to GAO testimony, as of March 27, 2009, Treasury has announced initiatives that are projected to use $590.4 billion of the $700 billion in TARP funds authorized by Congress. However, the projected assistance in these initiatives by the Federal Reserve could be up to $2.9 trillion by GAO estimates. In addition, the Federal Reserve has a variety of other facilities it has established to address the financial crisis adding up to another $1.5 trillion. Despite these enormous numbers, there is a statutory limitation prohibiting GAO from examining the Federal Reserve. That provision is now in direct conflict with the mission that Congress gave GAO to monitor and report on the TARP. Amendment No. 1021 would fix this conflict by allowing the GAO to provide Congress a complete and independent view of all the TARP programs, including those with Federal Reserve involvement, such as the Term Asset Loan Facility, TALF, and the Public Private Investment Partnership, PPIP. It would also allow the GAO to examine other extraordinary Federal Reserve actions, such as its acceptance of risky assets from Bear Stearns and AIG. I urge my colleagues to support amendment No. 1021. Let's not give GAO an important mission to do with a blindfold on. Let's take off the blindfold and let the professionals at GAO take a good hard look on behalf of the American people at what the Federal Reserve is doing.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, today, I am reintroducing the Government Charge Card Abuse Prevention Act to ensure that federal departments and agencies do not take the eye off the ball when it comes to spending the taxpayers' money. I have put in a lot of time and effort to call attention to instances of waste, fraud, and abuse using government charge cards while agencies were looking the other way. Now I want to make sure that they stay on top of this issue. In 1998, the General Service Administration's, GSA, entered into a contract with a set of commercial banks to utilize charge cards, not unlike those used by businesses large and small and millions of consumers worldwide. This is called the SmartPay' program. These Government charge cards include government purchase cards, which are used for acquisition of commercial goods and services by agencies and paid directly by the agency, and Government travel cards, which are used to pay for individual Government travel expenses and issued in the name of individual government employees. Government charge cards were intended as a low cost method to streamline government acquisition and travel processes. The whole idea was to adopt the best practices of the commercial sector. In the business sector, charge cards have been a success. They save time and money. The main reason they work so well is because the control environment in the private sector is rock solid and accountability is a fact of life. When a business is spending its own money, it is going to be sure that it accounts for every penny or it would not stay in business. As a result, in corporate America, if an employee is caught abusing a card, they'll lose it or get fired. This was not the case when the Federal Government began using charge cards. Federal agencies did not put in place the necessary controls to make sure that all spending on charge cards was legitimate. When I started looking into this with the Government Accountability Office, GAO, we uncovered blatant examples of wasteful spending like LA-Z-Boy reclining rocking chairs, kitchen appliances, and even a sapphire ring being paid for with Government purchase cards, with the American taxpayer paying the bill. Government travel cards have been used for gambling, sporting events, concerts, cruises, and even gentlemen's clubs and legalized brothels! While travel cards are not paid directly with taxpayers' money like purchase cards, failure by employees to repay these cards results in the loss of millions of dollars in rebates to the federal government. Also, when credit card companies are forced to charge off bad debt, they raise interest rates and fees on everyone else. A series of GAO reports over the last decade have identified an inadequate and inconsistent control environment across numerous federal agencies with respect to both government purchase cards and Government travel cards. This has led to millions of dollars in taxpayers' money wasted. In some cases purchases were outright fraudulent, and others were of questionable need or were unnecessarily expensive. In each report it has issued, the GAO has made recommendations about what kind of controls need to be implemented to prevent such abuses from occurring in the future. In many cases, the same controls were often missing or inadequate, and therefore the same recommendations are repeated in report after report. One agency would promise to clean up its act, but then we would find the exact same problems with another. That is why I worked to develop legislation that would incorporate GAO's recommendations regarding some of the most basic controls needed in every agency to prevent abuse of government charge cards. As a result of the pressure applied by the relentless oversight of Congress, the GAO, and agency Inspectors General, we have seen some progress toward establishing a better control environment. In fact, the Office of Management and Budget has issued a circular to agencies that seeks to bring about many of the controls we identified. However, this progress would not have been possible without the continual spotlight being shone on the problem and the threat of congressional action. It is also clear that we still have a way to go in stamping out abuse of government charge cards as evidenced by a GAO report on the internal controls for purchase cards governmentwide that came out just last year. That report found that a weak control environment led to government purchase cards being used for items like iPods at NASA, internet dating and pornographic sites at the Postal Service, women's lingerie from a place called ``Seduction Boutique'' at the State Department that was supposedly for use during jungle training'', and over $642,000 over six years in fraudulent payments at the USDA for the cardholder's live-in boyfriend. These funds went for personal expenditures like gambling, car loan and mortgage payments, and other retail purchases. Clearly we still have a problem and that's why I'm determined to make sure this situation is fixed once and for all. In addition to requiring federal agencies to establish a series of basic and vital internal controls that the GAO has found lacking in many cases, my bill would also provide that each agency Inspector General periodically conduct risk assessments of agency purchase card and travel card programs and perform periodic audits to identify potentially fraudulent, improper, and abusive use of cards. We have had great success working with Inspectors General using techniques like data mining to reveal instances of improper use of government charge cards. Having this information on an ongoing basis will help maintain and strengthen a rigorous system of internal controls to prevent future instances of waste, fraud, and abuse with government charge cards. My bill also requires agencies to establish penalties so that employees who abuse government charge cards will face real and consistent consequences. This is necessary not only so that taxpayers know that those who would squander their money are held accountable, but also to send a message to other government employees that such behavior will not be tolerated. In fact, these penalties must include dismissal in serious circumstances. This legislation has been revised a number of times with considerable input from the GAO as well as the Inspector General community and other stakeholders. I am also glad to have Chairman Lieberman and Ranking Member Collins as original cosponsors of this bill. Their help, assistance, and support has been very much appreciated as this legislation has developed. The result is a carefully considered and targeted piece of legislation that I look forward to seeing become law. I know that will give me and a great many American taxpayers more peace of mind about how their money is being spent.