Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Well, Madam President, I appreciate the Senator's kind words. I am going to kind of use some words that I think he spoke to me last year, and I would not say they are an absolute quote, but it went something like this: Chuck--that is my first name. This was in private. You do not call us by our first name on the floor of the Senate. But something like this was said to me: Chuck, hold off on this. We will do this on the farm bill in 2007. Well, we did do the farm bill in 2007, but we do not have it done yet. Anyway: Chuck, hold off on this. We will do this on the farm bill in 2007. You know you have the votes there. So I backed off and I waited, as has been verified by the chairman of the committee. Everyone knows what happened. His colleague, Senator Dorgan of North Dakota, and I worked hard over a period of a couple years to be able to offer an amendment of a $250,000 hard cap to the commodity programs on the Senate floor to the farm bill. Do you know what. We had a majority. We had 56 Senators who voted to support this hard cap. I can tell by looking at some other Senators here, we probably had 58, but there were reasons otherwise for voting. But leadership--and all I can say is in a generic way--leadership imposed a supermajority requirement on the amendment. We did not have 60 votes. So if you do not have 60 votes around here, sometimes you do not get anything done. At this point there is no guarantee we are even going to have a farm bill. I think we will, but I cannot guarantee it. I do not like to say this because I am very hopeful that we will, but there are a lot of hurdles to jump before we get there. We have not been able to come up with acceptable offsets that the administration can agree to. We have not been able to find a structure for the Finance Committee's assistance that the House can live with. The House has not even named conferees, so we have not even begun to engage in the very serious, substantive policy issues that get us to finality, even though there is a lot of talk going on and there are a lot of meetings going on. So this year, we are back where I was a year ago on the budget. Last week, Senator Allard and I offered an amendment on payment limits during committee consideration of the budget resolution. This amendment would limit commodity payments and allocate the savings to nutrition. The amendment was agreed to by a bipartisan vote of 13 to 9. Here I am to put everybody on notice that this $250,000 hard cap should be carried through to the conference report. I want to have an adequate safety net for family farmers in the tradition of farm programs for six, seven, or eight decades, where it was targeted toward small- and medium-sized producers, people who maybe cannot ``weather the storm'' as the big gigantic farmers can. That storm can be natural or it can be politically instituted or it can be internationally instituted--a lot of things beyond the control of the family farmer. So we have had a safety net to guarantee a stable supply of food for our people, both for social cohesion as well as for national defense. Now, in recent years, however, assistance to farmers has come under increased scrutiny by urban communities and the press. Do we have a chart? Yes, we have a chart here I wish to have you look at. The law that is now being administered maybe has unintended consequences, but they are real consequences. The law creates a system that is clearly out of balance. If we look at the results posted on this chart, we have a system where 10 percent of the farmers--the biggest farmers--get 73 percent of the benefits out of the farm program, and the top 1 percent gets 30 percent. I am not saying these corporate farms should not have a safety net like everyone else. This amendment is not means testing anybody. But it is saying at some point: Enough is enough. We have to set a hard cap, a hard level of payments that is equitable to all producers, no matter their size, with emphasis upon helping small- and medium-sized farmers. My amendment adopted in committee and included in this resolution will help revitalize the farm economy for young people, at the same time saving taxpayers money or, better yet, using that money in nutrition where it will do some good for lower-income people. The amendment will put a hard cap on farm payments at $250,000. I want to make a very clear distinction here. Even if we have a farm bill--because the arguments are going to be made against this bill: We are in negotiations on a farm bill. Why mess with this in a budget? Well, if we do have a farm bill, I have a feeling it is going to end up relaxing payment limit laws that we have in the 2002 farm bill. The House of Representatives, in their farm bill, actually increases direct payment caps. And both the House and the Senate totally eliminate the cap on marketing loan gains, making them virtually unlimited. So you have farm bills passed by both Houses that you could drive a gigantic 9620 John Deere tractor through--and those are big tractors. I will support trying to lower the adjusted gross income limits, but I have seen a lot of data that suggests that not many farmers are going to be kicked out of the program if they are filthy rich, do not need the help, do not need the support, do not need to be subsidized to get bigger. They have the ability to get bigger on their own economic entrepreneurship. We should not have to subsidize them. In addition, I have evidence that the U.S. Department of Agriculture is not even enforcing current law, the current adjusted gross income cap of $2.5 million. So what makes us think they are going to enforce something at $500,000? This to me is more than just economics of the farm program. This is about good government. This is about responsibility to the taxpayers. Most importantly, this is about protecting the livelihood of America's small and midsize farmers who you might say are protected anyway because there is a safety net for them. But my point is, you pay these 10 percent of the biggest farmers 73 percent of all the money out of the pot that is set aside for support for farmers, and we are going to lose urban support for the farm safety net, and small, medium, or big, there is not going to be any farm safety net, and someday you are going to wonder why there is not enough food in America. I want to take a minute to outline some of the folks who have supported this in the past. All 12 Democrats on the Budget Committee have voted to support this measure at one time or another. Last week, we had 13 votes in favor of a $250,000 hard cap, including a majority of Democrats. We have support from groups that are concerned about hunger in America or hunger in the world. We have the support of environmental groups. We have churches backing this. We have small and beginning farmer advocates. Let me remind this body of a report that was put out because of the 2002 farm bill. Remember, we had this argument in 2002. We won overwhelmingly in the Senate. It was taken out in conference because of big corporate farm interests that were on the House Agriculture Committee, and they are probably still there, even though it is under Democratic leadership. We did not get these limits. So we had a commission report: Let's study this. Let's find out what we can do to make sure that 10 percent of the biggest farmers do not get 73 percent of the benefits out of the program. Well, do you know what the report said. After about 2 years of study, it said: Do exactly what was done in the Senate in 2002. And that is exactly what we got 56 votes to do a couple months ago when the farm bill was up in the Senate--but not 60 votes to get over that hurdle. The report also said that the 2007 farm bill is the time for these reforms to be made as part of a change in permanent law. Well, that time has come. By supporting the policies included in the Allard-Grassley amendment, we can allow young people to get into farming and lessen the dependence upon Federal subsidies. This will help restore public respectability for public farm assistance by targeting this assistance to those who need it. You might remember the last time we had a vote on payment limits was on the budget bill. Many of our colleagues said they agreed--no. The second time back we had a vote on this was on a budget bill. Well, at that time it was argued: Wait until the 2007 farm bill. It needs to be done on a farm bill. Well, you know what happened. You change the rules in the middle of the game. You think 51 votes will get an amendment adopted around here. Then somebody says: Well, we can't beat Dorgan and Grassley with a majority vote, so we will somehow scramble around and wiggle the rules--and I don't know what all it takes; and it will never be in the history books--but it happens that all of a sudden you need 60 votes to get something done around here. We only got 56 votes, so we did not get it done. But to all my colleagues who said: Wait, a couple years back during the budget debate, we are done waiting. We will not be brushed off again. Payment limits must be done now, and waiting for a stalled farm bill is not an appropriate strategy. I call upon my colleagues to back this commonsense measure which a majority of this body has supported numerous times in the past. I hope we can count on our Senate colleagues to support the Senate position on payment limitations in conference. I yield the floor and thank all of my colleagues who were patient while I expressed my views.

