Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, my friend from Montana referred to the CBO analysis of this bill. He rightly pointed to some proposals in the bill that will have some stimulative effect. The Chairman also talked about CBO's analysis of years 1 through 3--all relevant data. But we need to know what happens in years 4, 5, and years 6 through 10. I have asked that question because there is a reasonable fear that the spending might have a negative effect on the economy from years 4, 5 and so forth. The spending might ``crowd out'' investment and that crowding out could adversely affect economic growth later. It is kind of like the difference between a carbohydrate diet and a protein diet. Under this bill, there is a lot of carbohydrate-spending. The spending is like eating a sugary doughnut. It tastes good going down, but shortly thereafter the effect wears off and you are hungry again. In this case, we have a spending surge, but we might face the effects of too much spending with crowdout. On our side, we would prefer a protein-type of stimulus. We want investment nourishment up front. Like protein, the economic body will become stronger after the investment stimulus is digested. Now, I am not saying there shouldn't be any spending stimulus. What we need is a balanced stimulative diet. This bill's stimulus diet is too carb-oriented. It needs more protein investment stimulus. I am afraid the detailed CBO analysis of years 4, 5 and 6 through 10 may confirm that this bill will show that we pay the price for a stimulus package that is too far tilted towards spending. On the AMT patch point made by Senator Durbin, I agree the AMT patch is not in the McCain admendment. As one who pushed for it in the Finance Committee, I agree the patch would be a good addition. Senator McCain would be glad to add the AMT patch. But I would ask my friends in the Democratic leadership a question. If the patch were added, would they support the bill? They were supporters of the House bill and the Chairman's mark. Both documents did not contain the AMT patch. If we add the patch here, will they support Senator McCain's amendment? If Senator McCain's amendment passes, I will seek to add the AMT patch in conference so that 24 million American families do not get hit with this stealth tax.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I don't want to do that because I am the manager for this bill and I have been waiting to speak. I want the floor after the Senator from Maryland completes his remarks, and I think I am entitled to it.

Mr. GRASSLEY. Madam President, on behalf of our leadership, I ask unanimous consent to temporarily set aside the pending amendment, and I call up three amendments and ask that they be reported by number. They are DeMint, No. 168; Thune, No. 197; and Thune, No. 238. I further ask that Senator Thune be the next speaker on the Republican side and that Senator Johanns follow him, with a Democrat in between.

Mr. GRASSLEY. Madam President, our Nation's fiscal outlook is very grim. The Congressional Budget Office projects the Federal budget deficit will exceed $1 trillion. Despite this enormous deficit, President Obama is urging Congress to enact a massive stimulus plan that would add another $1 trillion in Government debt over the next 10 years. The President and his advisers insist that we must spend this money as quickly as possible in order to save our economy. In the grassroots of my State, I don't think people argue with things that are in this bill that are truly stimulus, but I am getting outrage from my constituents about the large part of this bill that is strictly big-time spending. In normal times, such fiscal excess, stimulus or otherwise, would be widely criticized and promptly rejected. But we all know these are not normal times. Our economy faces the worst recession since the Great Depression. Such comparisons may be overblown but everybody is understandably concerned about the present state of our economy. Congress needs to take action--and we are doing that--to address declining growth and rising unemployment. But we must not let our desire for a quick fix undermine our ability to address the real challenges we face. A sustainable fiscal policy depends on a growing economy. A sound economy depends on a sound fiscal policy. Unfortunately, there doesn't seem to be any consensus on what constitutes sound policy. But I think we can all agree that Government doesn't create wealth; Government only expends wealth. So we have to be about the business of having an environment that creates wealth. There are two opposing views on how to help the economy. Some people say consumption is the key to economic growth. When people go shopping, the economy is good, so we need to spend more, they say. Other people say investment is the key. When businesses invest, the economy is good, so they say we need to save more. Some economists try to reconcile these opposing views by suggesting the correct route depends upon the circumstances. When workers are fully employed and factories are fully utilized, they say we need to save more and increase supply. But when workers are unemployed and factories are idled, they say we need to spend more and increase demand. While this explanation is appealing, it doesn't withstand careful scrutiny. We are told that in order to stimulate the economy, all the Government has to do is put more money into the hands of consumers and they will spend it back into prosperity. The problem with this approach is that the only way the Government can put money into somebody else's hands is by taking it from somebody else's pockets--either in the form of taxes or borrowing. Now, this is a zero-sum game in which one person's loss is another's gain. Some economists try to obscure this fact by introducing a concept known as the marginal propensity to consume. In my judgment, that is just a fancy way of saying some people spend more of their money than others. According to this concept, low-income people are more likely to spend an extra dollar than higher income people; thus, taking from the rich and giving it to the poor will stimulate consumer demand and boost the overall economy. It is the Government kind of playing the role of Robin Hood. This concept is flawed because it ignores the very important role of people saving. Money that is saved does not disappear; it flows back into the economy in the form of business loans or consumer credit. Saving is just another form of spending--specifically spending on capital goods, such as factories and equipment, or consumer goods such as cars and houses. Of course, the critics say this is not always true. During a recession, banks are less willing to lend and businesses are less willing to borrow. Thus, some of the money previously available in the economy is no longer being used, like right now with the credit crunch. It has been stuffed, in some cases, under the proverbial mattress, whether that is in anybody's home or in a bank vault. Thus, advocates of fiscal stimulus claim the Government can borrow and spend during a recession without crowding out other private sector spending. This is true only in a very narrow sense that increasing money supply allows the Government to borrow and spend without reducing the amount of money available to the rest of our population. That is monetary policy masquerading as fiscal policy. Moreover, when the Government borrows money, whether it is new money or old money, what the Government is really borrowing is the resources it acquires; thus, every dollar the Government spends has an ``opportunity cost'' in terms of the potential uses of those resources. Much of the confusion over this point comes from the failure to recognize the nature of money in our economy. Economists often talk about the multiplier effect in order to explain how each dollar of Government spending can result in more than a dollar of economic activity. But the multiplier effect is simply a way of illustrating the fact that if I give you a dollar, you will spend part of it and save part of it. The portion you spend goes to someone, who spends a portion and saves a portion, and so on and so on; thus, $1 effectively multiplies into many dollars. Contrary to what some people might have you believe, the multiplier effect applies to every dollar, not just the dollar spent by the Government. According to Federal Reserve data over the past 50 years, the ratio between gross domestic product and our money supply--defined as currency plus bank reserves--has ranged from a ratio of 10 to 1, to 20 to 1. In other words, every dollar in our economy supports between $10 and $20 of economic activity. During a recession, there are fewer workers producing fewer goods and services. That is why this is called a recession. Because the level of output is lower, the level of spending is lower as well. That means the available dollars are being used less. Economists often refer to this as a decline in the velocity of money. The money no longer being used reflects the goods and services no longer being produced. With fewer goods and services available to buy, Government efforts to borrow and spend will increase the money supply. Instead of the Federal Reserve increasing bank reserves to boost private lending, the Government will increase borrowing to boost private spending. But this is really monetary policy disguised as fiscal policy. The success or failure of this policy will depend upon how the additional money is used. Unfortunately, when some advocates of Government stimulus talk about priming the pump, they give the impression that we can grow our economy by simply spending money and it doesn't matter in any way how you spend that money. Consider the following comments by the great economist John Maynard Keynes, whom I don't agree with very much. He said this: If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines . . . and leave it to private enterprise . . . to dig the notes up again . . . there need be no more unemployment. . . . People are probably laughing at that. Nearly everyone would recognize the ill effects of printing up $1 trillion and dropping it from helicopters. But what if the Government hired 10 million Americans to dig holes and fill those holes back up and paid them each $100,000? Would this prime the pump and get our economy moving again? The answer should be obvious: It would be a complete waste of resources. The 19th century economist Fredrick Bastiat once observed: There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. When the Government borrows money for some activity, that is what is seen. But what is not seen is what could have been created had those workers and resources been used in some different way. The benefit of a Government stimulus plan must then be weighted against cost. So far, there has been no comprehensive cost-benefit analysis of this proposed stimulus bill. I may have talked about a lot of economic philosophy, but it is pertinent to what we are doing on the Senate floor this week, the stimulus bill. There is a glaring omission given in recent comments that have been made by President Obama. So I want my colleagues to take into consideration what my President says. Shortly before his inauguration, President Obama gave a series of speeches and interviews. I will read a couple sentences from them. According to the January 16 Washington Post: Obama repeated his assurance that there is ``near unanimity'' among economists that government spending will help restore jobs in the short term, adding that some estimates of necessary stimulus now reach $1.3 trillion. The President-elect said he believes that direct Government spending provides the most ``bang for the buck'' and that his advisers have worked to design tax cuts that would be most likely to spur consumer spending. They quote President Obama: ``The theory behind it is I set the tone,'' Obama said. ``If the tone I set is that we bring as much intellectual firepower to a problem, that people act respectfully toward each other, that disagreements are fully aired, and that we make decisions based on facts and evidence as opposed to ideology, that people will adapt to that culture and we'll be able to move together effectively as a team.'' Going on to quote President Obama: I have a pretty good track record at doing that. I was quoting from the Washington Post, but also quoting within that article what the President said. Now I want to go to a January 10 radio address by then-President- elect Obama, now our President: Our first job is to put people back to work and get our economy working again. This is an extraordinary challenge, which is why I've taken the extraordinary step of working-- even before I take office--with my economic team and leaders of both parties on an American recovery and reinvestment plan that will call for major investments to revive our economy, create jobs, and lay a solid foundation for future growth. I asked my nominee for chair of the Council of Economic Advisers, Dr. Christina Romer, and the Vice President-elect's chief economic adviser, Jared Bernstein, to conduct a rigorous analysis of this plan and come up with projections of how many jobs it will create--and what kind of jobs they will be. . . . The report confirms that our plan will likely save or create 3 to 4 million jobs. . . . The jobs we create will be in businesses large and small across a wide range of industries. And they'll be the kind of jobs that don't just put people to work in the short term, but position our economy to lead the world in the long term. That is a quote from the January 10 radio address by then-President- elect but now our President. These comments from President Obama are noteworthy for several reasons. First, he is our President, and we ought to respect his views, not always agreeing with them but consider them. First, he suggests a level, in these quotes I just gave, of unanimity among economists, and that unanimity does not exist. Second, he suggests his administration will make decisions based on the facts instead of ideology. Third, he suggests his plan will create jobs that are more than just temporary. In that regard, I note that the Congressional Budget Office released an analysis of the House stimulus bill. According to the Congressional Budget Office, the House stimulus bill will create between 3 million and 8 million new jobs over the next 3 years, depending on whether the multiplier assumption is low--that will be 3 million--or high--that will be 8 million. Given the cost of the House bill, these figures imply a very surprising and a very troubling result. The CBO estimate shows it will cost between $90,000 and $250,000 per job created. These numbers should be contrasted to those under the CBO baseline which show the gross domestic product per worker is about $100,000. In other words, the jobs being created by the House bill could cost as much as 2\1/2\ times more than the jobs that would be created without the stimulus bill. There has been a lot of talk about ``bang for the buck,'' particularly during this debate. But there doesn't seem to be any interest in actually making sure it happens. In other words, that it actually happens, we get bang for the buck. Before we spend another $1 trillion, we ought to make sure we are getting our money's worth. It should also be noted that the Congressional Budget Office's analysis only covers the years 2009 through 2011, but if you assume the ratio of employment to Government spending remains the same throughout the 10-year projection period that we always have in our bills, there will be only a few thousand new jobs. Moreover, if you adopt the standard assumption that increasing the national debt by $1 trillion will crowd out private sector investment, the net result will be fewer jobs because of this stimulus bill. I have written a letter to the Congressional Budget Office Director requesting an analysis of both the House and Senate stimulus bills. This analysis will cover the full 10-year period, consistent with the January baseline. The Director has indicated to me that this is a very complicated process, and their analysis may not be completed until next week. I strongly encourage my colleagues to have the CBO analysis before we have a final vote on this bill. The Senate must have the opportunity to carefully review the Congressional Budget Office analysis. Let me repeat what I said at the beginning. Congress needs to take action to address declining growth and rising unemployment. At the grassroots of America, there may not be consensus on that, but there is an overwhelming feeling that Congress can do things that will help the economy. But for sure, before we spend another $1 trillion, Congress must take time to look before we leap. I yield the floor.