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, today, I am reintroducing the Government Charge Card Abuse Prevention Act to ensure that federal departments and agencies do not take the eye off the ball when it comes to spending the taxpayers' money. I have put in a lot of time and effort to call attention to instances of waste, fraud, and abuse using government charge cards while agencies were looking the other way. Now I want to make sure that they stay on top of this issue. In 1998, the General Service Administration's, GSA, entered into a contract with a set of commercial banks to utilize charge cards, not unlike those used by businesses large and small and millions of consumers worldwide. This is called the SmartPay' program. These Government charge cards include government purchase cards, which are used for acquisition of commercial goods and services by agencies and paid directly by the agency, and Government travel cards, which are used to pay for individual Government travel expenses and issued in the name of individual government employees. Government charge cards were intended as a low cost method to streamline government acquisition and travel processes. The whole idea was to adopt the best practices of the commercial sector. In the business sector, charge cards have been a success. They save time and money. The main reason they work so well is because the control environment in the private sector is rock solid and accountability is a fact of life. When a business is spending its own money, it is going to be sure that it accounts for every penny or it would not stay in business. As a result, in corporate America, if an employee is caught abusing a card, they'll lose it or get fired. This was not the case when the Federal Government began using charge cards. Federal agencies did not put in place the necessary controls to make sure that all spending on charge cards was legitimate. When I started looking into this with the Government Accountability Office, GAO, we uncovered blatant examples of wasteful spending like LA-Z-Boy reclining rocking chairs, kitchen appliances, and even a sapphire ring being paid for with Government purchase cards, with the American taxpayer paying the bill. Government travel cards have been used for gambling, sporting events, concerts, cruises, and even gentlemen's clubs and legalized brothels! While travel cards are not paid directly with taxpayers' money like purchase cards, failure by employees to repay these cards results in the loss of millions of dollars in rebates to the federal government. Also, when credit card companies are forced to charge off bad debt, they raise interest rates and fees on everyone else. A series of GAO reports over the last decade have identified an inadequate and inconsistent control environment across numerous federal agencies with respect to both government purchase cards and Government travel cards. This has led to millions of dollars in taxpayers' money wasted. In some cases purchases were outright fraudulent, and others were of questionable need or were unnecessarily expensive. In each report it has issued, the GAO has made recommendations about what kind of controls need to be implemented to prevent such abuses from occurring in the future. In many cases, the same controls were often missing or inadequate, and therefore the same recommendations are repeated in report after report. One agency would promise to clean up its act, but then we would find the exact same problems with another. That is why I worked to develop legislation that would incorporate GAO's recommendations regarding some of the most basic controls needed in every agency to prevent abuse of government charge cards. As a result of the pressure applied by the relentless oversight of Congress, the GAO, and agency Inspectors General, we have seen some progress toward establishing a better control environment. In fact, the Office of Management and Budget has issued a circular to agencies that seeks to bring about many of the controls we identified. However, this progress would not have been possible without the continual spotlight being shone on the problem and the threat of congressional action. It is also clear that we still have a way to go in stamping out abuse of government charge cards as evidenced by a GAO report on the internal controls for purchase cards governmentwide that came out just last year. That report found that a weak control environment led to government purchase cards being used for items like iPods at NASA, internet dating and pornographic sites at the Postal Service, women's lingerie from a place called ``Seduction Boutique'' at the State Department that was supposedly for use during jungle training'', and over $642,000 over six years in fraudulent payments at the USDA for the cardholder's live-in boyfriend. These funds went for personal expenditures like gambling, car loan and mortgage payments, and other retail purchases. Clearly we still have a problem and that's why I'm determined to make sure this situation is fixed once and for all. In addition to requiring federal agencies to establish a series of basic and vital internal controls that the GAO has found lacking in many cases, my bill would also provide that each agency Inspector General periodically conduct risk assessments of agency purchase card and travel card programs and perform periodic audits to identify potentially fraudulent, improper, and abusive use of cards. We have had great success working with Inspectors General using techniques like data mining to reveal instances of improper use of government charge cards. Having this information on an ongoing basis will help maintain and strengthen a rigorous system of internal controls to prevent future instances of waste, fraud, and abuse with government charge cards. My bill also requires agencies to establish penalties so that employees who abuse government charge cards will face real and consistent consequences. This is necessary not only so that taxpayers know that those who would squander their money are held accountable, but also to send a message to other government employees that such behavior will not be tolerated. In fact, these penalties must include dismissal in serious circumstances. This legislation has been revised a number of times with considerable input from the GAO as well as the Inspector General community and other stakeholders. I am also glad to have Chairman Lieberman and Ranking Member Collins as original cosponsors of this bill. Their help, assistance, and support has been very much appreciated as this legislation has developed. The result is a carefully considered and targeted piece of legislation that I look forward to seeing become law. I know that will give me and a great many American taxpayers more peace of mind about how their money is being spent.

Mr. GRASSLEY

Mr. GRASSLEY. I thank the Chair, and I thank the distinguished chairman of the committee for those kind remarks, and I hold him in high esteem as well. First of all, the budget we are voting on had bipartisan opposition in the House of Representatives. Seventeen Democrats voted against this budget. Most of those are what you call conservative Democrats, or whatever title they want. That is what I will call them--fiscally conservative Democrats. They think this budget leaves too much of a legacy to our children and grandchildren in the way of debt. So bipartisan opposition ought to tell this White House and this majority something, and I hope in time that will become very clear. Today, the Senate begins its debate on the congressional budget resolution, and it will pass shortly, I am sure. The budget process started, of course, with the President's budget coming to the Hill on February 26. That was about 2 months ago. During the committee process--and I participated in that process, and I participated in the floor process--we faced one key question, and that was: Should we apply more or less budget discipline to the record debts and deficits of my President, President Obama, on what he inherited January 20, 2009? Over the past few weeks, we have heard a lot about revisionist fiscal history or it might best be described as heavy editing of recent budget history. I was pleased to see the distinguished Budget Committee chairman make the record clear: President Obama inherited a $1.3 trillion deficit. I agree with that. I don't take exception to that. Those are quantifiable facts. Republicans don't disagree that President Obama inherited a large deficit. One point of clarification, though, needs to be made. The deficit and the debt were bequeathed on a bipartisan basis. That was due to the makeup of the Presidency last time and the Congress over the last 2 years. The Democratic leadership obviously controlled the House and Senate during the years those budgets were drawn up--2007 and 2008. The Democratic leadership wrote the tax and spending bills President Bush signed in the last Congress. So congressional Democrats negotiated the bailout bill with the Bush administration. Those fiscal policy decisions, though at times very combative, in the end were jointly made on the one hand by a Congress, controlled by the Democrats, and by the administration, controlled by a Republican President. So it was bipartisan. The antirecessionary spending, together with the lower tax receipts and the TARP activities, set a fiscal table of a debt of $1.3 trillion. That, in fact, was on the President's desk when he took over the Oval Office on January 20 this year. That is the highest deficit as a percentage of the economy in post-World War II