Mr. GRASSLEY. Mr. President, I wish to discuss with my colleagues one of the sources of revenue that the chairman of the Budget Committee claims would bring in $100 billion per year to offset the cost of extending existing tax policy, and that would be the issue of shutting down offshore tax havens. I feel that I have been very aggressive as a member of the Finance Committee in combating abusive tax shelters offshore or otherwise, so I am not here to find fault with anything in the budget about going after abusive offshore tax havens. But I do have a degree of disagreement on the amount of revenue that will come in and whether this is the ``goose that laid the golden egg'' that will solve all of the problems we have with the budget. So I have worked hard on this subject for a long period of time. In fact, I would go to a bill that we passed in 2004 called the JOBS Act. It shut down the tax benefits for companies that enter into corporate inversion transactions and abusive domestic and cross-border leasing transactions. The JOBS bill also contained a package of 21 anti-tax shelter provisions--not just 1 or 2 but 21. Now, of course, I am ranking member of the Finance Committee, but having a good working relationship with Senator Baucus, we have been continuing to look at all these abusive parts of the Tax Code, or these parts of the Tax Code that are abused, and look at where we can get some additional revenue. We are not out to tax people who would not otherwise be taxed or to change the rate of taxation, and we are not out to get people who should pay more money than what we are paying if they are doing it in a legal way. We are after subverting the Tax Code in a way that wasn't intended by Congress. So in my role on the minimum wage small business tax relief bill that passed the Senate last year, we also included provisions that contained anti-tax loophole provisions, including shutting off tax benefits for corporations that inverted--after Senator Baucus and I issued a public warning on that issue that legislation would stop these deals, shutting off tax benefits from abusive foreign leasing transactions that weren't caught in the passage of the JOBS bill, and, of course, doubling penalty and interest for offshore financial arenas. In that particular bill, the minimum wage bill I referred to--it happened to be that the House Democrats rejected our offsets. It was kind of surprising to me, but they did that. I use it as one example that is a somewhat unrealistic account on these offsets in the budget resolution. The chairman of the Budget Committee went on and on yesterday about abusive foreign sewer systems and city hall leasing deals on which U.S. banks were claiming depreciation deductions. I didn't disagree. I led the effort to shut down these deals on a prospective basis, which we did in the 2004 bill, and I have continued to lead the effort to legislatively deny future tax benefits for deals that were entered into before the 2004 legislation. But here again, people, for reasons I don't know--and it was quite surprising to me--in the other body, the leadership of the Ways and Means Committee over there has continued to stop us cold. In fact, while the chairman of the Budget Committee was holding up a chart of a German sewer system during last year's budget debate--I am referring to last year's budget debate, but it is a prop that can be used this year as well--the chairman of the Ways and Means Committee at that time was holding a hearing that sympathized with U.S. banks that entered into these very same deals. So I sure hope this distinguished chairman, my friend, the Senator from North Dakota, is not counting on any revenue for doing something the House Democrats have rejected over and over again. But do you know what. My distinguished friend and chairman of the committee, it seems to me that he is counting on that revenue. Well, maybe he will have better luck a second time. We didn't do very well the first time. The Budget Committee chairman is also continuously referring to the billions of dollars that the Permanent Subcommittee on Investigations says we can get through offshore tax scams. Well, those of us who have to do this heavy lifting in this area, by passing tax legislation, know that whatever numbers the Permanent Subcommittee comes up with have tended to be meaningless. We all know there is not a dollar's worth of tax legislation that can be based on the Permanent Subcommittee's estimates. That is not their expertise, nor their job. That falls into the area of the Joint Committee on Taxation. So having studied these issues and having legislated in these areas for a long period of time, I consider my views on tax policy directed at tax shelters and tax havens to be credible. From what I can tell, the chairman of the Budget Committee views the problem of offshore tax havens in two categories: one, the ability of U.S. multinationals to shift income to these tax havens, and two, the evasion by U.S. citizens who hide assets and income in these tax havens. We have seen Democratic Senators, including the chairman of the Budget Committee, hold up a picture of the Ugland House, a law firm's office building in the Cayman Islands, which is home to 12,748 corporations. Senator Baucus and I asked the GAO to investigate the Ugland House. In fact, the Government Accountability Office is down there doing that right now. As often as that building is used to justify a pot of tax haven gold, it will be good to get an independent agency, such as the Government Accountability Office, to give us an objective perspective on this issue. I would like to give Senators some background on where that picture comes from and what issue it is aimed at. The picture comes from an article published in the Bloomberg Market, August 2004, titled ``The $150 Billion Shell Game.'' The article focused on the ability of U.S. multinationals to shift income to low-tax jurisdictions through transfer pricing. ``Transfer pricing'' is the term for how affiliated corporations set prices for transactions between those corporations. Transfer pricing is important because it determines how much profit is subject to tax in the different jurisdictions involved in related party transactions. The $150 billion figure is an academic estimate of the annual amount of profits that corporations shift outside the United States with improper--and I emphasize ``improper''--transfer pricing--in other words, trying to violate the law. One of the Democrats' revenue raisers that is still on the shelf purports to target this transfer pricing problem. But you would not know it by looking at the language of the proposal because it doesn't make any changes to our transfer pricing rules. Instead, the proposal would eliminate deferral for income of any U.S. multinational foreign subsidiaries incorporated in certain black-listed jurisdictions. It is called the tax haven CFC proposal. Deferrals have been part of our Tax Code since 1918. Deferral means that U.S. multinationals do not pay tax on the active income of their foreign subsidiaries until that income is repatriated to the United States. Passive income is subject to tax on a current basis. Deferral only applies to active income. I agree with the premise of this proposal that the U.S. multinationals should pay their fair share of U.S. taxes. I think I proved that with closing some of these tax shelters and improper offshore activities in previous legislation. I have already talked about that issue. U.S. multinationals who use improper transfer pricing do so to obtain the benefit of deferral on profits that economically should be subject to tax in the United States on a current basis. Here is my quote from this Bloomberg article: We have to get on top of corporate accounting and manipulation of corporate books for the sole purpose of reducing taxes. My view is that stronger transfer pricing rules and stronger enforcement of those rules is the way to target this problem in our current international tax system. The IRS is taking steps to tighten our transfer pricing rules. For example, the IRS has proposed regulations that would overhaul the rules for the so-called cost-sharing arrangements. These are arrangements by which multinationals of our country are able to transfer intangible property to subsidiaries in low-tax jurisdictions. Based on the volume of complaining I have seen from lobbyists and their leveling it at the Treasury and the IRS, the proposed IRS regulations would go a long way to prevent this artificial income shifting. I hope to see these regulations finalized soon, and I believe they will be. Others have a whole different view. They would eliminate deferrals altogether. Another quote in the Bloomberg article succinctly states this view. This is a quote from Jason Furman. He is a former aide to Senator Kerry: American companies should pay taxes on their profits in the same way whether they earn them in Bangalore or Buffalo. That is where these proposals to eliminate or curtail deferrals on a piecemeal basis are headed. They are headed to the complete elimination of deferrals for U.S. multinationals. Without a significant corporate tax-rate reduction--and thank God some candidates for President are talking about that. There are Members of this body who believe we ought to reduce the corporate tax rate so we can be competitive on an international basis but without a significant corporate tax rate reduction. Eliminating deferrals altogether would have the effect of exporting our high tax rates and putting U.S. multinationals at a competitive disadvantage in the global marketplace. Understand, our corporate tax rate is the second highest in the world. We are not even learning from Germany yet, a socialist country that decided they have to reduce their marginal tax rate to be competitive in the world market. Ireland found that out in 1986 and has economically advanced since they did that. Everybody understands our tax rates make us uncompetitive. Do we want to make it worse so we lose more jobs? I don't think so, but I don't think people have thought about it. The Senate is on record as wanting to protect the competitiveness of U.S. businesses in the global marketplace. The Senate passed the American Jobs Creation Act of 2004. I referred to that bill before in my remarks this afternoon. That bill contains several international simplification provisions, and it passed with a vote of 69 Senators, including 24 Democrats. The Senate version of the JOBS bill, which also contained these provisions, received a vote of 92 Senators, including 44 Democrats. There has been a longstanding debate about whether our international tax system should be fundamentally changed, and that is a legitimate debate. Some say the transfer pricing regime used by virtually every major country is broken and calls for taxing all foreign income on a current basis. Others argue for completely exempting active foreign income under a territorial system, as many of our trading partners do and, consequently, one of the reasons behind our uncompetitiveness. But we want to have that debate, and if we do, then it is a fair debate. The budget resolution does not contain specific proposals, but if the Democratic record is assumed on offshore tax issues, then we can count on a lively debate from this side to eliminate deferrals because we do not intend to do anything to make our businesses in America that create jobs more uncompetitive. We have to do things to make us more competitive. We have already seen what the House Democrats would do, and I am a referring to points I referenced already this afternoon. I may disagree with most of the international proposals in that bill that was referred to as ``the mother of all tax bills'' last fall--that is what the chairman of the Ways and Means Committee called his tax reform plan-- but at least the chairman of the Ways and Means Committee raises the issue in an intellectually honest way, setting the stage then for fundamental reform and also proposes to lower the corporate tax rate to 30.5 percent. That rate may still be too high, but at least the Ways and Means Committee chairman recognizes the concern that I laid out earlier about exporting our high tax rates. The piecemeal cutbacks on deferral for active foreign income that we have seen in the Senate would do nothing but complicate the Tax Code and create opportunities for tax planning around these cutbacks. The other offshore issue identified by the chairman of the Budget Committee is U.S. tax evasion by individual taxpayers who hide their assets and income in foreign bank accounts and foreign corporations. Let's go back to the beginning of the Tax Code in 1913. Our Tax Code has subjected U.S. citizens to tax on their income wherever it is made worldwide. No matter what the Internet purveyors of tax evasion say, this principle cannot be avoided by putting passive assets and income into foreign corporations. The Tax Code has rules to prevent that. Taxpayers who willingly violate these rules are guilty of tax fraud and, in many cases, criminal tax fraud. The problem of offshore tax evasion is not that our laws permit it; the problem is there are some taxpayers who are intent on cheating and hiding their income from the Internal Revenue Service. The IRS has been successful in catching many of these tax cheats, but more can be done. The IRS has difficulty detecting tax evasion and obtaining the information necessary to enforce our tax laws. One important tool for the IRS is information exchanged with other jurisdictions. Our double-tax treaties contain an article on information exchange designed to help the IRS obtain quality information to enforce our tax laws. In addition, administrations, past and present, have entered into over 20 tax information exchange agreements with jurisdictions that are often referred to as tax havens. We are seeing this information exchange network in action as we speak, providing the IRS and other countries with information related to the use of bank accounts in Liechtenstein. Sensible solutions to this problem should aim to improve on our tax information exchange network and not put that network at risk or the efforts at risk. Underreported income is the largest piece of the tax gap. We should keep in mind that hiding assets and income from the IRS is not just an offshore tax problem, it is not an offshore tax haven problem; it may also be an onshore problem. In fact, it is an onshore problem. An article in USA Today last year noted that ``there is a thriving mini industry that has capitalized on real or perceived gaps in domestic and corporation laws and virtually nonexistent Government oversight to promote some U.S. States as secrecy rivals of offshore havens.'' The picture of the Ugland House in the Cayman Islands that I referred to earlier makes for good grandstanding, but as I am sure the distinguished chairman of the Budget Committee is aware, there are also office buildings in some States that are listed as addresses for thousands of companies that are incorporated in those States for similar reasons as those incorporated in the Cayman Islands: secrecy of ownership and a permissive regulatory environment. Whatever additional solutions the Finance Committee comes up with to shine sunlight on tax evaders will need to consider both offshore and onshore evasion of taxes. I emphasize that I am all for shutting down inappropriate tax benefits from offshore arrangements. The chairman of the Budget Committee has said he thinks we could get, I believe, $100 billion from this source. I have not seen any proposals scored by the Joint Committee on Taxation that come close to bringing in this kind of money, and the Joint Committee on Taxation is the official scorer. The last score I have seen for a tax haven CFC proposal is about $1.5 billion per year. The more fundamental ``mother'' bill that I referred to from the chairman of the Ways and Means Committee in the other body would raise about $10 billion per year. I wish to emphasize to my colleagues another point. Each of these proposals that would eliminate or curtail deferral involve tax policy changes that raise taxes, which is the last place the distinguished chairman of the Budget Committee said he wanted to go to raise revenue. On the offshore evasion issue, Senators Levin, Coleman, and Obama have introduced a bill that contains several proposals, and these proposals are aimed at offshore tax havens. Yet, again, I have not seen a Joint Committee on Taxation score of that bill, and they are the official scorer. Once again, it will be the Finance Committee's responsibility to come up with real, sensible, effective proposals that combat offshore and onshore tax evasion, which I am glad to do, but the likelihood that they will be scored by the Joint Committee on Taxation to bring in the kind of money assumed in this budget resolution is very remote at best. Given these facts, it should be obvious how much of a shell game is going on and how unreal this budget resolution is. Mr. President, as my colleagues know, within the Finance Committee, we have jurisdiction over health care issues. I wish to address those health care issues in this budget resolution as well. The biggest health care issue in this budget resolution is a stealth provision--stealth. You cannot see it, but it is there. And I am going to talk about the issue of reconciliation, a process that was supposed to be used to save money, but I think in a stealthy way, before this is done and out of conference, it is going to be used to increase expenditures. It is true there are no reconciliation instructions for spending in the Senate resolution, but there is in the House version, and that is going to make it conferenceable. Last year there was a single committee instruction in the House- passed resolution but not in the Senate-passed resolution. The final conference version last year deferred to the House, no reconciliation. So I am willing to bet that the House instructions will be the final budget that comes back from the House-Senate budget conference. Truthfully, it makes no sense for the House to have reconciliation instructions in the first place. The House does not need reconciliation protection. The Speaker and the Rules Committee make sure the House is strictly controlled by a majority vote. Reconciliation is only important for the purposes of the Senate to avoid filibuster, to avoid a 60-vote supermajority, to get to finality in the process, limiting the role of the minority. And, remember, the Senate is the only institution in our political system where minority rights are meant to be protected and are, in fact, protected. I do not think the other side wants a debate in the Senate about reconciliation, so they have hidden the reconciliation instructions in the House bill so they can drop it in their final budget. Since I am pretty confident it will be there in the final budget, I want to bring attention to the problems this creates as we consider all the work, and three-fourths of it comes out of the Finance Committee over the next few months of this session. It is true, of course, that reconciliation can be a very useful and powerful tool for actually making policy to reign in Government spending. Reconciliation can be used to pass controversial reductions in entitlement spending. By design, the reconciliation process greatly reduces the role of the minority, be it Democrats for 12 years prior to now or Republicans now. But let us review the basics on how to make law around here. To make law, not only does Congress have to pass it but the President has to sign it or you have to have votes to override a veto. In the last 20 years, precisely four vetoes have been overridden--not a very high percentage. Pursuing an override strategy is an uphill battle as anyone such as Senator Baucus and I, who have worked so hard on the SCHIP bill last year, found out. To have the President sign it means the bill will have to be bipartisan. The President is not going to sign a partisan bill. The President will not sign a bill that lacks involvement and support from the minority as well as the majority. Since reconciliation cuts Republicans out of the process, it ain't going to work. Likewise, what do you have to have to override a veto? Republicans, of course. About 16 in the Senate and 60 in the House if you are going to get anything done. Since reconciliation is a partisan process, it is passed with only partisan support, it is pretty clear it will not work. It will be a pointless political exercise. It will not become law, plain and simple. If you want to make law around here, it has to be bipartisan. That means in this body involving the Republicans, and since you will need Republicans to make law, you do not need reconciliation to get a bill passed in the first place. If the effort is bipartisan, you do not need the restrictive rules of reconciliation to get it done. I think Senator Baucus and I, working together in this legislative process in this body, have proved that over and over and over in the 8 years we have been working together. What we are considering today is not about making policy. So what is the point of it? Well, I think it is about playing politics. We are in an election year. In fact, it is a Presidential election. We all know the stakes are very high. So why on Earth should anyone believe that trying to move a partisan Medicare and Medicaid reconciliation bill makes any sense at all? Exactly what bill does the majority want to pass that will not have broad bipartisan support? Fortunately, the chairman of the House Ways and Means Committee answered that question for all of us. He confirmed that he wants to include the House-passed Medicare bill from last year in reconciliation, a bill better known in the health care circles as the CHAMP Bill, acronym C-H-A-M-P, CHAMP. You may be wondering what it is in the CHAMP bill that would not pass unless it would be included in reconciliation. Fortunately, there is an answer. The House CHAMP bill includes drastic cuts to home health care, to hospital care, and skilled nursing care. The House CHAMP bill also would end availability of Medicare Advantage plans and their extra benefits in most of rural America. It would also drastically cut benefits for rural seniors who are enrolled in Medicare Advantage plans throughout the country. It would also cut other benefits such as preventive health benefits that seniors rely on when they enroll in Medicare Advantage plans. The House CHAMP bill would also result in higher out-of-pocket costs for lower income seniors who are enrolled in Medicare Advantage. The House CHAMP bill also has some changes in the State Children's Health Insurance Program that merit further discussion, to be sure. It would turn the capped SCHIP block grant program into an uncapped entitlement program. Childless adults would be allowed to stay on SCHIP indefinitely. Remember, we had that debate last year. Everybody said a children's health insurance bill is for children, not for adults. We did things in this body to make sure adults were not covered by the children's health insurance bill because it cheats children. So why would you want to go back to something we debated and carried by a two-thirds vote in this body? And it would add coverage for immigrants who have come here illegally to the SCHIP program as well. None of those provisions were included in the bipartisan package we worked out together last year. I have got a chart here that will emphasize this. It is the whole to-do list that is hidden in their agenda for the year. It is hidden in their stealth plan to do a reconciliation bill this year. One logical question you might ask is: Why would they be thinking about using reconciliation this year? The answer is simple. They know they do not have the votes to pass these kinds of dramatic Medicare cuts and they do not have the votes for these bad policies we changed in SCHIP last year. So they want to force it through the process by stuffing it into a partisan reconciliation bill. Now, focusing back on Medicare, let us consider what is at stake. We have until the end of June to pass a Medicare bill that the President signs into law. If the Democratic leadership insists on using budget reconciliation for this Medicare bill, they will fail to get a bill enacted. Failure to get this done by June 30 has serious consequences for seniors and disabled Americans who rely on this important Government program we call Medicare for their health care. Failure to get the bill done and signed means that severely disabled and injured Medicare beneficiaries will not be able to get the therapy they need beginning in July. Failure means that sorely needed doctors and other health care professionals in rural areas are going to see drastic reductions in their Medicare reimbursement. It means low-income beneficiaries who need help with their Part B premium will not be able to get it because the Qualified Individuals Program in Medicare will have expired. It means patients with end stage renal disease who need dialysis will still be in the system in need of payment reform. Necessary reforms are needed to improve how end stage renal disease facilities are paid so they have stronger incentives for improved critical outcomes and enhanced quality of care. Reforms are also needed to eliminate incentives for the overuse of drugs in that program. It means that seniors' reliance on ambulance services in rural areas will be put at risk because of underpayments for rural ambulances. It means that beginning in July, Medicare beneficiaries will have their health care threatened when family doctors, surgeons, medical specialists, and nurse practitioners all across the country will have Medicare payments cut by more than 10 percent. I hope you realize how demoralizing that will be to doctors in this country when they face a 10-percent reduction. In many areas, doctors are already in short supply. With a 10-percent pay cut, some may solve their problem by not accepting Medicare beneficiaries. New beneficiaries may also have trouble finding a doctor. Failure also means other important initiatives will not get done. It means that legislation to strengthen incentives for physicians to use electronic prescribing will not happen. This means we will continue to have higher rates of dangerous medical errors, that people have their lives put at risk. It means our Nation's seniors and disabled Americans will still be in the health care system that rewards poor quality care, because enacting hospital value-based purchasing in Medicare is not going to happen. These are some of the reasons why we should not be thinking about reconciliation as a way to avoid this set of outcomes in July. I hope we can set aside this reconciliation charade. I hope we can continue to work in this body in a bipartisan way, as we have a reputation for doing in the Finance Committee, to get a Medicare bill passed and signed by the President by the end of June. It is quite clear: The stakes for failure are too high. So let us not kid ourselves about including a reconciliation instruction in the final budget, meaning what comes out of conference. It is not about making policy. No one should mistake it for a serious effort. It is about jamming a bill through Congress and forcing the President to veto it. It is about making politics that threaten the Medicare Program and the seniors who rely on it. I will have nothing to do with that sort of a process. I do not think very many people on this side of the aisle will either. What we are considering today is not about making policy. Then what is the point? It is politics. If we are going to have a serious effort at legislating, I hope the other side would decide not to pursue a partisan reconciliation bill. Instead we need to work out a bipartisan bill that can become law. The bottom line is that reconciliation is a bad idea. It is partisan. It will not become law. We have serious work to do before the end of June, and a sham political reconciliation exercise is not getting us any closer to getting the job done. While the stealth reconciliation instruction is the most disturbing facet of this budget, it is not the only problematic health care provision. The budget misses the opportunity to continue the bipartisanship that was forged in the Senate over the State Children's Health Insurance Program last year that passed this body, sometimes with 69 votes. Last year, SCHIP reauthorization was a top health priority. It was a difficult and it was a bruising battle. But the $35 billion compromise bill garnered 68 votes in the Senate. It was a true show of bipartisanship. Now, rather than come back to the second session of this Congress to roll up their sleeves and finish the job, it looks to me as if the Democratic majority is abandoning that bipartisan work from last year. Now you might say, how do I know that? Well, it is very clear, because the budget before us returns to the $50 billion reserve fund for SCHIP from last year's Democratic budget, a figure that was soundly rejected by the Senate last year in the compromise that was put before us that got those 68 votes. My colleagues know that a key feature of last year's SCHIP deal was to cap spending at $35 billion. But they did not include the $35 billion for SCHIP that had bipartisan support. So where, then, is the bipartisan spirit on SCHIP that was here last year? Why is it not here this year?