Mr. GRASSLEY. Mr. President, one specific area of this cobbled- together bill is spending. The bill provides significant increases in Medicaid spending. There is $87 billion in Medicaid funds in this bill. There is a fundamental change to Medicaid that is in the House bill waiting to be put into the Senate bill when it comes to conference. There are numerous amendments to try to fix some of the problems with the Medicaid provisions of this bill, and I wish to discuss some of those at this point. I start with this $87 billion of FMAP money they have referred to. This is a huge payment to States. Now, some will say that $87 billion in Medicaid payments in this spending party bill is meant to help States pay for people already enrolled, but the facts tell a different story. In January, the Urban Institute produced a report for the Kaiser Commission on Medicaid and uninsured titled ``Rising Unemployment, Medicaid and the Uninsured.'' The Urban Institute's research asserts that for every 1 percent increase in nationwide unemployment, Medicaid and Children's Health Insurance Programs will see an increase of 1 million additional beneficiaries nationwide. I want to make clear that for the unemployed who qualify, we ought to provide enough money in Medicaid to take care of it, but we are raising questions about money beyond that. So we have this formula that is kind of a benchmark--this Urban Institute research. Using that formula and the unemployment baseline that is in the bill, I had the Congressional Budget Office prepare a cost estimate for an amendment giving States additional funding based on the Urban Institute's published research. This amendment would provide for an additional per capita Federal payment to States for every new enrollee--every new enrollee--that the Urban Institute research assumes will go on Medicaid or SCHIP during the 27 months contemplated in this bill. Everyone watching probably knows that the Urban Institute is not exactly a conservative think tank, so their research should be credible to my friends on the other side of the aisle. Now, remember, the cost of the additional Medicaid funds for States in this bill is a whopping $87 billion. The cost of my amendment to take care of the unemployed going on SCHIP or on Medicaid--$10.8 billion. That is $10.8 billion for what the Urban Institute suggests are enrollment-driven increases in Medicaid spending due to the recession. So the question is: Why does this bill provide almost eight times what the States actually need for new enrollments resulting from this economic downturn? The Senate is considering $87 billion in funding because States are facing deficits of as much as $312 billion in the aggregate over the next 2 years. So let us not kid ourselves. What this is all about is a bill giving States money to help them fill their deficits. This outlandish sum of money is not needed for Medicaid. It might be needed for something else--and we ought to discuss it in terms of the something else--but not for Medicaid. So you may want to ask: What commitment is Congress getting from the States in exchange for $87 billion, of which only $10.8 billion might be used for the need for which is supposedly in this legislation? Congress is giving States $87 billion and hoping that States don't take actions contrary to Medicaid actually providing the care that people need. I use the word ``hope'' because the underlying bill doesn't do enough to make sure the States do what is best for Medicaid. Does the bill prevent States from cutting their Medicaid Programs? It does not. The bill only prevents States from cutting Medicaid income eligibility. But if Congress is giving States $87 billion and telling them not to cut Medicaid eligibility, I think it is very important we in Congress also tell the States that they can't cut benefits. But this bill doesn't do that. If Congress is giving States $87 billion and telling them not to cut Medicaid eligibility, shouldn't Congress also tell States they can't cut payments to providers? So you have eligibility, you have providers, you have benefits--and we are only dealing with eligibility in this bill--and, yet, giving out $87 billion of which almost $11 billion is needed for the purpose of unemployed going on Medicaid. States cannot change income eligibility, but under this bill as written they can cut provider payments to doctors, pharmacists, dentists, and benefits to providers. Will there be Medicaid beneficiaries who are elderly or disabled, able to receive home- and community-based services? If we want to keep seniors and the disabled in their homes rather than in institutions, paying direct care workers to provide home- and community-based services is very critical to that goal. Will there be enough pharmacists taking Medicaid? Will there be enough rural hospitals and public hospitals taking Medicaid? I had one member of the Senate Finance Committee on my side of the aisle tell me in that State, their State legislature owes $400 million to hospitals. Shouldn't we be taking care of problems like that? Will there be enough community health centers taking Medicaid? Will Medicaid beneficiaries who are elderly or disabled get into nursing homes if they need to do that? Will States cut mental health services because Congress didn't prevent them from doing so in this bill, even at the same time giving them $87 billion, which is about $76 billion more than the demands of Medicaid because of unemployment? Will there be pediatricians or children's hospitals there for children on Medicaid? If the Senate does nothing to protect access to these vital providers, nobody will be able to assure the people who count on Medicaid that the care they need will be there for them. I have filed an amendment that prevents States from generally cutting eligibility and benefits and provider payment rates while they are receiving the $87 billion in additional aid. In other words, I go beyond just a requirement in the underlying bill that eligibility can't be changed. We go to benefits and we go to protecting providers. If we want to protect Medicaid, then we ought to really protect Medicaid. I hope we will do that by adopting this amendment. As written, the bill gives States $87 billion, also in the hopes that States do not take action that is contrary to economic growth. Here again, I use the word ``hope'' because the bill doesn't do enough to make sure States do what is best for the economy either. We should ask for more guarantees that States will spend the money appropriately and not make decisions that work against economic recovery. If Congress gives States $87 billion and tells them not to cut Medicaid, should Congress also tell States not to raise taxes because, if States react to their deficit by increasing taxes--even in view of getting this $87 billion--they will defeat the goal of economic recovery that we in Congress are trying to make happen through this legislation. For sure you do not increase taxes at a time of economic distress because it is going to make that distress worse. It makes no sense for us to leave the door wide open then for States to raise taxes while getting a $87 billion windfall from the Federal Government. I have an amendment that prevents States from raising income, personal property, or sales taxes as a condition of the receipt of $87 billion in Federal assistance. If Congress gives States $87 billion and tells them not to cut Medicaid, should Congress also tell States not to raise tuition at State universities? There is a report out just today that I heard about on the news about how unaffordable college is becoming, particularly to middle-income Americans. People are not going to go to college even though a college degree is very essential for success in our society, and we are here giving $87 billion to States without any direction to the States whether or not they increase tuition once again, as they tend to do every year. If States can price young people out of an education, that does nothing for preparing our workforce for the 21st century. So I also have an amendment that prevents States from raising tuition rates at State colleges and universities as a condition of the receipt of the $87 billion of Federal assistance. For $87 billion--we are talking about $87 billion, just to give to the States--shouldn't Congress expect States to modernize their Medicaid Program? We have heard my friend and colleague, Dr. Coburn, having an amendment requiring States to improve chronic care in Medicaid and develop medical homes as a condition of the receipt of $87 billion in Federal assistance--because these things are some of the best advancements you can make in the practice of medicine that are going to improve the quality of life, but more important they save taxpayer dollars or even private dollars. For $87 billion, what does this bill do to ensure that all those Federal taxpayers' dollars are being spent appropriately? Almost nothing. During the markup we were able to get funding for the Department of Health and Human Services Office of Inspector General increased by $3.25 million. For those of you doing the math back home, $3,250,000 is just under four one hundredths of 1 percent of the $87 billion Medicaid spending on the bill. Senator Cornyn and I have an amendment that requires States to do something to improve their waste, fraud, and abuse rates in exchange for the $87 billion in Federal taxpayers' money. That is what that money for the inspector general is all about. It provides a list of eight options to combat waste, fraud, and abuse, and the Secretary can provide more options at his or her discretion as well. States are given time to plan and implement options. States can choose to make their payments transparent. States can choose to implement recovery audit contractors--as is used very successfully in Medicare. States can choose the Medicare/Medicaid data matching program. States can implement third party liability programs that find other insurers who should pay before Medicaid pays out of the public fisc. States can implement electronic verification systems to limit fraud and abuse. States can implement the recently passed Paris system to protect the integrity of the program. States can comply with the recently implemented disproportionate share hospital audit requirement. States can choose to increase their budget for Medicare fraud control units. These are all very reasonable steps that States could and should take, if Congress is going to send them $87 billion in additional Medicaid dollars, when only $10.8 billion of that is necessary to take care of the people who will go on Medicaid because they are unemployed. They do not have to do all these options I just gave. They only have to do four of these many options; just show the American people that States can take four simple steps to reduce fraud, waste, and abuse. Shouldn't Congress at least ask that much of the State, for $87 billion? If Congress is going to give States $87 billion in Medicaid