history. Not a very pretty picture, Mr. President. I have a chart here that shows that part of the story, and that part of the story is the gray there, as you can see. As predicted a couple of months ago, that picture got a lot uglier with the stimulus bill. So for the folks who saw that bill as an opportunity to ``recover'' America, with Government taking a larger share of the economy over the long term, well, they can say: Mission accomplished. For those who voted for the stimulus bill--and I didn't-- you put us on a path to a bigger role for the Government. Over $1 trillion of new deficit spending was hidden in that bill. It caused some of the extra red ink in this chart. So I point to what is called the inherited aspect of the debt, and those are the red bars on top of the gray bars--what was inherited. I think supporters of that bill need to own up to the fiscal course they charted. Again, that is the red line, if you want averages, and it is the red bars for what has been done since this President has come to office. To be sure, after the other side pushed through the stimulus bill and the second $350 billion of the TARP bill, CBO reestimated the baseline. A portion of this new red ink up front is due to that reestimate. The bottom line, however, is that reestimate occurred several weeks-- several weeks--after the President and a more robust Democratic majority took over in January of this year. Decisions were made. And do you know what happens here? Decisions have consequences. So fiscal consequences followed. The budget before us, for the most part, follows the fiscal trail blazed by President Obama. As the administration's top budget official said: This budget is 98 percent like the President's budget. I want to congratulate the chairman on keeping some of the tax priorities of the Senate, however. One deals with the alternative minimum tax patch. Although shorter than I proposed, it is dealt with over 3 years. The chairman also kept part of the Senate's middle-income tax relief. But on both the tax and the spending side, we need to take a hard look at what is going on at the end of this budget term--2014. The budget resolution conference report claims to reduce the deficit from $1.7 trillion this year to about $520 billion in 2014. However, the final year of the budget fails to include the revenue loss from the alternative minimum tax patch for that year. It fails to include the revenue loss for fully extending the 2001 and 2003 middle-class tax relief, the President's Making Work Pay tax credit, the Medicare physician fix, and natural disasters, but it does include illusory, unspecified future discretionary spending cuts. When you add it all up, the thing it fails to do--or claims to do but doesn't--the conference report falls hundreds of billions of dollars short of its claimed deficit reduction. So let's return, then, to the basic question I asked at the very beginning and also asked when we started the budget process several weeks ago. The question, once again, is this: Should we apply more or less budget discipline to record debts and deficits which my President, President Obama, inherited on January 20, 2009? This budget does answer that basic question. It makes the fiscal situation even worse. Inherited debt doesn't stay at its unacceptably high level; it doubles to 82 percent of gross national product. So we have another chart here, with the red line going up toward the top in the 10-year outlook that the Congressional Budget Office shows to be over 80 percent. Abnormal deficit levels become normal deficit levels. Again, you see here what is normal and what isn't normal. Levels once considered a fiscal vice by most people--at, say, the peak during the Bush years--of 3 to 4 percentage points--here in the years 2007 and 2008, as you can see from the chart--are very dramatically dwarfed during the outyears of the President's budget. Fiscal vices become what? Fiscal habits, under this budget. I would ask anyone whether they define that plan as fiscal discipline. Everyone in this body wants to help get our economy back on track. If the economy gets back on track, everybody wins. From a fiscal situation, there is no better policy development than growing the economy. More economy to be divided over an increasing population, so more economy for more people to have more. If we do not grow the economy, we have less for more people. I think everyone in this body would agree that we ought to grow the economy. Likewise, we know small businesses are an extremely important part of our U.S. economy. I like to say that small business is the engine that drives the U.S. economy. President Obama agrees that small businesses have generated 70 percent of the net new jobs over the past decade, and most economists agree with that. One month ago we debated the budget resolution on the Senate floor. During that debate, the Senate spoke on this point. Senator Cornyn's small business tax relief amendment passed by an overwhelming 82 to 16; in other words, 82 of the people in this body agreed with President Obama. Senator Snowe had a similar amendment that was accepted by the managers of the floor bill. Last week the Senate spoke again. This time the question was phrased on a motion to instruct the budget resolution conferees on the importance of keeping taxes on small business low. The vote grew even more: 84 in favor of it, 9 against it. Unfortunately, the conferees did not adopt the Senate budget resolution protecting small businesses from tax increases. America's small businesses have been suffering during this recession. We will hear it in our events back home--I do. A very good source of answers on the environment for small businesses is found in the monthly survey of small businesses, the survey by the National Federation of Independent Business, NFIB, a spokes-organization for small business. They are well known around here. They have been conducting this survey for 35 years. The NFIB membership includes hundreds of thousands of small businesses all across America. I encourage every Member to check out this important survey and particularly this month's survey. This survey shows some extremely disturbing trends. On credit availability, small businesses are getting squeezed very hard. We have a chart that shows this trend. Particularly, look out here at the year 2009 on the right side of this chart. It is way down as far as the percentage change compared to before. This credit crunch and other factors have contributed to a near record low in the NFIB's index of small business optimism. I have a chart that puts this data in perspective. We have here, over a long period of time, the optimism of small business. What you see is the attitude of decisionmakers in small business America. Those are the decisionmakers for businesses that President Obama and Congress agree are the businesses most likely to grow or contract jobs. The pessimism is at its second lowest point in those 35 years of surveying. The data should concern every policymaker in this town. As bad as the two sets of data are, it gets even worse. This chart shows the net increase or decrease in small business hiring plans. The survey asks the business owner whether he or she planned to expand or contract employment over the next 3 months. As you can see right here, it is very negative. This chart shows small business activity contracting tremendously. Small business hiring plans are at their most negative level in the 35-year history of this survey. With this pessimistic environment, we should not be surprised, then, that small businesses are hemorrhaging jobs. The President's recent efforts to increase lending to the small business sector are commendable. The centerpiece of the President's small business plan will allow the Federal Government to spend up to $25 billion to purchase the small business loans that are now hindering small banks and lenders. Unfortunately, very well intentioned as it is, that is a drop in a very empty bucket. Remember, small business accounts for about half of the private sector. Moreover, the positives that will come to small business from this relatively small package of loans which will ultimately have to be paid back will be heavily outweighed by the negative impact of the President's proposed tax increases on those very same small businesses, the business sector. Helping small businesses get loans just to take the money back in the form of tax hikes is not wise. It would be wise to make those loans possible, but these tax policies that the President is thinking about doing are going to hinder small business. Don't take my word for it. Just today the National Federation of Independent Business wrote to all of us, all the Members of the Senate, on this point. NFIB's hundreds of thousands of small business owners oppose this conference report. I ask unanimous consent that a copy of that letter be printed in the Record.