Mr. GRASSLEY. Yes, I will yield. The PRESIDING OFFICER (Mrs. McCaskill.) The Senator from North Dakota.

Mr. GRASSLEY. The Senator from North Dakota backed us on that effort, and I thank him for that. And the extent to which you say you would be willing to work, I assume you are speaking as a person, for $35 billion instead of 50, I accept that. But I am saying for the public who is looking at this document we call the budget resolution, that has $50 billion in it. You draw other conclusions.

Mr. GRASSLEY. I thank the Senator. I am happy to yield to the Senator from New Hampshire without losing my right to the floor.

Mr. GRASSLEY. No, you would not. In fact, it detracts from it. Because too often reconciliation tends to be a partisan issue, and we will never get SCHIP through here that is not bipartisan. I think you are making the case that I have taken a long time to make, that reconciliation is not a process we need to accomplish most of the major goals in some of these areas that there is bipartisan agreement to reach.

Mr. GRASSLEY. Based upon what the Senator from North Dakota said about SCHIP, I will not go on making my case about that. He has pointed out what the intention is, which is not to preclude something less than $50 billion, and that brings us back to the possibility of a bipartisan compromise, assuming we don't have reconciliation. I will go on then to certain CMS regulations and how they are treated in the budget resolution. I know some people have concerns with the CMS Medicaid regulations. I will not argue that these regulations are perfect. In fact, I have written for my constituents a lot of letters to CMS raising questions about some of these regulations. However, the regulations do address areas where there are problems in Medicaid. Somehow I read this budget resolution as not recognizing those real problems. States don't have clear guidance and could be inappropriately spending taxpayers' dollars. We ought to make sure that since Medicaid is a Federal-State program, that we have 50 States to deal with, they ought to have as much assurance as they can have in our basic law and regulations as to what they can do and not do. We ought to be concerned that they know that. Because if they do something wrong, we pay over half. In my State, we pay 62 percent of the cost of Medicaid. So let's talk about how many dollars might be involved. The budget resolution provides for $1.7 billion that is going to be addressed by these regulations. The amount is only to delay the regulations until the end of March of next year in hopes the next administration will pull back those regulations. Of course, that is what the people who are supporting this provision are hoping for. What would it cost if we tried to completely prevent these regulations from ever taking effect? Not the $1.7 billion that is in this budget resolution to get us through to March of next year. It would actually cost taxpayers $19.7 billion over 5 years and $48 billion over 10 years. Let me emphasize that, $48 billion over 10 years. It is a farce, from my position, an absolute farce for anyone to argue that all those dollars are being appropriately spent and that Congress ought to walk away from these issues, forget about what CMS is trying to do to bring some rationale to the spending of taxpayer dollars. CMS still has a fundamental responsibility to combat fraud, to prevent inappropriate spending, and to protect the integrity of the Medicaid Program. This budget resolution tells CMS to stop your work. Take the rest of the year off. Your work is no longer necessary. This is a serious mistake. What we ought to do is have an instruction that requires the Finance Committee to replace the regulations. Instead of making the regulations go away, the Finance Committee ought to be tasked with replacing them with a policy that fixes the problems. That is what we should be doing for the American taxpayer. So let's review what we have in the budget resolution. First, we have a stealth reconciliation provision that promises to place politics over getting important policies accomplished. Second, we have an SCHIP provision that abandons the bipartisan progress made in 2007, recognizing the dialog I had with the chairman of the Budget Committee on that point, after I made my point. Third, we have a Medicaid provision that carelessly abandons the integrity of programs in several key areas, costing, if it would stay in place forever, $48 billion over 10 years. With spring training in full swing, I would like to borrow a baseball analogy. That is one, two, three--well, you know all the rest. I have some comments I wish to make about the provisions that might be offered in what is called the tax relief measures and particularly those that might not be included in an amendment that is going to be offered from the other side of the aisle. I would like to define for my colleagues some of the widely applicable expiring tax relief provisions that are not going to be covered by an amendment that I think is going to be offered by my friend from Montana, Senator Baucus, in an amendment he has. I know already that Senator Gregg, the ranking Republican on the Budget Committee, has pointed this out, that the lower rates on capital gains and dividends would rise after 2010, under the pending amendment. That means that lower income taxpayers', those in the 10- and 15-percent tax brackets, capital gains rates rise from the current zero rate to 10 percent. It means for dividends for the same group, the tax rate would go from zero rate to either 10 or 15 percent. Why would anybody want to discourage people who are in those brackets, usually lower income earning people, from having to pay a higher rate of tax on their savings, when the rate of savings in this country is at such a low level compared to other countries? In fact, last year it was a negative savings rate for all America. For all other taxpayers, though, the capital gains rate would go up 33 percent, from 15 percent to 20 percent. For those taxpayers, the dividend rate would go from 15 percent to as high as 39.6 percent on dividends as opposed to capital gains. As important are marginal tax rate hikes that would kick in after the year 2010. Here I am talking about all the tax brackets above the 15- percent bracket. We have a chart that tells exactly what is going to happen with each of these and how many families and individuals are being affected by these tax rates--who are going to have the tax rate increase. The chart shows the current law brackets and the number of tax-paying families and individuals in each bracket. The data is the latest available from the Internal Revenue Service Statistics of Income Office. There are four brackets above 15 percent. The first is a 25- percent bracket which contains 22 million families and individuals. The next bracket is 28 percent. There are almost 4 million tax-paying families and individuals in that bracket. The next bracket is the 33- percent bracket. There are 1.5 million tax-paying families and individuals in that bracket. And the top bracket is 35 percent, and in that 35-percent bracket is almost a million people. This is a group whom you will hear most about from the other side. Even it is a sizable group, 963,000 people. It contains a lot of stable and long-term small business owners who create most of our jobs. The other side would like to leave the impression that these are nothing but Wall Street moguls. If we were to raise this rate, as proposed, to 39.6 percent, the small business owners would be facing a 13-percent penalty vis-a-vis the largest corporations in the land. Now where do you get the idea that is good for America, that small businesspeople, sole proprietors filing individual taxes and in the business of creating jobs, ought to pay 13 percent more than what corporations pay? In fact, the whole purpose of the 2001 tax bill was to make sure there was parity between sole entrepreneurships creating jobs and corporations creating jobs. We are talking about a small group of people, 963,000. If you total the number of tax-paying families and individuals affected by these marginal rate increases, it is a total of 28 million families and individuals. Keep in mind, as I said yesterday, that is a group of tax-paying families who start paying on taxable income of $63,000, and for individuals it starts for as low as $32,000 of taxable income. This large group of taxpayers would face various marginal rate hikes, if the policy underlying the pending amendment were to become law. The better way to deal with these current law levels of taxation would be to make them permanent because permanency of tax policy is the best tax policy that is going to create the most jobs. There will be an amendment to be offered by Senator Graham that ensures capital gains and dividend rates stay at the current low levels for lower income taxpayers. The Graham amendment will ensure that roughly 28 million families and individuals would not face marginal tax rate increases after that. For those Members waiting to speak, I have one more fairly short comment I wish to make on another provision in the bill that was put in, in committee. I come before you to discuss payment limitations, meaning payments to farmers. For years I have been leading an effort to put a very hard cap on the amount of Federal subsidies going to farmers. Last year, as everybody knows, I stepped aside. I wish to say I graciously stepped aside during the budget debate when--