funds, shouldn't the formula be fair? While I admire the hard work devoted to the exceedingly complex formula in this bill, it simply is not fair to certain States. States with low unemployment rates, States that have not seen the recession hit in full yet--those States will see less of the $87 billion than other States. Senator Bingaman started down this road to correct this in our Finance Committee markup. You have an amendment that picks up the baton and drives it the rest of the way home. Each State gets a flat 9.5- percent increase in their FMAP payment and States can choose which 9 consecutive quarters in an 11-quarter period best fits the economic needs of their specific State. This is a better, this is a fairer way to spend $87 billion. If Congress passes all of this Medicaid spending, what guarantee do we have that the fiscal challenges facing Medicaid in the future will be solved? Sooner rather than later, we all must recognize our entitlements are unsustainable as currently constructed. President Obama has acknowledged this himself on numerous occasions recently. One of my concerns about the additional Medicaid funding that is in this bill is that it places too much emphasis on Medicaid in the here and now, the short term, and ignores future fiscal challenges down the road, the next two or three decades. Just last year the Center for Medicare Services Office of Actuary reported that Medicaid costs will double over the next decade. That is simply unsustainable, and I think every Senator knows that. It is critical that both the Federal Government and States recognize the fiscal challenges we face and the need to take action right now. Senators Cornyn and Hatch and I have an amendment that requires States to submit a report to the Secretary detailing how they plan to address Medicaid sustainability. It is critical that we look at the future of Medicaid if Congress is to give States $87 billion in additional Medicaid funding when it is only going to take about $10.8 billion to take care of the uninsured because of the economic recession we are in. The House bill has a provision that fundamentally changes Medicaid. Medicaid is a program that is generally, as we know, for low-income pregnant women, children, and low-income seniors. Under the House bill, the Federal taxpayer would step in to pay the full cost to provide Medicaid coverage to people who lose their jobs and are not eligible for continuing coverage from their employer. Normally, Medicaid is supposed to be a shared State/Federal responsibility, with the States and the Federal Government sharing the costs on a national average--57 percent to 43 percent. In my particular State, the Federal Government pays 62 percent--but not in this new Medicaid Program the House would create because under the House bill--get this--the Federal Government, for the first time ever, would pick up 100 percent of the costs. The House bill transforms Medicaid into a coverage for anyone who loses their job if they do not have access to COBRA coverage from their former employer, and the House bill would offer this taxpayer-paid Medicaid coverage regardless of how wealthy they might be. Now Medicaid is for low-income people, but it is being expanded in the House to, no matter how wealthy you might be, but being unemployed, you could qualify for Medicaid. Tell me if that is not a waste of taxpayers' money. It is taxing low-income people to help wealthy people, just the opposite of what we normally do in this country. With all the fiscal challenges this country faces, and with entitlement spending already out of control, this ought to be seen by every Member of the Senate as an outrage. Obviously, it was not an outrage to the 244 people who voted for it in the other body. I hope folks on the other side of the aisle will come to the floor and defend a policy that, if you are unemployed--I suppose if you are an unemployed CEO who previously made $5 million, you can walk into the State office and get Medicaid. I don't understand it. My bigger concern is what happens in 2 years when the money goes away. On December 31, 2010, what happens to all the people who have been covered by this massive expansion of Medicaid entitlement? What happens to all of the people who have been added to the rolls in States that expand coverage with the $87 billion influx in this bill, when only $10.8 billion is needed, according to CBO, based on the Urban Institute program, for those who are going to be unemployed? Mr. President, $76 billion more is going to be spent someplace. Someone on the other side needs to convince me that this policy we are putting in place is truly temporary. I do not buy that it is temporary. Every one of us knows the States will be coming back in the middle of next year to beg for an extension so they don't have to cut Medicaid rolls. There are too many former Governors in this Chamber for anyone to argue that it is not going to happen. I know a lot of people have worked very hard putting this bill together. I respect that they have worked hard. I wish they would have worked smarter. Giving States $87 billion even though that is about eight times what they need to stay ahead of enrollment-driven Medicaid increases is not well thought out. Giving States $87 billion while still allowing them to cut their Medicaid Program is not well thought out. Giving States $87 billion while still allowing them to raise taxes or tuition is not well thought out. Giving States $87 billion without requiring them to do a better job of addressing fraud, waste, and abuse is not well thought out. Giving States $87 billion without making them address the fiscal sustainability of their Medicaid Program is not well thought out. A massive expansion of the entitlements under the guise of the word ``temporary'' is not well thought out. This bill is cobbled together--a spending party. It is not well thought out. It is out of control. The Senate should support numerous amendments, as I have discussed this afternoon, to address the shortcomings that occur when partisan bills are moved too quickly. I filed what is referred to as a Grassley-Schumer amendment to amend the American Opportunity Tax Credit work. In my opinion, the amendment makes the American Opportunity Tax Credit better. Senator Schumer agrees with the me, or obviously he would not be cosponsoring this with me, because he is joining me. I thank Senator Schumer for his support and look forward to working with him on simplifying the education tax credit Congress has put into the Tax Code. I have long been an advocate for helping Americans afford college through the Tax Code. So when I was chairman of the Finance Committee, I successfully included a number of education measures in that tax bill of 2001. These measures were enacted into law as part of a bipartisan agreement--I want to emphasize, bipartisan agreement. Now Americans can take an above-the-line deduction for the cost of higher education expenses because of that bill. In addition, people with student loans have greater flexibility when deducting student loan interest. I have also promoted section 529 qualified tuition programs by repealing the sunset provisions Congress imposed back in 2001. The other education tax provisions we included in the 2001 bipartisan tax legislation should also be made permanent. Several provisions would fall into that category, but that debate will be left to another day. We are not pursuing that on this bill. Today, Senator Schumer and I are here to build on the American Opportunity Tax Credit included in the legislation we are debating today. This is how we do it. The amendment Senator Schumer and I are offering would increase the tax credit while maintaining a refundable portion of the tax credit, which will help low-income individuals with college expenses. The amendment would also spread out the way the tax credit is calculated. Under this amendment, more Americans will receive a more robust and uniform tax credit regardless of income. In addition, taxpayers currently claiming the HOPE scholarship credit will get a bigger tax benefit. Again, low-income individuals will continue to benefit from the credit's refundability feature, which I will note has never been done in the area of education tax until now. If my Senate colleagues argue that the Grassley-Schumer amendment adds to the cost of the stimulus package--which, in full disclosure, the amendment adds $3 billion to the existing $10 billion price tag on the American Opportunity Tax Credit--I will tell them to cut wasteful spending that is included in the bill. The Grassley-Schumer amendment is stimulative. The same cannot be said for the spending provisions in the bill, including millions upon millions of dollars for parking garages or millions upon millions of dollars for swimming pools, water slides. This spending does not pass the stimulative test. The Joint Committee on Taxation has even said that under the Grassley-Schumer amendment, we will ``lower the cost of higher education, which will induce more individuals to enroll in higher education programs.'' So I hope everybody agrees that this is a very good thing, particularly considering the fact that there was this report on the news today where there is, particularly because of the recession we are in, not enough middle-income people going to college because of the problems we have. So we need to make more help available for people going to college, especially for displaced workers who would like to go back to school for training in another career. That is more essential during an economic downturn like we now have. An education means jobs, and that is what a large part of this stimulus package is all about. I urge my colleagues to support the Grassley-Schumer amendment. Lastly, and then I will yield the floor, I have a statement I wish to read entitled ``CBO Analysis'' that shows stimulus bill jobs to cost as much as $300,000 each. A preliminary analysis by the Congressional Budget Office shows that the jobs created by the economic stimulus legislation being debated in the Senate will cost taxpayers between $100,000 and $300,000 apiece. These numbers should be contrasted to those under the January baseline of the Congressional Budget Office in which there is no stimulus. That shows the gross domestic product per worker is about $100,000. The new analysis indicates the cost of each stimulus job to be as much as three times more than jobs created without the stimulus bill. There has been a lot of talk about bang for the buck, but there is no talk about actually making sure it happens so that Americans get the help they need. Before Congress spends another $1 trillion, we ought to make sure we are getting our money's worth. Congressional leaders should postpone a final vote on a stimulus bill until the Senate has had the opportunity to carefully review a full analysis of the Congressional Budget Office. Mr. President, I ask unanimous consent to have the February 4, 2009, CBO report printed in the Record.