Mr. GRASSLEY. Mr. President, I would like to briefly respond to my friend from North Dakota, the chairman of the Budget Committee. The chairman was responding to my remarks on small business and the effects of proposed 20 percent higher marginal rates on small business owners. The budget brought before us raises taxes on small business owners. There can be no question about it. Here is how it works. The President's budget proposes to raise the top two marginal rates from 33 percent and 35 percent to 40 percent and 41 percent respectively, when PEP and Pease are fully reinstated. President Obama's marginal rate increase would mean an approximately 20 percent marginal tax rate increase on small business owners in the top two brackets. Many of my friends on the other side will say that while they agree that successful small businesses are vital to the success of the U.S. economy, the marginal tax increases for the top two brackets will not have a significant negative impact on small businesses. The chairman appears to fall into this camp. Proponents of these tax increases, like the distinguished chairman, the senior Senator from North Dakota, seek to minimize their impact by referring to Tax Policy Center data that indicate about 2 percent of small business filers pay taxes in the top two brackets. In testimony before the Senate Finance Committee, Dr. Bob Greenstein, director of the liberal think tank, Center on Budget Policy and Priorities, also used that figure. Moreover, Secretary Geithner has testified that this Treasury Department agrees with that figure. They argue that a minimal amount of small business activity is affected. However, there are two faulty assumptions to this small business filer argument. The first faulty assumption is that the percentage of small business filers is static. In fact, small businesses move in and out of gain and loss status depending on the nature of the business and business cycle. The nonpartisan Joint Committee on Taxation has indicated that, for 2011, approximately 3 percent of small business filers will be hit by these proposed higher rates. These statistics compare to a 2007 treasury which showed 7 percent of flow-through business owners paying the top rate. In the latest analysis, when the impact of the alternative minimum tax--AMT--is fully included, that percentage may drop some. Small Business Administration--SBA--data provide evidence of the dynamic nature of small business. You can find that data on the SBA Web site in its frequently asked questions discussion. The website is www.sba.gov/advo. According to SBA, 67 percent of small businesses survive for 2 years; 44 percent of small businesses survive at least 4 years; and 31 percent of small businesses survive at least 7 years. The second faulty assumption is that the level of small business activity, including employment, is proportionate to the filer percentage. According to NFIB survey data, 50 percent of owners of small businesses that employ 20-249 workers would fall in the top two brackets. You can see it right here on this chart. According to the SBA, about two-thirds of the Nation's small business workers are employed by small businesses with 20-500 employees. Newly developed data from the Joint Committee on Taxation demonstrates that 55 percent of the tax from the higher rates will be borne by small business owners with income over $250,000. This is a conservative number, because it doesn't include flow-through business owners making between $200,000 and $250,000 that will also be hit with the budget's proposed tax hikes. Now, as is frequently the case in debate, the proponent of an idea seeks to change the nature of the debate by changing the question. We witnessed a bit of that this afternoon. Notice the distinguished chairman did not dispute the basic thrust of the points I raised. Instead, he said, we, on this side, used an unfair or inappropriate definition of small business. He cited examples of former Vice President Cheney and Microsoft founder Bill Gates, Jr. The point seems to be that the 750,000 flow-through small business owners, again those most likely to expand or contract their workforces, who will be in the bulls-eye of the 20 percent higher marginal rates, should be ignored. We should focus instead on one or two examples. The point seems to be that it is fine to target the large group of small business owners if you can find a Cheney or Gates example. On this point, I direct the distinguished chairman and the full Senate to the Treasury Conference on Business Taxation and Global Competitiveness Background Paper. It was put out on July 26, 2007. The current Treasury is spending some time updating this data and will be incorporating the full effect of the alternative minimum tax--AMT--for 2011. If colleagues examine the study at page 20, table 3.3, they will find an insightful analysis. The study sorted Treasury data for flow-through entities. The analysis sorted the data to isolate active manager/owners from the broader pool of all flow- through filers. When so sorted, Treasury found that the lion's share of income and tax was still born by those manager/owners. I ask consent to have printed in the Record a copy of the Treasury table. Even the Tax Policy Center, an institution in accord with President Obama and the congressional Democratic leadership's goal of raising the top rates on small business, shows a large slug of active small business income in taxpayers in the top two brackets. I will ask consent to include a TPC chart printed in the Record. The proponents of a tax increase of up to 20 percent in the marginal rates of small business owners should bear the burden to disprove the concerns those on our side have raised. Perhaps they could work with Senator Snowe, Senator Cornyn and others to craft an exception that shields the small businesses that employ two-thirds of all small business workers from the tax increase. Pointing to an extreme example, like a Vice-President Cheney or a Bill Gates, Jr., may make great sound bites for politics. It, however, will not amuse the small business owners who have worked hard to build a business. It won't amuse the workers they need to layoff. It won't amuse the suppliers they have to curtail purchases from. The bottom line is the budget contains a tax increase that is aimed at small businesses most likely to expand or contract. That tax increase is significant and real to those small business owners. They, not the politicians voting in the tax increase, will have to deal with the added tax burden. Last week, a strong bipartisan group of 84 Senators agreed there is a problem here. We are raising taxes on Small Business America. We ought to be careful. Throwing out a red herring involving Vice-President Cheney or Bill Gates, Jr. doesn't deal with the problem we have raised. Mr. President, I ask unanimous consent to have the materials to which I referred printed in the Record.

Mr. GRASSLEY. I thought they reserved 15 minutes.

Mr. GRASSLEY. Here is what the NFIB says in that letter: NFIB is concerned the conference report assumes the top individual tax rates will expire, which would mean a tax increase from some small business owners. Do we really want to raise taxes on these small businesses that create new jobs and employ two-thirds of all small business workers? With these small businesses already suffering from the credit crunch before the entire country, do we really think it is wise to hit small business again with this double-whammy of a 20 percent increase in marginal tax rates? As we move forward from the budget process, the President and the congressional Democratic leadership have an opportunity to change course. From my 33 town meetings in Iowa during spring break, they want to change that course. There is a lot of concern about the legacy of debt that we are leaving to children and grandchildren. Both budgets would perpetuate the double whammy of constricted credit and high taxes directed at America's job engine, small business. So as I close, in the coming months we Republicans will try to persuade our Democratic friends who have all the controls of fiscal policy to change course. One way they can change course is to focus like a laser beam on jump-starting the Nation's job engine--the small businesses of America. We need to reverse the direction of the sharply downward-sloping arrow that you have seen on some of these charts. That is where the President and the Congress agree that we need to get more job growth. I quoted the President: 70 percent of the new jobs--small business. We in this party agree with that. As we move on from the budget, let's recognize the reality and the importance of small business. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, it is with great sorrow that I rise today to honor a fallen soldier. SGT LeRoy Webster, a 28-year-old soldier from Hartley, Iowa, was fatally shot while on patrol on April 25, 2009 in Kirkuk, Iraq. LeRoy was serving with the B Battery, 3rd Battalion, 82nd Field Artillery Regiment, 1st Cavalry Division, out of Fort Hood, TX. My prayers and condolences go out to his wife Jessica, daughters Natasha, Kaydence, and Jadyn, and his parents Donald and Crystal Webster. LeRoy was deployed to Iraq in January. He had previously served in Afghanistan in 2004 and 2005 and in Baghdad, Iraq from October 2006 to January 2008. An Iowa native, LeRoy was born in Spencer, IA, and graduated from Hartley-Melvin-Sanborn High School in 1999. His family has deep roots in Hartley, the community where LeRoy grew up and met his wife, who was his high school sweetheart. LeRoy Webster was a decorated soldier, having earned numerous military awards, and he is remembered by friends as dedicated, good- natured, and an excellent father. His family said he was ``proud to serve in the United States Army.'' LeRoy's sacrifice deserves the gratitude of the entire nation and is a reminder of the high cost of freedom. I express my deepest respect and admiration for this American hero. (At the request of Mr. REID, the following statement was ordered to be printed in the Record.)