Mr. GRASSLEY. Madam President, I will yield to the Senator.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that Lindsey Miller of my office be granted the privilege of the floor for the duration of the debate on the budget resolution.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, the chairman spoke about his budget. For Senator Gregg, the ranking member of the Budget Committee, I would like to start this debate on the Republican side. Since we are on the budget resolution, Senator Gregg would usually open debate for our side of the aisle. He wanted to take the lead today but has a necessary conflict in his schedule. He asked me to substitute, and I am pleased to do so. Senator Gregg will be here tomorrow to give what is normally the opening statement by the senior member of the Budget Committee on the Republican side. I am going to first talk about the process and recent history of the Senate budget resolutions. Almost all of the revenue side of the budget is Finance Committee jurisdiction. Most of the spending side of the budget is also Finance Committee jurisdiction. For those of us who sit on the Finance Committee, we need to pay very careful attention to the budget. Chairman Conrad, along with Senator Wyden of Oregon and Senator Stabenow of Michigan, are all Finance Committee Democrats. This Senator, along with Senators Bunning, Crapo, and Ensign are all Finance Committee Republicans. When I was Finance chairman for part of the year 2001 and all of the years 2003 through 2006, there was coordination regarding the fiscal resources and fiscal demands on the Finance Committee. That coordination occurred with respect to revenue levels, spending levels, and reconciliation instructions. Did we always agree over those years? The answer is no. Did we compromise when we had disagreements? The answer is most often yes. We did have some different priorities, but we worked through those differences during this committee's budget process. We came up with compromises that largely held together. I might add, those compromises and the levels regarding revenue spending and reconciliation instructions were in sync with the administration. My point is that we hashed out the fiscal differences in the Budget Committee and on the Senate floor. The committee and floor debate, amendment votes, both pro and con, made a very real difference. The product of that process, the budget resolution that we will vote on as the last vote probably this week, the product made a real difference. Those budget resolutions, though not perfect, provided me, while I was chairman of the Finance Committee, with the budget resources to deal with the policy demands on the Finance Committee. Most often, I used these resources to guide the Finance Committee, usually in a bipartisan manner, to deal with short-term, midterm, and even long-term problems. Last year was different. After the people spoke in the November 2006 elections, control of the Senate changed from Republican to Democrat, and the budget resolution was basically a Democratic resolution. This year we see some repetition of last year's dramatically different fiscal path. As with the rest of the Budget Committee Republicans, I learned about this resolution for the first time when the chairman of the Budget Committee put the markup document before the committee. Committee Democrats were consulted extensively, along with the Democratic caucus. Most of the Republicans' knowledge prior to markup was derived from what we read in the press. I don't say this to be critical of the Democratic leadership. It is unfortunate but perhaps necessary that budgets are usually partisan documents. So I would say, with all due respect to the chairman, the chairman's mark was developed exclusively by Democrats in a partisan fashion. Republicans, during committee markup, used that markup to educate ourselves, others on the other side, and the public. We asked questions. I pursued questions about how this budget deals with the resources and demands that fall on Senator Baucus and me in our respective roles as chairman and ranking member of the Finance Committee. We offered a relatively small number of amendments. Most were defeated; some accepted. On reforming farm program payment limits, I am pleased to say Senator Allard's amendment prevailed on a rollcall vote. That amendment improved this resolution, though not enough to gain the support of Senator Allard, this Senator, or any other Republicans. Before I discuss the substance of the budget, I want to start off by complementing the chairman of the committee and his staff. They conducted the markup in a professional manner. The Democratic and Republican members have sharp, well-intentioned reasons for coming down in different places on the budget resolution. We were able to debate those differences in a full and fair manner. I know if Senator Gregg were here speaking today, he would make these points as well. We are at the Senate floor stage of the budget on process. What I would like to do is step back and take a look at the budget from three vantage points. It is kind of like we farmers do before planting season. We look at the condition of the soil and prospects of various crops. The first vantage point will be looking at what the budget purports to do. From this angle, I am going to look at what the Democratic leadership says the budget is designed to do and whether those purposes make sense from a fiscal standpoint. The second vantage point will be looking at how well the budget carries out its stated purpose. The third vantage point will be looking at what the reconciliation would mean for the Senate. I will address the reconciliation in a separate speech later. I believe I will wait until tomorrow to do that. Let's start off with the first question: What does the Democratic leadership say this budget is designed to do? Then, after stating what they say it does, we need to look at the fiscal consequences of that policy. The budget's proponents claim it is all about fiscal responsibility. There are two basic parts to the Federal ledger: the revenue part and the spending part. If we spend more than we take in, then the Treasury sells more debt. This has been the pattern of much of the post-World War II period. If we spend less than we take in, then the Treasury buys back debt. When we look at this budget over the short term, it contains a material increase in spending. Over the next fiscal year, the discretionary spending rises by 9 percent over last year's spending. Now, how many Americans got a 9-percent raise? How many American families raised their discretionary household spending by 9 percent? On the spending side of the ledger, spending, then, goes up, and I say fairly dramatically. You would think proponents of fiscal responsibility would be looking at spending cuts, not 9 percent increases. It is a different story on the other side of the ledger, the revenue side. Let me start off with one smidgeon of good news on the revenue side in this budget resolution. The alternative minimum tax patch expired the first day of this year. If that patch is not addressed, 25 million families, most of them middle-income families, would pay an average of at least $2,000 in AMT this year. The chairman reduced the revenue baseline by $62 billion, which is a revenue loss from extending that patch. All middle-income Americans ought to thank the chairman of the Budget Committee--and I thank him on the Senate floor right now-- for that provision. Unfortunately, for years beyond 2008, pay-go still applies, so there is a big Senate hurdle built into this budget to patching the alternative minimum tax in years beyond 2008. The rest of current law expired or expiring tax relief provisions will need to be offset with other tax increases. There are also several bipartisan tax bills that would require offsetting tax increases under this budget. That is a very large tax increase over the next fiscal year. My staff calculates that tax increase to be roughly $150 billion. The definition of ``fiscal responsibility'' under this budget, over the fiscal year, is higher spending of $22 billion and higher taxes of $150 billion. Is that a legitimate fiscal goal? Is that the notion of fiscal responsibility the American people were looking for when they turned congressional power over to the Democrats in November 2006? Did we in Congress misread those results? Did the people really want us to increase spending and to raise taxes? Now, that is not what I am hearing from back home. What I heard from folks across Iowa was: Rein in spending. Live within your means. It seems to me if you are going to assume the mantle of fiscal discipline, you ought to treat a dollar of new tax relief the same as a dollar of new spending. What do I mean by ``new spending?'' I mean spending above the Congressional Budget Office baseline. And what do I mean by ``new tax relief?'' I mean new tax policy that loses revenue. I do not mean extension of existing tax policy. We see the same pattern over the 5-year period of this budget. Over 5 years, the tax hike and the spending increases grow exponentially. On the spending side, discretionary spending grows by $211 billion. When you throw in the special reserve funds, you can add another $300 billion in new spending on top of that. Over the 5 years, the budget assumes a dramatic tax increase--at least $1.2 trillion. In 2011, the bipartisan tax relief plans of 2001 and 2003 will expire. Some folks will call these provisions the Bush tax cuts. It is true President Bush signed both bills, but the bipartisan compromises occurred in the Finance Committee. In 2011, President Bush will have been gone from office by more than 2 years. He will probably be hanging around his ranch in Crawford, TX. You can call this package of tax relief for virtually every American the Bush tax cuts, but for the taxpayer, if we let them expire, it will be a big tax increase, and it will be a big tax increase that will happen without even a vote of Congress. So I have a couple charts in the Chamber. The charts use the analogy of a brick wall to show the ugly tax increases Americans are going to face. On this chart, you see a family of four. That is the average American family. Here is the husband, his wife, and two children. The family makes $50,000 a year in income. That is right about the national median household income today. For example, the Census Bureau stated, for 2006, the national median household income was $48,200. Under the Democratic leadership's budget, this family will face a tax increase of $2,300 per year. You see the figure $2,300 for that family of four. That is a loss in their paycheck of about $200 per month. It is a hit on their yearly budget of $2,300. Where I am from, the Midwest--or anyplace in this country, I will bet--that is still a lot of money. Now, I have another example. This next chart has the same brick wall but a different family: a single mom with two kids. Here we have a person earning about $30,000 a year. In 2011, under this budget, she and her family run straight into that brick wall--that brick tax wall. That is a brick wall of about $1,100 per year of taxes. That is almost $100 a month out of this family's budget. So when you hear folks rail against the 2001 and 2003 bipartisan tax relief plans, you will hear a lot of talk about millionaires, you will hear a lot of talk about the death tax, but you will not hear the critics talk about these two families--a family of four: husband, wife, and two children; or a single mother with two children. You will not hear these critics--almost all of whom voted against these two tax bills--consider these two families. Now, those on the other side will point to the Baucus amendment that will be upcoming--at least we have heard about the Baucus amendment--as the answer to the tax increases that I have pointed out. Isn't it ironic that my friend, our chairman, my partner from the 2001 tax relief bill, and several other tax relief bills, is the author of this key amendment? The Senator from Montana, my friend, Mr. Baucus, took a lot of heat for working with me in a bipartisan fashion in 2001. He took a lot of heat from people in his caucus, quite frankly. Many on the other side who fought him and that bill were also denying tax increases in last year's budget. So they now turn to his amendment--this upcoming amendment--as they did last year, to try to deflect the tax increase charge because there is a real charge in what is in this budget. If something is not done to stop tax increases, they are going to happen automatically. And don't let anybody tell me something cannot be done about it. At Budget markup, we were told the Baucus amendment would contain enough revenue room--$323 billion--to accommodate extension of several components of the bipartisan tax relief plans that go back to 2001. We were told the 10-percent bracket, the marriage penalty, the child tax credit, and some death tax relief would be covered. There were provisions that were not intended to be covered. The excluded provisions were the lower rates for capital gains and dividends and other marginal rate reductions. Now, some on the other side will describe this excluded group-- excluded from the Baucus amendment--as top-rate taxpayers and other high-income people. Now, I hope you will not believe it. The facts are otherwise. Low-income folks, including millions of seniors, pay no tax on their dividend or capital gains income. If this budget stands, even with Senator Baucus's amendment, millions of these low-income taxpayers, especially senior citizens, will pay a 10-percent rate on capital gains and could pay as high as a 15-percent rate on dividends. I have a couple charts to show how wide the dividend and capital gains tax increases would be. The chart that is up now deals with just dividends. It shows the number of taxpayers claiming dividend income. Nationally, over 24 million families and individuals reported dividend income--24 million Americans. There are 24 million Americans, all of whom you are not going to call filthy rich. Very few of them you are going to call filthy rich. In my State of Iowa, for instance, over 299,000 families and individuals claimed dividend income on their returns. Now, there are not 299,000 millionaire families or even 299,000 people in Iowa you can call filthy rich. As to capital gains, you can see the numbers not only for my State of Iowa, but you can see the numbers for all the other States in the United States. You can see them for the entire United States up there on the chart. Nationally, we are talking about over 9 million families and individuals. In Iowa, we are talking about 127,000 families and individuals when it comes to capital gains. I want to emphasize, I went from dividends to capital gains. The chart has changed to tell you what there is in each of the respective States on capital gains. There are many marginal rates, other than the top rate, that would rise if this budget stands, even with the Baucus amendment. The 25- percent rate, which for 2007 starts at $31,850 for singles and $63,700 for married couples, would rise 3 percentage points to 28 percent. The 28-percent rate, which for 2007 starts at $77,100 for singles and $128,500 for married couples, would rise 3 percentage points to 31 percent. The 33-percent rate, which for 2007 starts at $160,850 for singles and $198,850 for married couples, would go up to 36 percent. The top rate would rise from the current 35 percent level to 39.6 percent. To sum up, even with the Baucus amendment--even with the Baucus amendment added to this budget, there would be marginal rate increases on millions of taxpayers, and not millions of millionaire taxpayers. Those marginal rate increases would go up, whether it is the 28 percent to 31 percent or the 33 percent to 36 percent or what have you. Those marginal rate increases would reach taxpayers with incomes as low as $31,850 for singles and $63,700 for married couples, and these people are not filthy rich. Now, what I just described is accurate only if the Democratic leadership intends to follow the letter and spirit of the Baucus amendment. If you look at last year's track record, the House neutered the effect of the amendment in the conference agreement. They created a Rube Goldberg type of mechanism to impede the amendment. Of course, after the budget conference report was agreed to, all talk and action around the amendment ceased. So I wouldn't put much stock in the followthrough on the Baucus amendment, and things can only get worse for middle-income taxpayers beyond that point. This budget asks a lot of the taxpaying population--about $1.2 trillion worth of a lot being asked of taxpayers. That is a big chunk on the revenues ledger. Compare that to what is going on on the spending side of the ledger. The answer is $211 billion more spending on the discretionary side. Nothing is proposed to rein in any entitlement spending. If the definition of fiscal responsibility is higher spending, no entitlement savings, and dramatically higher taxes, then this budget is fiscally responsible. Keep in mind that while ramping up $1.2 trillion on the taxpayers, the budget spends $775 billion of the Social Security surplus and grows the gross Federal debt by $2 trillion. For those on our side, this budget is not fiscally responsible. We don't agree that the definition of fiscal responsibility is higher spending, no entitlement savings, and dramatically higher taxes. For those of us on the Republican side of the aisle, you can't solve all fiscal problems just on the tax side of the ledger. Now I wish to go to the second part of my discussion and annualize the tax side of the budget. I am looking at how this budget will carry out its objectives. Let's take a look at the short term. By the short term, I am referring to the fiscal year of the budget, and this chart here is for the fiscal year. This is the first fiscal year. That is the first fiscal year out of five fiscal years. A lot of people from farm country get their water from wells. When the well water is low, you can either dig it deeper, cut back water use, or pay to have the water trucked in. This well shows the extra demands on the revenue side of the budget. That is