Mr. GRASSLEY. Madam President, I will vote for DeMint Amendment No. 168 because it provides long-term tax relief. However, I do not agree that State and local tax deductions and other itemized deductions should be eliminated. If the amendment passes, I would work in conference to restore the State and local tax deductions, as well as other itemized deductions.

Mr. GRASSLEY. Mr. President, I am pleased to express my support for the Dorgan amendment that would clarify that the Buy American provisions of this bill shall be applied in a manner that is consistent with our international trade obligations. The original Buy American language in the bill doesn't specifically provide an exemption for countries that provide reciprocal access for the United States in the area of government procurement. But we are obligated under international agreements to provide such a carveout. This amendment will fix this problem. The United States has obligations to its trading partners. If we don't live up to our commitments to other countries under trade agreements, we can't expect them to live up to their commitments to us. The last thing that we should do in this time of economic uncertainty is fail to comply with our international obligations. I would like to thank Senator Dorgan and Senator Baucus for working together to craft this amendment.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that Terri Postma and Rachel Miller, members of my staff, be granted the privilege of the floor during the debate of H.R. 1.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, the matter before this body is the majority's stimulus bill. It merges the products of last week's markup in the Finance Committee and the Appropriations Committee. Twenty-three Senators were involved in the Finance Committee markup. In that group, there were 13 Democrats, 10 Republicans. Thirty Senators were involved in the other committee's markup, the Appropriations Committee. In that group, there were 17 Democrats and 13 Republicans. So if we add that up, it means over half the Senate has been involved in either the Finance Committee part or the Appropriations Committee part of this legislation. For the first time, however, all Senators will have to consider this very large and complicated piece of legislation. That started yesterday and will go on for a week. So the public who want to follow Congress will have a long time to follow the issue. We ought to take that sort of time with an $800, almost $900 billion piece of legislation. First, I will discuss process and then focus on substance. Because I am the senior Republican on the Finance Committee, I will focus on the Finance Committee's portion. I, like 69 other Senators, am still studying the Appropriations Committee part. First, I thank my friend from Montana, Chairman Baucus, for courteously and professionally consulting Members on this side. We had one bipartisan Members' meeting where Chairman Baucus patiently heard all of us out. In addition, Chairman Baucus apprised me of the negotiations between Democratic leadership of both bodies and the Obama administration. Those Democrats-only negotiations were extensive. Folks on our side who read press reports could see how extensive they were. Further evidence of that deal making is the relatively small differences between the basic structure of the Committee on Ways and Means of the House of Representatives and the Finance Committee of the Senate. I congratulate Chairman Baucus on those negotiations. The fruit of that labor is the Finance Committee package. One significant change followed a recommendation I made in early January. That change was made in committee. That was the addition of the alternative minimum tax patch for this year which means over 24 million families need not worry about an average tax increase of at least $2,000 per family for this year. But let no one be mistaken that this bill is the result of bipartisan negotiations. While Republicans were courteously consulted at the Member and staff level, we were never at the negotiating table. Speaker Pelosi best described the bottom line of the process from the Washington Post, dated Friday January 23, when she said: Yes, we wrote the bill. Yes, we won the election. Indeed, there was a rumor floating around about an informal agreement among Democratic Members. The agreement appeared to be to vote against any Republican amendments, no matter what the merits of the amendments might be. As proof of that, if one would review the markup, they will find that nearly all Republican amendments were defeated on a virtually party-line vote. They will also find, for the first time in recent Finance Committee tax legislative history, small issues or modifications raised by dissenting Members, with a couple exceptions. I thank the leadership for those exceptions. None of these smaller issues were even accommodated. So let's be clear. We knew at the outset the markup would be ratifying a deal made between Democratic leaders of the House and Senate: No Republican ideas need apply. With the exception of that AMT patch amendment, this was the basic outcome. Since the largely partisan markup process finished, we have been told by the President and members of the Democratic leadership that this bill is open to improvement by amendment, and I am hopeful we will see that follow through, and before the day is over, I am sure we are going to have some votes where we can do that. If I could define ``bipartisanship'' just for a minute, I would define it kind of the way I have seen it work over the past decade in the Finance Committee but probably other committees do the same thing. Days before you want to bring up a bill, you sit down and you negotiate between the two leaders, and maybe other people, but you consider every member's position to some extent, and you come out with what is called a bipartisan mark. In our committee, for some times that was Grassley-Baucus, for other times it was Baucus-Grassley. It is a little bit like buying a new car. If it is going to be a family operation, Chuck Grassley does not go up to Barbara Grassley and say: I have made a determination that we are going to buy a Ford Taurus, and it is going to be blue, and it is going to have these accessories, et cetera, et cetera. No. You sit down. Chuck and Barbara Grassley sit down, and we decide what color car do we want, what brand do we want, what do we want for accessories, et cetera, et cetera. And you go to the dealer, and you have a uniform family position of what kind of a car you buy. That is the way bipartisanship ought to work here. That is the way I define it. That is the way it has worked over a long period of time. But it is not the way it worked in the product we have before us. Now we have the President of the United States saying to leaders of his party, when they meet at the White House: Republicans have good ideas, and we want to work toward bipartisanship. Now we have a process in place. Will the President's leadership make a difference to the majority party here on Capitol Hill? Before I get into substance, though, I wish to pull back and talk about the larger picture for a couple minutes. Majority Leader Reid opened debate on this bill yesterday. Yesterday we also had Groundhog Day. My first chart is a depiction of Punxsutawney Phil, that famous weather forecaster there in Pennsylvania. Yesterday, Phil saw his shadow. Groundhog Day is a recurring event. ``Groundhog Day'' is also the title of a famous film starring Bill Murray. I have another picture for you of Phil and Bill driving along. In the movie ``Groundhog Day,'' Bill Murray finds himself continually repeating the same routine. Now, my friend, Chairman Baucus, last year rightly pointed out the message of the film. The message was that Bill, guided by Phil, eventually had to figure out what he was doing wrong. Once Bill figured it out, he escaped the infinite loop. On this bill before us, we need to learn from Bill's and Phil's adventure. We cannot and we should not legislate in a hasty manner and place ourselves in an infinite loop of repeating the same exercise. Democrats and Republicans and the President need to get this right, particularly in the time of the terrible economic recession we are in. We cannot casually deficit spend and ask American taxpayers to clean up the fiscal mess with high taxes down the road. To me, there is a particularly compelling irony to the fact that we are debating another stimulus bill at roughly the same Groundhog Day timeframe. One year ago, almost to this exact date, the Senate spent a week debating an economic stimulus package. The target time set for enacting legislation was similar to the one for this package. I am talking about the Presidents Day recess. Let's keep the Groundhog Day irony in mind as we move forward this week and next week. Let's not repeat the same exercise, except this time with even much bigger dollars. Let's get it right. Now to substance. I want to make it clear that most on our side agree with President Obama that stimulus is necessary. The economy is flat on its back. Too many Americans who want to find work cannot find those jobs. A lot of Americans are worried their job will be the next to go. We get that on our side. Everyone here knows we need to do everything we can to get the economy moving again. Where we differ between parties is the degree to which the engine ought to be Government or the engine ought to be the private sector, especially America's biggest job creator, our small business sector, where you hear quite regularly from economists that 70, 80 percent of the new jobs are created. In fact, in the year 2007, big business created no new jobs. All the new jobs in 2007 were created by small business. These are honest, well-intentioned, philosophical differences between our two parties: Government or the private sector. But those are differences that are there. On our side, we want the new jobs to come from the private sector. On the other side, the preference is to grow employment through an expansion of Government. Many on the other side and opinion makers who agree with them are invoking the example of Iowa-born President Hoover. Iowa is my home State. They seem to be doing it to portray anyone who questions the trillion-dollar package as a reincarnation of what we call Hoover economics. It is an unfair characterization. Again, let's be clear. Folks on our side recognize the need for action. So do not accuse us of Hooverism. Also, though Iowans are rightly respectful of the only Iowan to be President, President Hoover, you have to recognize history. I would instruct the other side on a couple lessons from the Hoover era, too, where President Hoover was wrong. One lesson: Do not obstruct free trade. The highest tariff levels in the history of this country--the Smoot-Hawley tariffs--were enacted in the middle of his Presidency, and it shut down world trade. We have to think about that right now because the latest reports have the first reversal of the growth of trade worldwide since 1982. There is little doubt those protectionist barriers that were put up in 1930 or 1931 made the Great Depression worse. So let's not repeat that mistake. There is some evidence on the other side of the aisle that they do want to repeat that mistake and build up protectionist walls. Now, there is another lesson from the Hoover era I want the other side to be aware of. President Hoover signed into law significant tax increases that made that Depression worse. Like high tariffs, economic history tells us that these burdensome taxes retarded the economy's ability to recover--a recovery that did not happen until World War II came along. We do not want war to get us out of a recession. On this side, we agree the lessons from the Hoover era need to be learned. We cannot be passive. President Hoover was passive. Errors of omission on fiscal stimulus should be avoided by all of us. Likewise, errors of commission on fiscal stimulus, such as impeding free trade and raising taxes, also should be avoided. By the conclusion of this debate, those differences will be plain to people at the grassroots of America. I will tell you, all you have to do is go to Iowa, go to church on Sunday, go eat at the Village Inn after church with your family, go to a University of Northern Iowa basketball game, and talk to your neighbors. The public knows what is going on here. They see this as a big spending bill and not a stimulus bill. We will see differences fleshed out in the debate and on the amendments. That is the way it should be. As I indicated above, most on our side want to improve this bill. Our amendments, large and small, will be offered as improvements. We hope the other side is sincere and will follow our President's admonition yesterday in their desire to change the bill in a way that can garner a bipartisan majority. Whether Republicans or Democrats have been in control, the test of proper stimulus boils down to three words. That famous Harvard economist, former Secretary of the Treasury, a good person, Larry Summers, had this to