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I would like to take a moment to recognize the achievements of American Legion Post 27 out of Muscatine, IA. This group hosted its first World War II Honor Tour in Washington, DC, in October 2008, sponsoring 30 World War II veterans from the Muscatine area. The local community raised funds by holding yard sales, dances, and tournaments, and also by asking help from local businesses and friends. The veterans attending the tour were accompanied by family members and volunteers who donated their time and money to come along on the trip. While in DC, the group visited several historical sites including the World War II Memorial and Arlington National Cemetery. I am very proud to represent these honorable veterans and ask unanimous consent that an article written about their time in Washington by Melissa Regennitter of the Muscatine Journal be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to be here again to speak in support of the Fraud Enforcement Recovery Act. I urge my colleagues to join me in supporting this bill so we can pass this important legislation. I cosponsored this bill because I believe that we need to do something to show the American people that we are taking their tax dollars seriously and committed to rooting out fraud, waste, and abuse of Government programs. The fraud enforcement tools and resources provided in this bill will help Federal agents and Federal prosecutors devote more resources to investigations into financial and mortgage frauds. The criminal fraud law updates in this bill will also help send a message to individuals in the future that fraud against homeowners and investors won't be tolerated. While it is true the criminal law provisions can't apply retroactively to conduct that led us the current financial and housing crises, they will help prosecutors in the future and will help to deter future criminal conduct. Finally, and perhaps most importantly, this bill makes critical amendments to the Federal False Claims Act that will ensure those who rip off the Government can't hide behind judicial loopholes created in the law. These edits to the False Claims Act are important to ensure that the Justice Department and individual qui tam whistleblowers aren't blocked by some procedural hurdle put in place by judges. When I authored the 1986 amendments to the False Claims Act, I couldn't imagine the types of decisions we have seen from courts. These courts have read all sorts of new procedural and intent requirements into the false claims that were never imagined nor were they intended by Congress. These amendments will help restore the original intent of the False Claims Act and keep it working into the future so it can continue to add to the $22 billion already recovered under this powerful law. I urge my colleagues to join me in supporting this important legislation so we can show the taxpayers we are serious about fighting fraud against homeowners, investors, and the Federal Government.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I heard the kind remarks of the Senator from Vermont. I thank him for those remarks about this Senator and I thank him for his cooperation on this bill, including some things I am very much interested in, but also the basis of the legislation that he proposed, and I support it as enthusiastically as I do the rest of the bill. I thank the Senator from Vermont. I am here, obviously, to speak in support of the Fraud Enforcement Recovery Act which has been so thoroughly discussed by our distinguished chairman of the Judiciary Committee. As the lead Republican cosponsor of this timely antifraud legislation, I believe it is a very important component--a very important component--to help get both the financial and the housing markets back on track. The fraud enforcement tools and resources provided in this bill are very necessary. They will ensure that the taxpayers' dollars that have been expended to shore up bank and financial institutions and corporations and Freddie Mac and Fannie Mae and others aren't lost to fraud, waste, and abuse. This bill sends a very clear message to would-be bad actors that their conduct will have repercussions from here on out. It will also make sure money lost to fraud can be recovered through the False Claims Act. Most importantly, this bill will help show the American people we are doing something to try and prevent future fraud and recover moneys lost to that fraud and that abuse. That is why I am voting for cloture on this bill. Early in the process of bringing this bill to the floor, I explained to the Democratic leadership that I wanted an open process for amendments to be considered on this bill before I supported the cloture that we will be voting on. The leadership honored that and we had a number of amendments filed on this bill. We have spent a week and have debated and disposed of a number of amendments to the bill. We have some other amendments that remain outstanding that are good amendments and should be debated on a housing or banking bill that is coming up in the very near future. It is now time to pass this bill. Our law enforcement officials need these tools and they need these resources and they need them now. That is why I am going to vote for cloture on this bill. Taxpayers have been asked to shoulder an enormous burden at this time of economic crisis created by a credit crisis. They have shouldered an enormous burden, be it the bailout of financial institutions, an economic stimulus bill that handed out $1 trillion, and more recently the Omnibus appropriations bill loaded full of Government spending. To my colleagues: Whether you agree with these expenditures, we simply cannot allow these funds to be unprotected from fraud, waste, and abuse. This legislation ensures that our law enforcement officials and our prosecutors have the tools necessary to enforce our laws and the resources to hunt down the bad actors. It makes revisions to our criminal fraud laws to ensure that complex financial and mortgage crimes aren't outside the scope of Federal jurisdiction in the future. It also makes necessary corrections to our antimoney laundering laws to ensure that a recent Supreme Court decision doesn't limit the ability of our Department of Justice to go after criminals who launder their ill-gotten funds. Finally, and perhaps most importantly from the standpoint of this Senator, the bill amends the civil False Claims Act to ensure that taxpayers' money lost to fraud, waste, and abuse can, in fact, be recovered and particularly when that recovery is associated with a patriotic work of whistleblowers who make that known. Back in 1986, I authored major revisions to the False Claims Act and did that so we could fight fraud, particularly against Government then more so than now, by defense contractors. Now it seems to be Medicare and the health care industry. Since those revisions were signed into law in 1986 by President Reagan, the False Claims Act has recovered over $22 billion of taxpayer money. This powerful law allows citizen taxpayers to act as private attorneys general by going to court on behalf of our Government when they know of fraud against the Government. These qui tam whistleblowers are the heart and soul of the False Claims Act. They uncover fraud from the inside, bringing schemes to light so taxpayers are not taken for a ride. However, in recent years, litigation fueled by powerful Government defense and health care contractors has created legal loopholes that threaten the application of this powerful tool that has brought in billions of dollars. This legislation fixes this, thus ensuring that no fraud can go unpunished by simply navigating through the legal loopholes. This bill will help deter potential defrauders from attempting to scam the Government and the taxpayers. In addition, this legislation will help instill confidence back into the housing and financial markets. I hope my colleagues will join me by voting for cloture on this bill to help make sure these taxpayer dollars are protected. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President. I wish to pay tribute to a 100-year tradition in my home State of Iowa . This past weekend, the Drake Relays in Des Moines, IA, celebrated a century of competition for the world's elite track and field athletes. Schools and athletes from all over the country come to Des Moines each year to compete in this classic. The display put on by the Drake community every year brings alumni, Iowans, athletes, friends, and families together to cheer competitors in victory and defeat. The Drake Relays has been creating memorable moments for 100 years. It is moments created by Jesse Owens, Michael Johnson, Carl Lewis, Jim Ryun, Gwen Torrence, and Iowa's very own Lolo Jones, Natasha Kaiser- Brown, Kevin Little, and Joey Woody. It is unknown athletes making their own mark in history and taking the first step toward fame far beyond the borders of Iowa. It is high school kids, like my son Robin, whose capstone moment of their athletic career was participating in the Drake Relays. Anybody who has attended the Relays understands the marvel of this one-of-a-kind sporting event. For some it is the blue track that helps athletes run a little faster, jump a little longer and higher, and throw a little further. For others it is the fans filling every seat to cheer for the athletes who cross the finish line in first and for those who cross last. And for some it is the intense competition from the high school kids all the way to the top athletes in the world who are standing shoulder to shoulder waiting for their event. Whatever it is, there is a reason fans and athletes alike keep coming back to the Drake Relays year after year. Just as Jesse Owens said, ``There's something special about the Drake Relays.'' Congratulations to the Drake Relays on 100 years of ``America's Athletic Classic.''

Mr. GRASSLEY

Mr. GRASSLEY. I will take it off your time.