the bucket: $152 billion. These demands reflect the extenders for this year and next year. The bucket contains next year's AMT patch because under this budget, that has to be offset. The bucket also covers pending bipartisan tax legislation, and that is bipartisan because it is generally agreed that we ought to do some of this tax legislation. All of these items are listed on the chart for my colleagues to add up. The water in the well represents known, specified, and scored revenue-raising proposals supported by the Senate Democratic caucus. Included are $35 billion in Finance Committee-approved offsets and $29 billion that has been approved elsewhere. That total, then, is the $61 billion you see at the bottom of the well. When you net the offsets against the demands, you find an offset shortfall of $91 billion. Somehow, you have to find a way to fill up that well if you are going to offset everything where there is a bipartisan agreement of what ought to be offset. The upshot of the analysis in this chart is that known offsets cover only about 40 percent of the revenue needed to carry out pending time-sensitive tax legislation that there is a great deal of bipartisan support for and bipartisan agreement that it ought to pass and some of it ought to be passing very shortly. Now, some on the other side will probably respond with three counterpoints, so I want to anticipate that--not that I am going to stop them from responding. The first will be that the committee tax staffs will find the additional $91 billion that is needed to fill up the well. The second will be a claim that offshore shelter activity is a vast, easily tapped revenue source. The third counterpoint will be that closing the tax gap can yield the necessary revenue. As far as those three points are concerned, in the preceding presentation by the chairman of the committee, my colleagues heard some of these points expressed already. On the first point, I would refer everyone to the track record of the tax staffs to the period 2001 to 2006. During that period, I chaired for 4\1/2\ years and Senator Baucus chaired for 1\1/2\ years. During that period, we changed the tax shelter rules and closed numerous corporate loopholes. If you don't believe me, then just go down and ask the K Street crowd of highly paid lobbyists who defended or fought every one of those. During that 6-year period, an active Finance Committee tax staff was able to achieve $51 billion in enacted revenue raisers. That figure should give everyone some perspective of what is doable. It is very hard to find that revenue. Now, some on the other side will argue for my second point that the offshore activities will produce up to $100 billion a year. The anecdote alluded to usually referred to fraudulent activities. Of course, tax fraud is a crime now. Perhaps we could continue to make progress on this front with more enforcement, but the figures bandied around have no Joint Tax or Treasury scoring that I am aware of. I will expand on this point in a separate discussion later on in this week when we have some more debate on it. But it is tough to get the revenue that is alluded to in the speeches we are going to hear this week. The third counterpoint is that the tax gap will yield a readily available, easily tapped revenue source. As a preliminary matter, let me say that the tax gap is a serious tax policy and a serious administration issue. I have devoted a lot of time and energy to closing the gap over the last few years, as the chairman of the committee, Senator Baucus, is doing in his recent chairmanship. Unfortunately, as IRS officials have told us in several hearings, the tax gap number currently estimated to be $250 billion net annually is not the same thing as a revenue estimate. They have cautioned us to be careful about designing tax gap closure measures that are driven by unrealistic revenue targets in unrealistic timeframes. When we went through the tax gap discussion last year, these points were disputed by some on the other side. With a Senate Democratic majority in place for over a year, we may have a bit of a yardstick to use to see just how much revenue can come in. Let's take a look at the claims on tax gap revenue and how we have done. We have three charts that I hope will help us understand. The first chart is the tax gap reality check. My colleagues can see it here. We see some big numbers. This chart takes the form of an inverted pyramid, as my colleagues can see. At the top of the chart is gross tax gap. That is what appeared in the budget resolution markup document, the last year that the IRS testified that the improvements in collections have brought the tax gap down by $55 billion to a net tax gap of $290 billion. As we work our way down the inverted pyramid, we go to the tax gap proposals. There are two categories. The first is the Treasury tax gap strategy set of proposals. On an annualized basis, these proposals raised $3.6 billion per year. Some of these proposals have proved controversial on both sides of the aisle. Many are complicated and wide-ranging and may need further work. It is not by accident that they are still a work in progress. The second set of proposals comes from the Joint Tax Committee's white book. This pamphlet, requested by Senator Baucus and me--and we requested this a few years ago--was published in late January 2005. A note of caution is in order about the chart's figures. The $44 billion annualized figure includes many tax expenditure reform proposals. Some tax gap proponents have strongly opposed the mixing of these proposals with pure tax gap proposals. I will speak in more detail about these proposals as we go on in this week's debate. If one were to delete the tax expenditure reform proposals from this figure, it would drop considerably. For purposes of this exercise, I am going to use the full set of Joint Tax proposals. If we do that and add them to the Treasury proposal, we come away with roughly $44 billion per year in tax gap- related proposals. As a side note, a couple of recently enacted tax gap proposals have run into rough sledding with the new majority. The first proposal is from the 2005 Joint Tax book. It deals with withholding on contractor payments enacted in 2006. Ways and Means Democrats are seeking to delay it. In addition, many House and Senate Democrats are insisting on repealing another tax gap measure, this one dating from 2004, providing supplementary private debt collectors. If enacted, the Joint Tax scores that proposal as actually losing revenue. As we work our way further down the inverted pyramid that I call the tax gap reality check, we total up enacted tax gap provisions. During the fiscal year of the new majority, we find $572 million of enacted tax gap provisions. The enacted provisions represent two-tenths of 1 percent of that great big, gigantic figure that we call tax gaps--just two-tenths of 1 percent. Now, that ought to give anybody pause when you are putting this year's budget together and you are anticipating a lot of money coming in from this source. What experience we have had hasn't produced a lot of revenue. Let's look at the demands on the tax gap revenue in this budget. We have another chart. It totals up the proposed uses of the tax gap revenue. This chart is in the shape of a pyramid--the way a pyramid ought to be, not upside down. Listed in the first category is annualized tax relief and spending demands in the budget that are assumed to be offset by, and among other things, this tax gap revenue. You can see that they total $314 billion per year. I have accounted for the Baucus amendment's annualized impact of $65 billion. So the net demand on the annual tax gap is about $249 billion. If you have been following the charts and the arithmetic, you can see that the budget uses almost all of the tax gap revenue, up to about 85 percent. Keep in mind that the track record is that only $572 million of tax gap raisers were enacted last year. To give you perspective, you can look at the ratio of demands on tax gap revenue to the revenue raised from enacted provisions. That is what this chart does. The ratio is 435 to 1. There are $435 of proposed tax gap uses in the budget for every $1 of enacted tax gap revenue. When you look over these numbers, it should lead to a healthy skepticism of using tax gap revenue as some sort of instant revenue source to accommodate all the spending this budget proposes to do. We ought to listen to the career statistics of income folks over at the Internal Revenue Service. When they tell us not to treat the tax gap number like a revenue estimate, they are on pretty solid ground. It doesn't mean we should not be aggressive about the tax gap. We should. But the thirst for quick-and-dirty revenue raisers should not drive the strategy for dealing with this important problem. I wish to step back and summarize the last two major points. The first point is that this budget does represent the priorities of the Democratic leadership. It is put forward with the stated objective of achieving fiscal responsibility. The budget dramatically raises taxes, increases spending considerably above the already generous baseline, and does nothing about entitlements. Most experts agree that entitlement spending, left unchecked, will cannibalize the rest of the budget. From the perspective of the Republican caucus, this fiscal blueprint is not fiscal responsibility. The second point is that an examination of the budget, even from the perspective of its own proponents, shows that it doesn't work. There is too much pressure on the revenue raising. We have raised revenue from closing corporate loopholes. We have raised revenue from anti-tax shelter measures. I am proud of the Finance Committee's track record in that regard. We have enacted $51 billion in loophole closers and antishelter measures for the period of 2001 to 2006. There are not, however, enough loophole closers to offset the time-sensitive tax legislation we face in the first fiscal year of this budget. We have, likewise, found revenue in policing offshore shelters and other activities, but it fits under the umbrella of loophole closers and other tax shelter oversight. Finally, the tax gap is an important problem that needs to be tackled, but targeting revenue from closing the tax gap needs to be more realistic than it is in this document. This budget anticipates revenue that is incredibly out of line with our track record of bringing in money from the tax gap, as worthy as closing the tax gap is. There has to be a reality check between what is out there and what people at the IRS say we can collect, and they are much more aggressive at that because of the leadership of Senator Baucus. But will it bring in the revenue? We have shown that it will not, based upon the practice we have had. When you step back from the differences across the aisle on this budget, you probably won't be surprised to find similar differences among the Presidential candidates of the two parties. Generally, the candidates on the other side have proposed to take heavily from the taxpayer under the guise of fiscal responsibility. This is true when they are talking about ending the bipartisan tax relief plans of 2001 and 2003. It is true when they are talking about the same loophole closers for a myriad number of expansions of existing entitlements or creating new ones. Nowhere is there discussion of reining in spending. So the tax side of the Federal ledger is the only route to fiscal responsibility from the perspective of the candidates on the other side. I want to give one telling example. I have a chart here that shows the revenue from the key revenue raisers from one of our colleagues on the other side. That proposal would repeal the bipartisan tax relief plans for taxpayers earning above $250,000 a year. This proposal raises $226 billion over 5 years and 10 years. A key fact is that the source of that revenue peters out over the next few years because under current law the tax relief sunsets at the end of 2010. You can see it right there. Let the tax laws work the way they want them to work, and the revenue doesn't come in. Like the Democratic leadership's budget, the candidates on the other side oversubscribe the revenue sources from proposals that are popular with the Democratic base. The deficiency can only be made up in three ways: One, the undefined sources of revenue would need to be tapped. Taxpayers should rightly be worried about that revenue. Secondly, the proposed spending plan would need to be abandoned or curtailed. There is not much history on that side for doing that, taking that avenue. Third, add to the deficit for the cost of the new programs. Unfortunately, this avenue has been taken far too many times--by both political parties, I am sorry to say. We will hear a lot of criticism of our candidate, Senator McCain, from those on the other side. They will argue, like the President's budget, that a continuation of current-law levels of taxation ``costs'' the Federal Government too much revenue. They will argue that the spending increases they propose are more important than the restrained levels of the President's budget. They will argue that, despite the record tax hikes in their budget, entitlement reform is a matter for another day. I have a chart that I believe helps set the basis of this larger debate. It shows the glidepath for revenue under current law. It shows that trend in the post-World War II context. You will see revenues average about 18.3 percent of the economy. That is the dotted line across there, so for those years since 1968 until now. And what we propose would be a continuation of that policy; we have averaged, with what the Federal Government is taking in from all sorts of taxes and Federal Government levies, about 18.3 percent of gross national product. That means that 535 Members of Congress are going to decide how to spend 18.3 percent of the total economy of our country and that the taxpayers are going to spend the other 81.7 percent. You will also see that the state of the economy affects revenues more than anything else. There are dips when we have been in recession and peaks when growth was high. Our side cares about keeping the revenue line at a reasonable level. We don't see the merits of an imperative behind a growing role for Government in the economy. I say that because a 40-year history of about 18 to 19 percent of the total economy being used by the Federal Government has been a level that has not been so high that the public has revolted against it. They might revolt at times, when it gets way high and we have tax decreases to bring it back down. Also, I think you can say that at that level of taxation, it hasn't been harmful to the economy. As you have seen each generation during this period of time, they have lived better than the generation before. Our economy has done well. When you argue about 18.3 percent being the right figure, often the other side disagrees. If they don't disagree directly, their policies help us draw a different conclusion about whether they agree or disagree. They impliedly or explicitly reject our premise that the size of Government needs to be kept in check. We have another chart. It is a copy of an editorial, dated October 22, 2007, from the New York Times. I suppose that is pretty small print for the public to read. The lead-off paragraph says it best: President Bush considers himself a champion tax cutter, but all the leading Republican Presidential candidates are eager to outdo him. Their zeal is misguided. This country's meager tax take puts its economic prospects at risk and leaves the Government ill equipped to face the challenges from globalization. The bottom line of the editorial directly states the view behind this budget and the position of the Democratic candidates for President. From this perspective, the historical level of taxation is not appropriate as a measure. The New York Times implies that the Federal Government must grow as a percentage of our economy by at least 5 to 8 percentage points. If we were to follow the path suggested by the New York Times, the Government's share of our economy would grow by one-third. The Democratic leadership's budget takes some big steps down that path. So do the campaign proposals of the Democratic Presidential candidates. Our Republican conference takes a different view. America is a leading market economy. American prosperity and economic strength, in our view, is derived from a vigorous private sector that provides all Americans the opportunity to work hard, save, and invest more of their money. A growing economy is the best policy objective. It makes fiscal sense as well. I have one more chart to back up the point that it makes fiscal sense. My last chart shows that despite criticisms to the contrary, the bipartisan tax relief plan drove revenue back up after the economic shocks we suffered in the early part of this decade because of a recession and because of 9/11. I am referring to the stock market bubble, corporate scandals, and 9/ 11 terror attacks--all those events that were detrimental to this economy of ours and yet it bounced back. The revenue outperformed Congressional Budget projections by a significant margin, and all one has to do is look at what CBO said would happen, the blue line, and look at the red line of what actually happened. People on our side, including our Presidential candidate, do not take this significant data lightly. We believe the bias ought to be against growing Government, not the other way around; another way of saying-- disabusing people who say that the way to bring more money in is to raise tax rates and if you lower tax rates, you bring a decline to revenue in the Federal Treasury. Not so. This chart shows that we can reduce tax rates, we can enhance the entrepreneurship of the average American, particularly the small businesspeople in this country who create at least 70 percent of the jobs that are created, and we can expand revenue coming into the Federal Treasury. That is what, on this side of the aisle, we propose to do. Are we equipped to do it? The history of 2001 through 2006 is enough evidence for me and most Americans that it can be done and that we did it. I yield the floor.