say that ought to be a lesson for both political parties: As with any potent medicine, stimulus, if misadministered, could do more harm than good by increasing instability and creating long run problems. A stimulus program should be timely, targeted, and temporary. He may not be an MD, but there is a lesson from that Ph.D. we can learn. It is a lesson of medicine: First, do no harm. Well, we want to measure this bill according to what Dr. Summers says. If you apply the three ``T's'' test to much of the spending in this proposal, you will find it fails the test. We will get into that when we examine and debate the bill. Some folks might ask: What is the problem if we overshoot and flunk the test? The first problem is running out of budget room. The bill before us will, when interest costs are included, add up beyond that $900 billion to $1.3 trillion added to the deficit. All of this extra deficit increase would be proposed when the baseline deficit for this fiscal year will hit $1.2 trillion. That amount exceeds all historical records. As a percentage of our economy, that will mean 8.3 percent of gross domestic product. I have read some economists saying that is more stimulus than we have ever had in the history of this country. Maybe 8.3 percent is enough. I think in a bipartisan way, and with the President, we concluded it is not enough. But above that, it seems to me, we ought to be cautious and make sure it is timely, temporary, and targeted because this amount of 8.3 percent easily exceeds the 5.7 percent in 1983. It is almost 50 percent above any comparable post-World War II levels. The figures on Federal debt held by the public are likewise staggering. In the period of 2001 to 2007, debt held by the public increased by comparatively smaller amounts, roughly 1 percent per year. This year's change easily exceeds all of that, as you can see from this chart of how the deficit continues to go up. You also see it there, as a percent of gross national product, higher than it has been for a 40- year average. So we need to acknowledge the deficit situation we are in. It is very serious. So whatever we do, we ought to not make the long-term fiscal situation worse than it is. You can see from this chart in the outyears how bad that situation is going to be. The other problem is if we prime the pump too much and the pumped-out stimulus does not materialize until after the hoped-for recovery is upon us, then we might risk too much stimulus. The result could be inflation. Let's look at the timely part of Dr. Summers' statement. That needs to be brought into sharper focus. The Congressional Budget Office tells us that less than half of the appropriations amounts will be spent out by the end of fiscal year 2010. So only half of the spending in the bill is timely. The Finance package does a little better. Ironically, the tax policy stimulus, much maligned by the hardcore of both Democratic caucuses, helps the spend-out ratio greatly in the Finance package. The theory for erring on the side of overloading the spending side is that we need to direct dollars to the folks most likely to spend them. This is the reason we are told we need extra FMAP money, expanded entitlements, and other State aid. It misses the point that the U.S. fiscal policy system already has an arsenal of antirecessionary automatic stabilizers directed to the very same populations. These stabilizers provide immediate assistance to those most vulnerable who have been hit by an economic downturn. The Congressional Budget Office says that these benefits, including food stamps, unemployment insurance, and Medicaid, will grow to $250 billion this year. That built-in, lower income-population stimulus will be equal to 1.8 percent of gross national product. It also misses the point, when you argue that you ought to err on the side of overspending, about ensuring that the lessons of moral hazards apply to the States. The fiscal problems faced by many of our States and localities are largely the result of their inability to keep spending in line with revenue. Between the third quarter of 2006 and the third quarter of 2008, State revenues increased 7 percent and State spending increased twice that amount--15 percent. In other words, the States and localities spent $2.22 for each additional dollar of revenue. The States have been on a spending spree, and they have dug themselves into a hole. Now, we will hear that the Medicaid money we are adding--which I refer to as a slush fund for States--is necessary to avoid tax increases at the State and local level. We will also hear that vital services will be cut unless we cut a big blank check to States. Just as we did during the Finance Committee markup, some on our side will test these assumptions with amendments on these points. An open-ended slush fund is not targeted. It is not going to bring about sound, responsible fiscal policy in the States that need it, and this is true no matter how you dress up this issue. Perhaps the most disturbing stimulus test failure is on the third ``t''--that it should be temporary. This is what bothers me most about this bill. I am referring, of course, to the temporary test. In this package, there are many new popular spending programs labeled ``temporary.'' Those programs total $140 billion. If these programs are extended or made permanent, we can expect another $1.3 trillion added to future deficits. I will challenge anyone on the other side to tell me these programs will be turned off once enacted. With large Democratic majorities and a Democratic President, I would say any such promise is dubious in this Congress. It is about as deliverable as a promise to sell the Brooklyn Bridge. Just so appropriators don't get too far out on a limb, I wish to quote from what Chairman Miller of one of the House committees had to say. He was talking about these built-in expenditures that are going to go beyond the 2 years; things that ought to be handled by the Appropriations Committee on an annual basis, considering all of the priorities that come to us from all segments of the economy and from all government programs. If you think you are building this into the base, this is Chairman Miller--I am going to quote here from Congress Daily: Chairman Miller in the House was asked about the fact that funding for education programs disappears in two years, and he said the word he got from the Obama administration is that these funding levels will NOT become the baseline and that in two years, we can expect that the President's Budget Request will be lower than these new levels. That means schools will see a short-term jump for these programs, but any teacher or programs they put in place may be cut in two years. Now, let me just ask my colleagues about that. Is it smart to use something that is absolutely needed--a stimulus bill--for an excuse to jack up spending well into the future? That is going to be done in 1 week. Isn't that something appropriations committees generally take several months to do before they make decisions to go down that road? That is something for my colleagues to consider. To sum it up, this package meets a different three t's test. We start with trillion-dollar deficits. We have a bill that, with interest added, adds more than another trillion dollars to future deficits. We have a bill that has new spending ostensibly labeled as ``temporary'' but likely to be extended, that bakes into the cake another $1 trillion of future deficits. Passing this three t's--as in trillions--test ought to be a Senator's pause, and we hope during this debate that pause happens. From our side's view, these are major shortcomings on the substance. Although we saw execution of a deal to vote down our amendments in committee no matter whether our ideas were meritorious or not, we would like to be and will be constructive, and we will build on parts of the package that we support. But make no mistake about it, we are going to try to use Dr. Summers' guideline of, first, do no harm--he didn't say that--but the three t's test he put on the chart from his quotation. In other words, we hope our amendments will be more openly received on the Senate floor than they were in committee. In this respect, we will go back to major differences between the parties on how to get the economy moving. On our side, we would like to push more incentives for long-term growth of private sector jobs. There is a good start on a broad-based middle-income tax cut in the package. We would like to expand the tax cut to cover all middle-income taxpayers. During this fall's campaign, the President described as middle class families making less than $250,000. Many of the tax cuts don't apply to millions of families making less than $250,000. It doesn't make sense to me to call a proposal a middle-class tax cut if it doesn't apply to millions of middle-class families. We would like to direct that at labor and capital income earned by middle-income taxpayers. Since we weren't at the negotiating table to offer these progrowth ideas, you will see them arise as constructive offers to improve the package. I wish to speak for just a minute to some health provisions in the bill. Spending in this bill should be judged based on two criteria: Will it stimulate the economy, and is the money being well spent? In committee, we aired our honest disagreements over whether several of these provisions were actually stimulative. Improving health information technology is critical for health care infrastructure. I support many of those provisions, but I have to ask: Will it stimulate our economy, and is this money we should add to the deficit rather than offsetting it? It wasn't so long ago that $16 billion was a lot of money around here. Providing assistance to States makes sense if we are concerned about States raising taxes or cutting spending. But is $87 billion the right number, and is increasing Medicaid spending the right way to do it beyond what is necessary to take care of the millions of people who are going to lose their health insurance? That is a much smaller figure; somewhere around $10 billion to $12 billion rather than $87 billion. Could we better stimulate economic recovery using all or part of that money elsewhere? The Finance Committee package also includes a 2-year extension of our current Trade Adjustment Assistance Programs. I am working with the chairman to see if we can agree with our counterparts on the House Ways and Means Committee on a broader reauthorization of these programs, but that is still a work in progress. Apart from trade adjustment assistance, I am disappointed that this administration isn't focusing on trade as a component of an economic stimulus package. As I said, we should heed an important lesson from the Hoover era. Economic growth comes from expanding free trade, not contracting it, because protectionism in the 1930s brought us to World War II. Opening new markets for U.S. exporters should be a part of the mindset to stimulate our economy. Right now, 20,000 people are being laid off from Caterpillar. I don't think John Deere has laid off very many yet, but 22 percent of John Deere workers have their jobs because of international trade--tractors made in Waterloo, IA, getting on boats in Baltimore to go overseas. We don't want to shut down those kinds of jobs, and without emphasis upon trade being a very important part of a stimulus package, we are sending a message that trade does not matter. Trade does matter. For instance, we have these pending agreements with Colombia, Panama, and South Korea which would provide significant opportunity to do just that, and they should be implemented as soon as possible. As we go through the bill, our side will offer several amendments that I hope will be accepted to try to make the bill better and answer the questions I and other Members have raised. The people back home see Congress spending vast amounts of taxpayers' money. They are counting on us to ensure their money is spent wisely and not wastefully, and that means to make sure this is a stimulus bill and not a ``porkulus'' bill. I thank the Chair, and I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I know the Senator from Maryland always thinks things through very well, but I am going to rise in opposition. I don't do it easily. But this is a time when we are in a recession. I know the motivation is to help us get out of a recession, but we have a massive amount of increase in consumer debt, and this is going to just encourage more consumer debt. We have other things in the Tax Code that help people who buy hybrid cars and electric cars, and we have incentives for the automobile industry within TARP. So I have to oppose this, and in opposing it, I will do it this way, by raising the point of order against the Mikulski amendment pursuant to section 201(a) of Senate Concurrent Resolution 21 of the 110th Congress. Mr. President, I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that Lacee Oliver of my Finance Committee staff be granted the privileges of the floor during the first session of the 111th Congress.