Mr. GRASSLEY. Pretty soon we are going to have a motion dealing with small business. I want to address that issue now so that I get it addressed properly as a senior member of the Senate Finance Committee. Everyone in this body knows that small businesses are an extremely important and dynamic part of the U.S. economy. I wish to say, and I often do, that small business is the employment machine of our economy. President Obama agrees with that. Small businesses have generated 70 percent of the net increase in jobs in the United States over a long period of time. Three weeks ago, we debated this issue during the budget resolution debate. During the debate, the Senate spoke on this point, because Senator Cornyn had a small business tax relief amendment. That amendment passed by an overwhelming vote of 82 to 16. America's small businesses have been suffering during this recession. If you go back to your States frequently, as I do, you will hear about it from your small businesses very directly. A few weeks ago, Senator Landrieu and Senator Snowe held a hearing on the crunch hitting small business. They found that big banks have been cranking down lending to small businesses. At a time we are putting more money into big banks, why? I do not know that we got an explanation. I have been trying to get an answer out of Treasury on whether banks receiving the bailout money have been similarly squeezing out small business customers. I am still waiting for an answer from our Treasury Department. A very good source of answer, though, as we turn elsewhere, an answer about the environment of small business, is found in the monthly surveys of small businesses conducted by the National Federation of Independent Business. We all know about the NFIB, the largest small business organization. NFIB has been conducting these surveys now for 35 years. The membership of that organization includes hundreds of thousands of small businesses all across America. You can find the survey on NFIB's Web site www.nfib.org. I wish to encourage every Member to check out this month's survey, because I am going to be referring to it with charts I have with me. The survey shows some extremely disturbing trends on credit availability. Small businesses depend on credit. Small businesses are getting squeezed very hard. That chart is up now. As you can see, the chart shows the availability of loans has fallen off the cliff as late as 2007 and gets worse as you get into 2009. You see on the right side of the chart the sharp downturn evidencing the lack of ability of small businesses to get loans. This credit crunch as well as other factors has contributed to the near record low in the NFIB's index of small business optimism. I wish to have you view this, something like we regularly view, the University of Michigan's monthly index on consumer confidence. The NFIB takes surveys regularly. This chart shows small business owners turning extremely pessimistic in the last couple of years. You can see how that has ``downturned'' very rapidly at the right end of the chart. What you see here is the attitude of decisionmakers in small business of America, the people who create the jobs. Those are the decisionmakers for the businesses that President Obama and we in the Congress agree are most likely to grow or contract jobs. The pessimism evidenced by the chart is at its second lowest point in the 35-year survey. This data should concern every policymaker in this body. As bad as the two sets of charts are, I have a worse picture. This chart shows the net increase or decrease in small business hiring plans. The survey asks the small business owner simply whether he or she plans to expand, on the one hand, or contract, on the other hand, employment over the next 3 months. As you can see even more dramatically, look at the right-hand side of the chart here. If I said on those others to the left hand, in each case I was talking about the right. I do know the difference between the left and right hand. But as you can see even more dramatically on the other two charts, this chart shows small business activity contracting tremendously. Small business hiring plans are at their most negative level in the entire 35-year history of this survey, again, the right side of the chart. Let me repeat, because it is so important, this goes back to 1974, those surveys. Since NFIB started doing them, the likelihood of small business owners adding workers has never been worse. With this pessimism, we should not be surprised then that job losses for small businesses have been growing dramatically. The national employment report recently released by Automatic Data Processing shows 742,000 nonfarm private sector jobs were lost from February to March 2009. Of those 742,000 lost jobs, 614,000 or 83 percent, were from small business. The President's recent efforts to increase lending to the small business sector are commendable. The centerpiece of his small business plan will allow the Federal Government to spend up to $25 billion to purchase the small business loans that are now hindering community banks and other lenders. Unfortunately, that is only a drop in the bucket. Remember that small business accounts for about half of the private sector. Moreover, the positives that will come to small businesses from this relatively small package of loans--which will ultimately and obviously have to be paid back--will be heavily outweighed by the negative impact of the President's proposed tax increases. Helping small businesses get loans just to take that money back in the form of tax hikes is not helping the economy or small businesses. The President's budget proposes to raise the top two marginal rates from 33 percent and 35 percent to 40 percent and 41 percent respectively, when PEP and Pease are fully reinstated. President Obama's marginal rate increase would mean an approximately 20 percent marginal tax rate increase on small business owners in the top two brackets. Many of my friends on the other side will say that while they agree that successful small businesses are vital to the success of the U.S. economy, the marginal tax increases for the top two brackets will not have a significant negative impact on small businesses. I take exception to that argument. They used Tax Policy Center data, and I want to show why that should not be allowed. Proponents of these tax increases seek to minimize their impact by referring to Tax Policy Center data that indicate about 2 percent of small business filers pay taxes in the top two brackets. In testimony before the Senate Finance Committee, the liberal think tank, Center on Budget Policy and Priorities, also used that figure. Moreover, Secretary Geithner has testified using that figure. They argue that a minimal amount of small business activity is affected. However, there are two faulty assumptions to this small business filer argument. The first faulty assumption is that the percentage of small business filers is static. In fact, small businesses move in and out of gain and loss status depending on the nature of the business and the business cycle. The nonpartisan Joint Committee on Taxation has indicated that, for 2011, approximately 3 percent of small business filers will be hit by these proposed higher rates. These statistics compare to a 2007 Treasury which showed 7 percent of flow-through business owners paying the top rate. In the latest analysis, when the impact of the alternative minimum tax is fully included, that percentage may drop some. The second faulty assumption is that the level of small business activity, including employment, is proportionate to the filer percentage. This is where the argument is hogwash. According to NFIB survey data, 50 percent of owners of small businesses that employ 20-249 workers would fall in the top two brackets. You can see it right here on this chart. It shows what I am talking about. According to the Small Business Administration, about two-thirds of the Nation's small business workers are employed by small businesses with 20 to 500 employees. Do we really want to raise taxes on these small businesses that create new jobs and employ two-thirds of all small business workers? Of course, we don't. But that is exactly what the majority is going to do if they follow the President's lead. With these small businesses already suffering from the credit crunch, do we really think it's wise to hit them with the double-whammy of a 20 percent increase in their marginal tax rates? Newly developed data from the Joint Committee on Taxation demonstrates that 55 percent of the tax from the higher rates will be borne by small business owners with income over $250,000. This is a conservative number, because it doesn't include flow-through business owners making between $200,000 and $250,000 that will also be hit with the budget's proposed tax hikes. If the proponents of the marginal rate increase on small business owners agree that a 20 percent tax increase for half of the small businesses that employee two-thirds of all small business workers is not wise, then they should either oppose these tax increases, or present data that show a different result for this group of people. As we prepare for the conference on the budget resolution, the President and the congressional Democratic leadership have an opportunity to change course. They have an opportunity to revisit the tax heavy, spending heavy, and debt heavy budget they have passed 2 weeks ago. Both budgets would perpetuate the double whammy of constricted credit on the one hand and high taxes on the other, directed at America's job creation engine--small business. In the coming days, we Republicans will try to persuade our Democratic friends who have all the controls of fiscal policy to change course for the benefit of small business that we all agree ought to be our first concern. One way they can change course is to focus, like a laser beam, on jump-starting the Nation's job engine--small business America. We need an upturn in the small business optimism index that is contrary to what this chart shows. We need to reverse the direction of this sharply downward sloping arrow. If we ignore this negative environment, we are just kidding ourselves. We need to change course and reverse this even more sharply downward sloping hiring plan arrow. That is where the President and Congress agree we need to get more job growth. As we take the final steps on the budget, let's match that budget with this reality I yield the floor.