Mr. GRASSLEY. Mr. President, I would like to respond to the distinguished chairman. The Senator from North Dakota disputed the 9 percent increase I cited with respect to the discretionary spending. Here's how the Republican staff of the Senate Budget Committee reached that figure: 1. Take the increase in the President's budget--6.5 percent over last year. 2. Add the amount of $22 billion the budget assumes over that request. 3. These additions in discretionary are not offset. 4. Add the two together and you arrive at a 9 percent increase in discretionary. 5. I said a 9 percent increase in discretionary and I reconfirmed the figure with our Budget Committee staff. As to the tax gap figure of $290 billion, I say to the chairman, that is the figure that is derived from career statisticians at the IRS statistics of income--``SOI''--Division. I will reiterate that these statisticians have cautioned us to not treat that figure like a revenue estimate. I reiterate my recognition of the tax gap problem. I am pleased that Chairman Baucus has made this a top priority. I have been his teammate in that regard and will continue to be. All I would say is be careful about realism about the revenue we can raise and its timeframe. My inverted pyramid chart is a yardstick of that realism. We should close the gap, but the revenue raised is what it is. I am pleased that the distinguished chairman agreed that 15 percent is the knowable tax gap-related offsets in terms of scored proposals. I would caution everyone that the $44 billion annualized figures is the celing on the tax-gap related offsets. I will discuss this data in more detail as the debate proceeds. The distinguished chairman's final point was that revenues have been flat since 2001. In fact, 2000 was an anomaly. The stock market had not burst and the chairman knows capital gains and other nonwithheld revenue pushed that number up. We had a triple whammy hit to the economy in the next year, 2001. The stock market bubble burst, the corporate scandals rocked Wall Street and whacked main street businesses, and the terrorist attacks occurred. Because the economny was rocked, revenues dropped for 2001 and 2002. Revenues steadily came back after the economic growth plan of 2003 was put in place. Any review of the revenue baseline data would confirm what I have said. I yield the floor.