Mr. GRASSLEY

Mr. GRASSLEY. Madam Chairman, I have decided to support Mr. Holder's nomination to be the next Attorney General of the United States. However, I want to make clear that just because I am voting to support Mr. Holder, this nominee does have a few issues that give me some concern. For example, I am concerned about Mr. Holder's overly restrictive views of the second amendment. In last year's challenge to the District of Columbia's gun ban in the U.S. Supreme Court case District of Columbia v. Heller, Mr. Holder joined an amicus brief arguing that the second amendment does not provide an individual right for citizens to own firearms. However, a majority of the Supreme Court held that the second amendment does indeed guarantee an individual right to keep and bear arms. I am a strong supporter of the second amendment, so I am concerned that Mr. Holder's views may be too limited. I am also concerned about Mr. Holder's reluctance to expand programs that enforce current gun laws, such as ``Project Exile.'' This highly effective initiative started in the 1990s, but was only implemented in a few targeted cities. I don't understand why Mr. Holder is willing to consider the need for new gun laws and regulations, when we could be embracing a nationwide expansion of a proven, successful program enforcing existing gun laws. In my opinion, Mr. Holder should reconsider this position. I find Mr. Holder's involvement with the FALN clemencies to be troubling. Mr. Holder played a pivotal role in obtaining clemencies for the FALN terrorists. He fired pardon attorney Margaret Love who had issued a report in 1996 against clemency, and instructed the new pardon attorney Roger Adams to issue an ``options'' memo keeping clemency on the table, even though the pardon attorney, U.S. prosecutors, Bureau of Prisons and FBI were all very much against clemency. Mr. Holder met with a number of groups and politicians who supported the clemencies, but never met with the victims. Mr. Holder testified that his recommendation to support the FALN clemencies was ``reasonable'' and ``appropriate.'' This is remarkable, especially since the FALN pardons were criticized by the public and condemned by Congress. Mr. Holder's handling of the Marc Rich pardon is also problematic. He recommended Mr. Rich's pardon to President Clinton as ``neutral, leaning favorable,'' even though Mr. Rich was the biggest tax cheat in U.S. history, a fugitive of the law, and an individual who traded with the enemy. Mr. Holder did not provide the Judiciary Committee with a good explanation--legal, political or factual--for why he was ``neutral, leaning favorable'' on the pardon. Mr. Holder assisted Jack Quinn--President Clinton's former White House counsel--in bypassing the U.S. prosecutors and other DOJ officials who opposed the pardon, and advised Mr. Quinn on how to deal with the media and other logistics after the pardon was issued. Although Mr. Holder did acknowledge that he made a mistake with respect to the Rich pardon, I am troubled by Mr. Holder's deliberate maneuvering around the established Justice Department pardon processes. Also, I believe that Mr. Holder made statements to the Senate Judiciary Committee about his involvement in the Rich pardon that appear to be at odds with the facts as recorded in documents written at the time and testimony provided by other witnesses. Mr. Holder has indicated that he will be responsive and candid with Judiciary Committee requests, and that he will respect DOJ internal processes and exercise better judgment with respect to DOJ matters. I am hopeful that Mr. Holder will meet that commitment. The U.S. Constitution requires Senators to fully vet the qualifications and fitness of presidential nominees and to exercise their independent judgment when they decide whether to ultimately consent to them. This has been a difficult decision for me-- particularly because of the concerns that I have just outlined. However, Mr. Holder is an experienced individual with extensive credentials. He has very good qualifications. Mr. Holder's a good lawyer. He has a lot of support in the law enforcement community. Moreover, Mr. Holder has acknowledged some of the mistakes he made-- even though I believe he could have done a lot more. We had a productive meeting when he came in to talk about his nomination last year, and he seemed to be responsive to the issues that I raised with him. He has committed to work with me on a number of matters that are important to me, such as the False Claims Act. He has pledged to cooperate with my oversight efforts and to be responsive to my document requests. He has pledged to cooperate with Judiciary Committee investigations and requests for information. So I will support Mr. Holder's nomination. But I plan to hold Mr. Holder's feet to the fire to make sure that he leads the Justice Department in the right direction and keeps Americans safe from criminals and terrorists.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, for the benefit of my Members, I do not think I will use 10 minutes, but it is always dangerous for me to say that. (The remarks of Mr. Grassley and Mr. Levin pertaining to the introduction of S. 344 are printed in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'')