Mr. GRASSLEY. Mr. President, the second point I wish to make before I get to my formal remarks is on the question the Senator from Arizona raised about how big of an incentive is enough to get reported. That is a legitimate question. Here is my experience with 22 years of the False Claims Act, dealing with whistleblowers, Government agencies listening to whistleblowers or not, the Justice Department taking a case or not taking a case, or whether the whistleblower initiates the case on their own. What I have found is that the False Claims Act does not come up early in anybody's thought process--about initiating a thought process that there might be fraud out there and somebody ought to be investigating and get to the bottom of it. Usually, the whistleblower has ample evidence of that or they wouldn't be doing it in the first place. They jeopardize their profession and their job in Government. That isn't right, but whistleblowers who want to do the patriotic thing actually jeopardize their professional future. What I have found is they don't even know about the False Claims Act or about getting a percentage of it. They don't even know about whistleblower protection laws. They want to do the patriotic thing. They want to report fraud. So to talk about the award being the incentive to come forward, I don't want to say that in some cases that may not be the case, but in most cases these are patriotic people knowing about the fraudulent use of taxpayer money, they think it is wrong and ought to stop, and they think it ought to stop within the agency. They don't get anywhere with the agency, so they come to other people, and eventually along the line, probably, somebody says: You need to take this to court, and you can get something out of this if you win and if you have a case. Probably the majority of them don't win. So they get nothing out of it. But they are trying to be patriotic citizens. I think that bringing up the issue of how much of an award is big enough to get this information out should not even be a part of the debate. It is still something because we are talking about taxpayer money and what is an incentive to do this, but it ought to be discussed in a thoughtful way, not on an amendment to a bill that is trying to correct a few bad court decisions to get the False Claims Act back to its original purpose. I thank the Senator from Vermont for letting me cooperate with him on this issue. The Senator from Vermont also recognizes that the False Claims Act is a very useful tool against fraud, which is the overall purpose of the rest of Senator Leahy's and my bill. The other thing you have to remember is that this has brought in $22 billion. Senator Leahy made that very clear. There are so many court cases I can tell you about where the Government, through the Justice Department, came in and tried to belittle the whistleblower, the claimant, to reduce, or even eliminate, any access to an award; how many times judges have had to berate people in the Justice Department. I am not talking about Presidents Obama, Bush, Reagan, Bush 1, or Clinton; I am talking about several of them where you wouldn't even have a case--in other words, saying to the prosecutor and the Justice Department: Do you realize you would not even have had a case without this patriotic whistleblower coming forward? More recently, there has been a case where the Justice Department asked not to proceed forward. The judge stepped in and said: We are going to go forward; there is something wrong here, and we are going to get to the bottom of it. So we have $22 billion back because of patriotic Americans. Do you know what. Just because the False Claims Act has been out there, it has been a preventive to fraud, like all the other tools Senator Leahy has in this bill that will not only help with prosecution, but the possibility of prosecution is going to be a preventive factor. So I feel strongly that if the issue of an award limit comes up, it ought to be discussed thoroughly and thoughtfully in a tool--the False Claims Act--which has proven its worth by $22 billion and a lot of unknown preventable fraud out there. We ought to think through it thoughtfully. I want this amendment defeated. The False Claims Act is the No. 1 tool for recovering taxpayer dollars lost to waste, fraud, and abuse. Whistleblowers who bring fraud cases on behalf of the Government, known as qui tam relators, often risk everything to uncover truth. Currently, the False Claims Act provides a reward to whistleblowers who come forward with good-faith allegations of fraud, waste, or abuse of Government dollars. They are allowed to file a lawsuit on behalf of the Federal Government, and the case remains under judicial seal in Federal court. The Justice Department then decides to join a case or not join a case. If the Justice Department joins a case and the case is successful, a whistleblower can recover 15 to 25 percent of the funds recovered. If the Justice Department does not join--then it is going to be a much more difficult process for the whistleblower and his or her counsel-- the whistleblower can go forward with the case and if they are successful, they can recover more, somewhere between 25 and 30 percent, depending upon the judge. While some are arguing that this represents a windfall for whistleblowers, the statistics paint a different picture. In fact, in cases where the Department of Justice joins the whistleblower, the average share for the whistleblower is not 25 percent or 30 percent, it is 16 percent. Compare that 16 percent with the percentage it takes to administer Government generally, throughout Government--about 12 percent. Do you, Mr. President, think there are enough people in the Justice Department, enough FBI people to know where all the skeletons are buried, where all the frauds are being committed? No. This average award is not too far out of line with the average administrative costs of Government. There have been 6,197 qui tam complaints filed since 1986 which have resulted in $13.7 billion in recoveries to the Federal Government. That averages about $2.2 million recovered for complaint filed. In these 6,197 cases, the Government has paid qui tam whistleblowers $2.2 billion in awards. That means the average share award for a qui tam whistleblower is about $350,000. This is hardly a windfall that one would seek, particularly if one is ruining their professional career by being a whistleblower, coming forth to do what is patriotic, to do what is right. It is, in fact, an incentive that helps fuel complaints coming in. However, if we start adding new caps to the already existing whistleblower caps, we could reduce the incentive for whistleblowers to proceed through the cases--or coming forward in the first place--that would help us then recover billions of dollars. I wish to share the story of Tina Gonter who was a qui tam whistleblower who testified before the Judiciary Committee last year. Ms. Gonter worked closely with the Government and went undercover at the company for months collecting documents and evidence of a fraud against the Navy. She even wore a wire for the Federal agents of the Defense Department. Ultimately, a couple of individuals went to jail as a result of Ms. Gonter's work. But the Government refused to sue the contractor for fraud. Believe that, the Government refused to sue with obvious evidence. Ms. Gonter filed a false claims case against the company, and it was not joined by our own Justice Department. The judge in that case even scolded the Justice Department and the Navy for not joining the case. Ultimately, Ms. Gonter prevailed, and the contractor paid over $13 million to the Federal Government. Ms. Gonter received a share of that money, but had she not brought this case, the Justice Department and the Defense Department would have been satisfied with simply putting two people in jail and allowing the contractor to walk away with the money it received for providing fraudulent product to the Navy. And it is not just a case of fraudulent product to the Navy. It is a serious safety matter for the people in the military who put their lives on the line in the defense of our freedom. That is only one example out of 6,197 that the False Claims Act provides power to get fraudulent activity under control. It is a check on the power of the Government bureaucracy to look the other way--that is what the Justice Department did in this case--and pretend that fraud did not happen on their watch. However, it is fueled by courageous whistleblowers, such as Tina Gonter, and without sufficient financial incentives to come forward and fight these cases for 5 to 10 years they can take in court, we may lose this valuable tool against fraud. It is about recovering money, taxpayers' money. I find it ironic--I hope people are listening now because there is a conflict here between maybe people on my side of the aisle who think this is a good idea--I find it very ironic that those outside groups supporting this amendment were in staunch opposition to the idea of the Senate imposing any caps on executive compensation at companies receiving bailout funds. Now instead, they want to cap the recovery of good-faith whistleblowers to come forward with claims of fraud at companies that are ripping off American taxpayers. The False Claims Act works and will continue to work if we do not cut the incentives for relators to go to court. The law already has a cap for whistleblower recoveries. I urge my colleagues to oppose this amendment which is based on a couple of extreme examples from outlier cases that are not the norm. We have $22 billion coming in under this act. Early on, we fought the defense industry to get this bill passed, and the defense industry tried to gut it after it was passed. When they could not because they did not have the proper prestige, they came to the American hospital industry to fight a front for them. That did not happen. I don't know exactly what groups are out there now backing all this. But when are you ever going to realize that in this country, the taxpayers deserve some respect? And if there is fraud in your industry, it is no holds barred on the recovery and the preventing of fraud. I yield the floor.