Mr. GRASSLEY. I yield whatever time Senator Alexander might consume.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, in yesterday's speech on the executive branch stonewalling of congressional oversight, I erroneously referred to two Egyptian nationals charged with terrorism as former students at Florida State University. In fact, they are former students at the University of South Florida.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, today I support this resolution to honor the service and leadership of Iowa State University. I am cosponsoring this resolution because I know firsthand the substantial contributions that Iowa State has made to both Iowa and the Nation as a whole. In fact, as one of the first land-grant universities, it has led the way in technology advancement and outreach. Iowa State University will celebrate 150 years of service to the United States this month. The university is a leader in agricultural, engineering, and computer science technologies. They have been pioneers in the education of minorities and women. Because of these advancements, Iowa State University is recognized throughout the world as a standard for excellence in education, practical research, and outreach through extension. Iowa State is a great representative for the people of our State and will continue to leave an important legacy for our Nation. It is with great respect that I introduce this resolution in honor of Iowa State University's 150th year anniversary.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, are we in morning business?

Mr. GRASSLEY. I ask unanimous consent to speak as in morning business.

Mr. GRASSLEY. I will speak for a short period of time if anyone else wants the floor. Stonewalling on Oversight

Mr. GRASSLEY. Mr. President, throughout my career in the Senate, I have taken very seriously our constitutional responsibility of oversight. So I have actively conducted oversight of the executive branch of Government regardless of who controls Congress or who controls the White House. These issues that I do oversight on are about basic, good Government and accountability in Government. It does not deal with party politics or with ideology. The resistance from the bureaucracy is often fierce. It does not matter whether we have a Republican President or a Democratic President. There is an institutional bias among bureaucracy not to cooperate with Congress in doing our constitutional job of oversight. Protecting itself is what the bureaucracy does best, and it works overtime to keep embarrassing facts from congressional and public scrutiny. This has gone on too long. It is time for the stonewalling to stop. We have a duty under the Constitution to act as a check on the executive branch, and I take that duty seriously. I know other Members of the Senate do. But too often, we let issues in oversight slide that somehow we do not let slide in legislation. So I am asking my colleagues to ramp it up a little bit, to be more serious in the pursuit of information, but not just in the pursuit, to make sure that information actually comes to us when we do not get the proper response from the administration. When the agencies I am reviewing get defensive and refuse to respond to my requests, it makes me wonder what they are trying to hide. They act as if the documents in the Government files belong to them. These unelected officials seem to think they alone have the right to decide who gets access to information--information, which, by the way, was probably collected at taxpayers' expense. I have news for them. I am asking my colleagues to have news for them. Documents in Government files belong to the people, and the elected representatives of the people in our constitutional role of oversight of the executive branch have a right to see them. That right is essential to carry out our oversight function. Let me summarize a few examples of the kind of stonewalling I face. But before I do that, I would like my colleagues to know this is the first of several trips to the floor that I intend to make about the executive branch and its stonewalling. I am tired of it, and I am going to talk about it until we in the Senate and this Senator gets what we are entitled to under the Constitution. All the kids in America study the checks and balances that are a part of our system of Government, and this is part of the congressional check under the Constitution on the executive branch of Government. So let me start this evening with what is outstanding and is being held up at the FBI on the one hand, the State Department on the other, and the Department of Homeland Security in another case. Let's look at the use of the jet aircraft that is available for the FBI. The Government Accountability Office is beginning an audit that I requested on the use of luxury executive jets by the FBI. I asked for the audit after a Washington Post article detailed evidence that the jets were being used for travel by senior FBI officials rather than for the counterterrorism purpose as Congress intended when the jets were provided. However, the FBI Director has refused to commit to providing the flight logs to the Government Accountability Office investigators who are working on this project. What is wrong with a little bit of public scrutiny about the flight logs on a corporate jet, which the taxpayers have paid for, for the use of Government bureaucracy and Government officials? Let's go to the Michael German case. For nearly 2 years, despite requests from two Judiciary Committee chairmen, the FBI refused to provide documents in the case of FBI whistleblower Michael German. It took more than a year for the FBI to respond to questions for the record following last year's FBI oversight hearing by the Judiciary Committee. Even when the responses finally came in, most of them ducked and evaded the questions rather than answering them very directly. The FBI misled the public about the facts in the German case. Even faced with the evidence, the FBI still will not admit that German was right about domestic and international terrorist groups meeting to discuss forming operational ties. Now they are trying to hide that evidence from the public. Don't you think the public ought to know everything there is to know about people who are planning terrorist activities against Americans? I would like to bring up next exigent letters. The FBI continues to stonewall this committee on requests for documents. For example, last March, we requested internal FBI e-mails on their issuance of exigent letters. These letters were criticized by the Justice Department inspector general as inappropriate ways to obtain phone records without any legal process and said the letters contained false statements, promising that a subpoena would be on the way even when there was no intent to issue such a subpoena. Here we are, then, a whole year later, and the FBI has provided only 15 pages. We know they have been sitting on even more e-mails that should shed light on this controversy. It is enough to make you wonder what they might be trying to hide. Let us go back to something now 5 years old--the anthrax case. Not 5 years I have been working on it, but it hasn't been too far short of 5 years. There is still no public indication of progress in the investigation of the anthrax attacks. Well, this involved attacks on individual Senators. A former journalist is being fined for failure to disclose her sources, despite press accounts stating the sources were unnamed FBI officials. Whether anyone in the Justice Department has taken any serious steps to find out who in the bureau was leaking case information about Stephen Hatfill to the press is still a mystery. And why should it be? It shouldn't be a mystery. Have they obtained and searched the phone records of their own senior officials to see who was calling the reporters in question? You know, it is mysterious, but the FBI won't say. Let us go to the Cecilia Woods matter. We have been waiting 2 years for documents in the case of a whistleblower named Cecilia Woods. Woods came to my office to report that she was retaliated against for reporting that her supervisor had an inappropriate intimate relationship with a paid informant and that her supervisor was inexplicably not fired, despite overwhelming evidence of this misconduct. I asked to see the FBI internal investigation to find out why. I still have not received adequate replies. Let us look at the Goose Creek defendants. It is not only the FBI we have problems with. The Homeland Security and State Departments are stonewalling Congress as well. Last year, I wrote to Secretary Rice-- she is an honorable person, Secretary of State, doing well--and we wrote to Secretary Chertoff--he is an honorable person. We wrote about the case of two Florida State University students arrested near Goose Creek, SC, with explosives in their trunk. They are both Egyptian nationals. One of them, Ahmed Mohammed, entered the United States on a student visa. However, I learned he had previously been arrested in Egypt and that he even declared his arrest on his visa form. I wanted a copy of his visa application and other documents to investigate how our screening system for visa applicants could still be so broken 7 years after 9/11. Both the Department of Homeland Security and the State Department have thus far refused to comply. Why would they want to keep information such as this from a Member of the Senate, who has responsibility for appropriating enough money to make sure we can keep terrorists from doing another attack against American citizens? For today, I have given only a few examples. I am going to come to the floor again to outline more examples where these agencies and other agencies have delayed and delayed and delayed. Months turn into years, and we don't get the information we need. It is time for excuses to stop so Congress can perform its constitutional job of check and balance--in this case check the executive branch of Government--and our constitutional responsibility of oversight of that branch of Government, the executive branch. I yield the floor. Madam President, I suggest the absence of a quorum.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, this week the House passed a 10 month extension of our unilateral trade preferences for Colombia, Peru, Ecuador, and Bolivia, and today it is the Senate's turn to consider the issue. I want to take a moment to explain why I have decided to agree to support this 10 month extension. As my colleagues know, I have been critical of the operation of these trade preferences for quite some time. Last year, reported developments in Ecuador and Bolivia led me to question the commitment of their respective Governments to upholding the democratic rule of law, honoring contracts and other legal obligations, protecting civic freedoms such as freedom of the press, and fully partnering with us in the fight against traffic in illicit narcotics. In that context, I have questioned why we should renew these particular trade preferences, which we provide in addition to the broad preferences that we give to developing countries under our separate Generalized System of Preferences program. More generally, I have questioned why we should continue to extend unilateral trade preferences when our farmers and manufacturers deserve to enjoy reciprocal trade benefits. I realize that we advance our national interest by fostering the creation of legitimate economic opportunities in the four Andean beneficiary countries. There need to be viable alternatives in the region if we are going to succeed in the fight against illicit narcotics. And the Andean trade preferences have been a good start. But I continue to question how unilateral trade preferences provide a basis for truly sustainable economic development over the long term. On the other hand, a permanent, reciprocal, open trading relationship would appropriately address each of those questions. That is what we should be aiming for. Not only would it provide a level playing field for both sides, it would facilitate the establishment of strong long- term economic relationships through mutually beneficial trade and investment. That is one of the reasons why implementation of our trade promotion agreement with Colombia is my top priority on the trade agenda this year. On balance, I have concluded that this 10 month extension of Andean trade preferences will allow us to accomplish a number of things. It will allow for the smooth entry into force of our trade agreement with Peru. It will avoid economic disruption in Colombia as we strive to implement our trade agreement with that critical ally. And it will extend an opportunity for Ecuador and Bolivia to engage us in a deeper dialogue on the direction they want to see our bilateral economic and political relationships take going forward. But let me be clear. Today's extension should not be interpreted as a sign that Andean trade preferences are a de facto perpetuity. They are not. I intend to continue my oversight of this program in advance of its expiration at the end of the year. Whether this program is again extended, or in what form, or for which countries, remains an open question. In the meantime, I will continue monitoring a number of important concerns. For example, the Government of Ecuador has indicated that the U.S. lease to the Eloy Alfaro airfield will not be renewed when it expires in 2009. That is, of course, Ecuador's sovereign right. But we should not wait until the lease expires to discuss how our cooperative efforts to combat traffic in illicit narcotics can be augmented in order to offset the loss of this access. I am also concerned about expanded cultivation of coca leaf. Just this past Saturday, the New York Times reported on how the rollback of restrictions on coca growing since President Morales took office in Bolivia has contributed to surging drug use in Argentina and Brazil. We need to focus on cultivation just as much as on eradication in the fight against drugs. With respect to investment disputes, it is essential that legal obligations be fully honored. That includes honoring arbitral awards once they become final. It also includes honoring contracts and the mutual settlement of claims involving prior disputes. Separately, I am disappointed that we haven't been able to fully resolve some of our differences in agricultural trade. For example, with respect to beef, Colombia and Peru comply with the standards of the World Organization for Animal Health, which sets benchmark standards for the World Trade Organization, by permitting the importation of all U.S. beef. In contrast, Ecuador and Bolivia continue to reject these international standards. Ecuador restricts U.S. beef imports to only boneless beef from cattle under 30 months of age, while Bolivia prohibits imports of all U.S. beef. In addition, Ecuador committed to phase out its agricultural price-band system by 2001 as part of its World Trade Organization accession package, but the Government has yet to do so. Ecuador's price-band inhibits U.S. exports of wheat, rice, barley, corn, soybeans, poultry, pork, and powdered milk to Ecuador. Such failures to live up to existing trade obligations undermine the case some make for an extension of trade preferences. I would also expect all four Andean beneficiary countries to actively support efforts to conclude an ambitious agreement in the Doha Development Round negotiations of the World Trade Organization. Finally, I will continue to assess our respective bilateral relations on a political level, as well as monitor the status of protections extended to civic freedoms such as freedom of the press. In closing, I want to make clear that I am very much interested in strengthening our relations with each of the four Andean beneficiary countries. But it takes cooperation on all sides to make that happen. Colombia and Peru have certainly demonstrated a reciprocal interest in stronger relations. I hope to see a similar demonstration on the part of Ecuador and Bolivia in the months to come with actions that are commensurate with words. I am also going to call upon the administration to review conditions in Ecuador and Bolivia in order to help me evaluate the concerns that I have identified and determine whether changes are warranted if the program is to be extended beyond the end of this year.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, today I pay tribute to an American hero who was killed on February 17, 2008, in Diyala Province, Iraq, while supporting Operation Iraqi Freedom. His bravery and selflessness will not be forgotten. I extend my thoughts and prayers to his wife Stephanie, his daughter Clarissa, and all his family and friends. Chad Groepper was raised in Kingsley, IA, and graduated from Kingsley-Pierson Community High School in 2004. He enlisted shortly after his graduation. Chad was known for his ability to put smiles on faces, make people laugh, and for being involved with outside sports such as dirt biking and four-wheeling. He met his wife while stationed at Fort Lewis, WA, and their daughter is only 4 months old. Specialist Groepper was assigned to Headquarters and Headquarters Company, 2nd Battalion, 23rd Infantry Regiment, 2nd Infantry Division out of Fort Lewis, WA. He will be remembered for his courageous sacrifice and energetic personality. Kingsley mayor Wayne Plendl describes Groepper as ``a nice, nice young man who was highly thought of.'' He will be greatly missed. I ask my colleagues here in the Senate and all Americans to remember with gratitude and appreciation a heroic soldier, SPC Chad D. Groepper.