Mr. GRASSLEY. Mr. President, I rise for the purpose of supporting the Bunning amendment. What I say will have some rebuttal to what the distinguished chairman of the committee has said just. Medicaid and the Children's Health Insurance Plan were created to cover low-income children. An income of more than $63,000 for a family of four is not low income. I know the Senators from the State of New York and New Jersey will argue that $63,000 is low income in their States. I know they will talk about the cost of living in those States. As an example, the median home price in Des Moines is greater than that in Binghampton, Buffalo, or Rochester in the State of New York. The underlying bill says all States can cover above 300 percent of the Federal poverty level. I think that should be limited, as it was in the second bill that was a bipartisan bill passing the Senate in 2007. But if we are going to allow States to cover above 300 percent, all States should be treated equally, and an exception for two States--and I might emphasize only two States--is not fair, and it is not right. This amendment strikes that exception so all States are treated equally. I urge support for the Bunning amendment that we will vote on in a little over an hour. I hope Senators coming to the Senate floor will take that into consideration. Treating all States favorably is essential. Amendment No. 83 (Purpose: To provide H.R. 3963 (CHIPRA II) as a complete substitute) The amendment I am going to introduce is the exact contents of the bill we call the 2007 bipartisan bill No. 2 because that is the No. 2 bill vetoed by President Bush. This amendment I am offering today, I am doing so with Senator Hatch because he was there with me through all of that discussion in 2007 that brought us to a bipartisan bill. The amendment is the bill that, 2 years ago, Speaker Pelosi called ``a definite improvement on the first bill,'' meaning the first bill the President vetoed. This amendment I am going to soon lay before the Senate is a bill I believe is the best bipartisan compromise we could put together to cover as many low-income children as possible. This amendment is that 2007 bill that told States they could not cover children above 300 percent of poverty level in the Children's Health Insurance Program. Why do we concentrate so much on that level and not above that level? In 2007, we thought letting States cover children above the national median income diverted attention from the mission of Medicaid and the Children's Health Insurance Program, which was obvious then and still obvious today; that is, that we ought to be putting the emphasis on low-income children. The underlying bill allows States to cover children up to any income level and, as I said, includes a special grandfathering exclusion for New York to cover children and families with incomes up to $83,000 per year. The second bipartisan children's health insurance bill--that is the amendment before us or that I will put before us now--returns the focus where it has been since 1997 in the CHIP bill. The emphasis is upon getting low-income children into a plan so they have the health care they need. This amendment is the bill that includes a policy to address the problem of crowdout that was the subject of an amendment yesterday. It is a policy that is not in the underlying bill, which brings me to the question: What exactly went wrong with the crowdout policies that so many of us voted for in 2007? Certainly, it is not because the Democrats have put forward a policy that addressed crowdout in a better or more efficient manner. Certainly, it is not because the Democrats have new analyses that crowdout is no longer occurring, especially in the expansion of public programs. When Children's Health Insurance Program dollars go to higher income children who already have private coverage, that money could have gone to low-income children. Make no doubt about it, 4 million new people being covered does not take care of the problem of covering low- income children. There are still going to be millions out there who will not be covered whom we ought to have a focus on. The second bipartisan children's health insurance bill of 2007 that is now the amendment I am going to lay before the Senate returns the focus to low-income children. Finally, this amendment-to-be is the bill that we voted on in 2007 which did not have the divisive legal immigrant issue in it. The underlying bill today has $1.3 billion of coverage for legal immigrants, more than 100,000 of whom already have private or public coverage, dollars that could have gone to cover more low-income children. The second bipartisan children's health insurance bill--that is the amendment I am going to lay before the Senate--now returns the focus to low-income children. Now, today in the Senate, there are 43 Democrats and 12 Republicans, of which I am one, who were Members of the Senate in 2007 and voted for this bill that my amendment is going to represent. Those 43 and 12 Republicans who are still here--that is 55 of us--if we would stand together, we could still do great things. We could show that bipartisan amendments still mean something in the Senate. When the vote count ended, we would probably have more than 70 votes for this amendment. Instead, I know if I call for a vote on this amendment, 43 ayes that were cast in 2007 would become ``no'' votes. After watching the difficulty those 12 Republicans, including this Republican, faced by voting aye and sticking together because we thought we were doing good policy, watching 43 ayes turn to noes on the very same policy is a bitter pill to swallow. Mr. President, I ask unanimous consent to set aside the pending amendment and to call up amendment No. 83.

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. GRASSLEY. Mr. President, I yield the floor.

Mr. GRASSLEY. Madam President, I would, first of all, like to give my rationale for an amendment I am going to present to the Senate before I actually present it. It will be amendment No. 71, though. Congress has known for some time that the Children's Health Insurance Program faces expiration March 31 of this year. We all knew Congress would have to act quickly once the new session got underway. The majority had three different options they could have taken in moving forward. First, they could have simply picked up one of the two vetoed bills and quickly passed it. It would have received bipartisan support. I would have preferred the second bill over the first, but I could have probably found a way to support the first bill. Either of those bills would have moved quickly and would have had significant bipartisan support. The second option the majority could have taken was to do a short- term extension of the Children's Health Insurance Program while we worked on broader health care reform. That is what this amendment does. It is a six-quarter extension of SCHIP through the end of the next fiscal year. Now, I do understand there is a point of order against this amendment. This amendment actually should have been done on the stimulus bill, where everything and the kitchen sink appears to be going, but that is a debate for next week. It would have been a drop in the bucket on that bill. If the underlying bill is enacted, it will provide coverage to many people who were previously uninsured--approximately 4 million children--by the year 2013. While I don't want to denigrate the accomplishments of this bill, everyone in this Chamber knows we need to roll up our sleeves and get to work on covering the other 42 million uninsured Americans who will not benefit from this bill--millions of whom are children this bill does not provide coverage for. I wish to focus on that task. I want us to work in a bipartisan manner to get coverage for all Americans, and everything in that process so far has been bipartisan, but it is something we are going to have to deal with on SCHIP again. So I am willing and ready to do the hard work it is going to take. We could have set aside SCHIP while we focused on that most important task of full-fledged health care reform. Instead, the majority has chosen a third option: to bring up a bill that walks away from the bipartisanship of 2007 and threatens relationships moving forward with broad health care reform. I want to emphasize ``threatens'' because so far everything has been bipartisan in meetings and discussions and everything. I have made no secret of my disappointment in the changes made in the underlying bill. It is very important that people watching the debate understand how totally unnecessary a partisan fight is. The majority had bipartisan bills they could have brought up for consideration. I had an amendment earlier that would have replaced the underlying bill with the second of those earlier bills. The majority could have done a simple extension of SCHIP while we worked together on covering 46 million uninsured, not just the 4 million covered by this legislation. That is what this amendment does. It is the last chance for cooler heads to prevail. It was reported recently that the Speaker of the House said, ``We won the election. We write the bills.'' Seeing the majority take that approach on the Children's Health Insurance Program, an issue that always had broad bipartisan support, does not give me comfort moving forward on health care reform. I ask unanimous consent to set aside the pending amendment and call up my amendment, No. 71. I do not know how much debate there will be on it, but I have nothing more to say on that amendment.