Mr. GRASSLEY. Yes.

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. GRASSLEY. Mr. President, the first point I wish to make is that with the false claims provisions in the Leahy-Grassley bill, which deals with other provisions as well, but the False Claims Act is essential to accomplishing the overall purposes of the bill, along with other tools to do it--to get rid of fraud. We are trying to just, in this bill, in a very rifle shot way, correct some court opinions that have been detrimental and weaken the False Claims Act. That is all we are trying to accomplish in this bill that deals with bigger things as well. What Senator Kyl is bringing up is a legitimate subject of discussion because it has been brought up at other times since passage of the False Claims Act 22 years ago. I don't say it is not legitimate to discuss it. But there is broader false claims legislation in the Judiciary, and it ought to be discussed at a time when we have hearings on this subject. There have been no hearings on this. These amendments should be reviewed by the full committee under the regular order process. That is the first point I wish to make to Senator Kyl about why not to consider this amendment right now. The second one is the point he made on how big of an award is big enough to incentivize people to turn in fraud.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, over the last 5 years I have conducted extensive oversight of the Food and Drug Administration. As a result of my oversight activities, I identified serious problems at the FDA that included: the quashing of scientific opinion within the agency; delays in informing the public of emerging safety problems; too cozy a relationship between the FDA and the industries it is supposed to regulate; and a failure to be adequately transparent and accountable to the public. The FDA will require strong leadership to rebuild public confidence and tackle the cultural and organizational problems that have plagued the agency. Strong leadership alone, however, will not fix all the problems. The agency needs additional tools, resources, and authorities to fulfill its mission of protecting the health and safety of the American people. In September 2007, the Congress passed the Food and Drug Administration Amendments Act to provide FDA some of the needed tools, resources, and authorities. This legislation was a positive step forward in strengthening the agency and restoring the public's trust in the FDA, but Congress's work is not done. Today, I am here to talk about another FDA bill. In the summer of 2007, I started examining FDA's program for inspections of foreign pharmaceutical manufacturing plants. I expressed concerns to the FDA regarding, among other things, inspection funding, emerging exporters, and severe weaknesses in the inspection process. An increasing amount of the drugs and active pharmaceutical ingredients Americans use are being manufactured in foreign countries, primarily in China and India. Yet as reported by the Government Accountability Office in November 2007, the Food and Drug Administration does not know how many foreign establishments are subject to inspection and the agency conducts relatively few foreign inspections each year. According to the FDA, from fiscal year 2002 through fiscal year 2007, the agency conducted fewer than 1,400 inspections of foreign pharmaceutical facilities. And these inspections were often conducted in countries with few reported quality concerns. In China, the world's largest producer of active pharmaceutical ingredients, and where we have seen increasing reports of contaminated products, only 11 inspections were conducted during fiscal year 2007-- that is way too few. During the same year, FDA conducted 14 inspections in Switzerland, 18 in Germany, and 24 in France--all countries with advanced regulatory infrastructures. In addition, FDA officials estimated that the agency inspected foreign class II device makers every 27 years and foreign class III device makers every 6 years. Class III devices are devices that support or sustain human life or present a potentially unreasonable risk of illness or injury, such as pacemakers and heart defibrillators. In January 2008, we saw too well what happens when we have a broken inspection system. Baxter International Inc. temporarily suspended production of its blood thinner Heparin because of an increase in reports of adverse events that may be associated with its drug. Then recalls were announced. There were serious concerns about whether or not this country would have enough Heparin to meet patient needs as a result of the contamination. After several months, FDA's investigation found that the active ingredient in Heparin, which was made at a facility in China, was contaminated. And the serious adverse events in patients who received Heparin were linked to the contaminated blood thinner. The recalls and investigation of contaminated Heparin highlighted significant weaknesses in FDA's oversight of the production and supply chain and emphasized the need to improve FDA's protection of the safety of products made in this country and abroad. The FDA is charged with ensuring the safety and efficacy of drugs, pharmaceutical ingredients, and devices produced around the world despite its inadequate budget for inspections, in particular foreign inspections. It is troubling that the FDA is grossly under-resourced at a time when foreign production of drugs and active pharmaceutical ingredients is growing at record rates. Last Congress, I introduced the Drug and Device Accountability Act of 2008 with Senator Kennedy, chairman of the Committee on Health, Education, Labor, and Pensions. The Congress did not have an opportunity to act on that legislation. So today Senator Kennedy and I are introducing the Drug and Device Accountability Act of 2009. Senator Kennedy is not able to join me on the Senate floor, but I thank him for his cooperation and work with my office on this important legislation. I also want to take this opportunity to express my appreciation for his commitment and efforts over the years to reform and improve the FDA. I am going to spend the next few minutes highlighting some of the things the Drug and Device Accountability Act of 2009 would do. This bill would augment FDA's resources through the collection of inspection fees. It also expands the agency's authority for ensuring the safety of drugs and medical devices, including foreign manufactured drugs and devices by expanding FDA's authority to inspect foreign manufacturers and importers; allowing the FDA to issue subpoenas; and allowing the FDA to detain a device or drug when its inspectors have reason to believe the product is adulterated or misbranded. In addition, the bill would require individuals responsible for submitting a drug or device application or a report related to safety or efficacy to certify that the application or report complies with applicable regulations and is not false or misleading. Civil as well as criminal penalties could be imposed for false or misleading certifications. I believe this is an important provision given the troubling findings over the last few years; that is, that some companies have withheld important safety information from the FDA or buried that information in their submissions to the agency. In addition, in light of recent serious allegations that have been raised by scientists within the FDA regarding the agency's handling of medical device reviews, the bill calls for an Institute of Medicine study to examine FDA's system for clearing and approving devices for marketing. During President Obama's weekly address last month, the President stated, ``There are certain things only a government can do. And one of those things is ensuring that the foods we eat, and the medicines we take, are safe and do not cause us harm.'' I concur, and the Drug and Device Accountability Act is an opportunity for Congress to help FDA do a better job of ensuring that our increasingly foreign-produced drug and device supply is safe and effective. I look forward to working with my colleagues in the Senate and with the Obama administration to ensure that FDA has the necessary tools and resources to meet its oversight responsibilities.