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. GRASSLEY. Madam President, I rise for three or four purposes that I will do in succession. No. 1, I would like to define bipartisanship for the Senator from North Carolina. No. 2, I want to give a statement in support of the Coburn amendment. No. 3, I would like to bring to final debate my amendment 83, if the majority manager would like to vote on it at that time--and that would be a voice vote--and then I would have my last amendment to introduce, which is amendment No. 71 that I would speak about. First of all, I think I know something about establishing bipartisanship in the Senate. I was part of a bipartisan proposal 2 years ago that maybe Senator Burr didn't like, but it was very bipartisan. It is kind of an institutional thing, bipartisanship, as far as I practice it in the Senate and as Senator Baucus has practiced it, up until this particular amendment. What you do to get to be bipartisan, you sit across the table from each other, Republican and Democrat--and maybe more than one Republican, maybe more than one Democrat--with expert staff, and you build up a piece of legislation that is eventually put before the committee as a Baucus-Grassley bill or as a Grassley-Baucus bill, depending on who is in the majority. Then what you do is you make up your mind that you are going to be arm in arm defending that through the committee process, through the Senate, through conference, and all the way to the President. And you try to maintain 65 to 70 votes within the Senate. That is the way I define bipartisanship. It is a little bit like if you and your wife were going to buy a new car for that old jeep that you drive around. If you said it is going to be a family affair, you would be sitting down with your wife and asking: What kind of a car do you want? What color do you want? What accessories do you want? You wouldn't go up to your wife, I hope, and say: Honey, we are going to buy a new car. This is what we are going to buy and it is a mutual decision. You wouldn't do that. You would work with your wife to decide what kind of car you want. So if you want bipartisanship in the Congress of the United States-- and I am sure that is what our President was talking about during his campaign--you have to work together to get it. But it is not like this issue was handled--or maybe I can speak more accurately about the stimulus issue that will be up next week--where 48 hours or 24 hours before it comes up, Republicans are given a document and are notified that this is what we are going to do. So I say to the Senator from North Carolina, that is my definition on what bipartisanship is. I don't know whether you agree with it, but at least that is what I have tried to practice, and I think Senator Baucus has basically tried to practice that as well.

Mr. GRASSLEY. Madam President, one of the reasons I said I came to the floor was to speak about the Coburn amendment and to say why I am going to vote for it. This amendment, which has been the product of Senator Coburn's and Senator Burr's speeches a few minutes ago, presents a fundamental choice about how we will go forward with health care reform in this country. Now, I wish to emphasize ``how we will go forward with health care reform,'' which is maybe the next health care issue that is going to be before our Senate. The underlying bill covers 4 million kids. It leaves 2 million kids without coverage. Why? Well, as CBO has told us so often, if you ask State government to go out and cover kids, as we do in Medicaid and the Children's Health Insurance Program, States need more and more Federal dollars to do so. So let's face it, that is exactly how this bill works. We throw billions of dollars at the States, and the States go out and find kids and pay for their health care. The more money we throw at the States, the more kids they cover. The less money we throw at States, the fewer kids they cover. The Coburn amendment takes a totally different approach. This amendment generally follows the successful way that the Medicare Part D benefit works. By the way, let me say parenthetically about Medicare Part D, which has been law now for 4 or 5 years, it is about the only Federal program I know about that has come in under budget. I am not talking about just for 1 year, I am talking about the projections CBO made for it at that time for the 10 years into the future. I don't have an exact figure in mind now, but maybe 6 months ago I used a figure that was in the billions of dollars that it was under what we anticipated spending. So we are talking about a Coburn amendment that follows the pattern of Part D Medicare, which works, and it is financially a protection for the taxpayers' dollars. If the Federal and State governments work together to create a healthier market, the private sector will be more efficient in covering kids. That is the Part D model. That is the model we have before us in the Coburn amendment. It is the private sector, on the one hand, in that philosophy, versus the public sector on the other hand. I wish my colleagues had more time to fully develop this with the Congressional Budget Office because the contrast this amendment paints is one we are going to be facing in the health care reform. So I wish to emphasize that the next health care debate we have is going to be health care reform and we ought to have that debate and we ought to bring about the reform that is necessary. So let's think of that as laying the groundwork for a lot of debate that we are going to have in the upcoming issue of health care reform. Basic questions: Do we want a government-run solution? Is growing our Government bureaucracy in the area of health care the pathway to covering all Americans? Or do we want governments to help the market work better; or possibilities of Government and private partnerships? Do we want to harness the ingenuity that is out there in the private sector in covering all Americans? Now, I don't answer those questions, but those are questions everybody in this body, and I hope grassroots America, will look at in the coming months. With this vote, I am giving you a partial answer to my approach to these questions. I would like to go on to, hopefully, what will lead us to a vote on amendment No. 83, I believe is the number of the amendment, but before I do that, I would like to speak about an issue that came up when I was off the floor earlier this afternoon. The chairman of the Senate Finance Committee, my friend, Senator Baucus, characterized the Grassley-Hatch amendment I offered earlier as not covering 750,000 individuals as compared to the underlying bill. This is about my amendment 83. Now, I understand Senator Baucus later came to the floor to acknowledge that his characterization of the Grassley-Hatch amendment was incorrect and he apologized, and I thank him for that. However, the chairman is still inaccurate, from my point of view, in some characterizations of the Grassley-Hatch amendment, and that is what I wish to go into. The chairman stated my amendment would cover fewer individuals because it does not include the legal immigrant provision. I would like to draw all my colleagues' attention, but particularly Senator Baucus' attention, to footnote ``f'' on the enrollment table of the Congressional Budget Office production on the underlying bill. Footnote ``f'' states: The Medicaid and SCHIP figures and the Medicaid SCHIP total may include some legal immigrant children and pregnant women who receive health insurance provided through State-funded programs. In other words, the so-called new enrollments of legal immigrants are actually individuals who are currently insured with State or local funds. In terms of additional enrollment figures, the chairman notes correctly that we don't have a CBO table. He is correct that we don't know the actual enrollment numbers resulting from the Grassley-Hatch amendment. I would reiterate what I said earlier. The amendment we are going to be voting on is the same bill that 55 Members of this body--and they are presently Members of this body--voted on and successfully passed by a wide margin in 2007. So I have to ask the question, before we vote on my amendment: If it was good enough then, why isn't it good enough now? If the majority doesn't want to vote on this now, I will go on to offer my other amendment. Do I ask for the question, Madam President, on amendment No. 83?

Mr. GRASSLEY. Mr. President, I wish to emphasize that I do not disagree with what he said, he said it accurately, but here is the point I am trying to make. In just a few months, we are going to be working on health care reform and we are going to be working, within those few months, on how the Children's Health Insurance Program fits in with it. We are going to be going through this exercise once again, so we wasted a lot of time here for nothing. I yield the floor.

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

Mr. GRASSLEY. Mr. President, in closing today--and I know we have a few votes, but we are about done--I wish to talk about bipartisanship. I believe I have a history of getting bipartisan compromises done. Over the last several years, I have worked to deliver important bipartisan legislation on taxes, trade, and health care. We work together, we make commitments, and we sometimes have to say no to Members of our own party who would put their specific interests ahead of bipartisanship. It is tough at times, but when we work together to produce legislation, we are better off for doing so. Lately, I have seen a disturbing change in the way bipartisanship appears to be working around the Senate. Last year, on Medicare, we were working together for months--I am talking about for months--on a bipartisan bill to extend a lot of things in Medicare. It was jointly drafted. There were many provisions in the bill I strongly supported. But when we came to an impasse on some of the tough political issues, the majority solved the tough issues the way they wanted them and moved forward. That is not the way I think bipartisanship should work. Then we have this bill before us today. It is largely the work of Senators Baucus, Hatch, Rockefeller, and myself. It should be a bipartisan piece of legislation, but it is not. In this case, the majority decided to make some very political changes in the bill and presented it to us as a ``take it or leave it'' proposition. Today, I choose to leave it. Some Senators have tried to argue that this bill is 90 percent the bill we voted in 2007. I wonder that those Senators don't realize how insulting it is to me to hear that. It is an open admission that the majority unilaterally changed 10 percent of the bill and has presented it to me as a take it or leave it; it can still be bipartisan, Chuck Grassley, if you will just do what we tell you to do. The stimulus bill coming next week is no better. We were presented with a bill and asked if we wanted to sign on to it and call it bipartisan. That approach shouldn't come as a surprise to anybody or much of a surprise at all. As the Speaker said: We won the election, we write the bills. I must admit I appreciate why House Republicans decided yesterday they would not sign off on Speaker Pelosi's version of bipartisanship. We need to get back to real bipartisanship around here. I yield the floor.

Mr. GRASSLEY. Mr. President, I suggest the absence of a quorum.

Mr. GRASSLEY. Mr. President, this is where you get the wool pulled over your eyes. Here we are, in the last moments of a very partisan debate, and we have one last vote to abandon further compromises we made in 2007. This one weakens fraud protection. In that bill 2 years ago, we reached a carefully crafted compromise, balancing access and program integrity. With this amendment, the majority backs away from that compromise further. In 2007, we agreed that an express lane application would require a signature from the applicant acknowledging they were applying for Medicaid or SCHIP. This change eliminates the signature requirement. It is not technical, it is substantive, and it is going to lead to fraud. We should vote this down because we don't want to promote fraud.