Mr. GRASSLEY

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

Mr. GRASSLEY. I ask unanimous consent to speak as in morning business.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I come to the floor for the purpose of introducing a bill. The bill's title is the Nursing Home Transparency and Improvement Act of 2008. I introduce this bill along with Senator Kohl of Wisconsin. It is a bipartisan bill. Senator Kohl, because he is in the majority, has the distinguished pleasure of serving as chairman of a special committee on aging which is also a very important responsibility, particularly since our Government spends about more than $50 billion a year on nursing home care for elderly, among other things that are the responsibility tie of that committee. The bill that we are introducing is an important piece of legislation that aims to bring some overdue transparency to consumers regarding nursing home quality. It also provides long-needed improvements to our enforcement system. This legislation further strengthens nursing home staff training requirements. In America today, there are over 1.7 million elderly and disabled individuals in roughly 17,000 nursing homes. As the baby boom generation ages, that number probably will rise, unless we do something about the problems of osteoporosis and Alzheimer's and diabetes. Hopefully, we can do those things so our nursing homes do not fill up more. But those are some of the health problems that are facing 77 million baby boomers. Some of them undoubtedly will end up in nursing homes. So we have to have not only a tremendous interest in ensuring nursing home quality based upon the number of people who are already there, but we are going to have more in the future. While many people are using alternatives such as home care or other methods of community-based care, nursing homes are going to remain a critical option for our elderly and our disabled. I always think in terms of nursing homes being at the end of a continuum of care for people who need some help. People want to stay in their own home. When there is a question, can they do that without endangering them, bring some help to the home, relatives or home health care types. If that is not the right environment, then assisted living. And then other things that might eventually bring a person to a nursing home. But a nursing home is a last resort. I say that because during my tenure as chairman of the Aging Committee from 1997 to the year 2001, versus the period of time I was chairman of the Senate Finance Committee, dealing with a lot of aging issues, interacting with a lot of older people, I have never once had anybody say to me that: I am just dying to get into a nursing home. So I think it is important we do whatever we can to keep people out of nursing homes. But there are some people, a lot of people, and a growing number of people who are going to need that type of care. So we have to be concerned about the quality of care in nursing homes. We surely owe it to them to make sure they receive the safe and quality care they deserve. Unfortunately in many areas, the nursing homes, we have a few bad apples always spoiling the barrel. Too many Americans receive poor care, often in a subset of a nursing home. Unfortunately, this subset of chronic offenders stays in business, in many ways keeping their poor track records hidden from the public at large and often facing little or no enforcement from the Federal Government. As ranking member of the Senate Finance Committee, I have a longstanding commitment to ensuring that nursing home residents receive the safe and quality care we expect for our own loved ones. But this effort requires transparency, transparency in the nursing home industry so consumers are armed with information, consumers having information they need to make the best decisions possible for loved ones. This same transparency also provides additional market incentives for bad homes to improve. This effort also requires a strong mandatory enforcement and monitoring system to ensure safe and quality care at facilities that would not take the steps needed to do so voluntarily. The Grassley-Kohl legislation seeks to strengthen both areas, transparency and enforcement. It is a bill that is good for consumers, good for nursing home residents, and good even for the nursing home community. Let's look at transparency. In the market for nursing home care, similar to all markets, consumers must have adequate data to make informed choices. For years people looking at a nursing home for themselves or loved ones had no way of knowing whether that home was-- this is kind of a legal term in the regulations--a ``special focus facility,'' a designation meaning they had been singled out as a consistently poor performer. Why should consumers not have access to this information? The Government has it and so should consumers. To that end, this bill requires that the ``special focus facilities'' designation be placed on the CMS website. Nursing Home Compare is the name of that website. By giving consumers this information, we will both give consumers information necessary to make informed choices and poorly performing homes an extra incentive to shape up or consumers then can go elsewhere. This bill also requires more transparency about ownership information. What is so secretive about who owns a nursing home? Also, it provides transparency in inspection reports and more accountability for large nursing home chains and the development of a standardized resident complaint form so there is a clear and easy way to report problems and have them resolved. The bill would also bring more transparency on what portion of a nursing home's spending is used for direct care for residents and also bring more uniformity to the reporting of nursing staffing levels so people can make an apples-to-apples comparison between nursing homes. But even with improved transparency, there are some nursing homes that will not improve on their own. In the nursing home industry, most homes provide quality care on a consistent basis. But as in many sectors, this industry is given a bad name by a few bad apples that spoil the barrel. So we need to give inspectors better enforcement tools. The current system provides incentives to correct problems only temporarily and allows homes to avoid regulatory sanctions while continuing to deliver substandard care to residents. That system must be fixed. In ongoing correspondence that I have had with Terry Weems, the Acting Administrator of CMS, that agency has requested the statutory authority to collect civil monetary penalties sooner and hold them in escrow pending appeal. To that end, this bill requires penalties be collected within 90 days following a hearing; after that, they be held in escrow pending appeal. Penalties should also be meaningful. Too often they are assessed at the lowest possible amount, if at all. Penalties should be more than merely the cost of doing business, they should be collected in a reasonable timeframe and should not be rescinded easily. These changes would help prod the industry's bad actors to get their act together or get out of business. In addition to increased transparency and improved enforcement, this bill provides commonsense solutions to a number of other problems as well. This legislation requires the Secretary of Health and Human Services to establish a national independent monitoring program to tackle problems specific to interstate and large intrastate nursing home chains. This legislation directs the Government Accountability Office to, one, conduct studies on the role, if any, of financial problems in the poor performance of special focus facilities; identify best practices at the State level in temporary management programs; and, three, determine what are the barriers preventing the purchase of nursing homes with a record of poor quality. Finally, in the case of nursing homes being closed due to prior safety or quality of care, the bill requires that residents and their representatives be given a sufficient notice so they can adequately plan a transfer to a better performing nursing home. I happen to be very sensitive to the fact that nursing home residents are often old and fragile. Moving them into new facilities is often very traumatic. So we have to make sure these residents are transferred appropriately and with the time and care deserved. This bill would also strengthen training requirements for nursing staff, by including dementia and abuse prevention training as part of the preemployment training. The Grassley-Kohl bill also requires a study on the appropriateness of increasing training requirements for nurse aids and supervisory staff. I am proud to introduce this bill today, along with the distinguished Senator from Wisconsin, Mr. Kohl, the chairman of the Aging Committee. He and I have a long history of working on issues together, particularly for the elderly. We will continue to do everything we can to make sure America's nursing home residents receive the safe and quality care they deserve. Increasing transparency, improved enforcement tools, and strengthening training requirements will go a long way toward achieving this goal.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I come to the floor for the purpose of introducing a bill. The bill's title is the Nursing Home Transparency and Improvement Act of 2008. I introduce this bill along with Senator Kohl of Wisconsin. It is a bipartisan bill. Senator Kohl, because he is in the majority, has the distinguished pleasure of serving as chairman of a special committee on aging which is also a very important responsibility, particularly since our Government spends about more than $50 billion a year on nursing home care for elderly, among other things that are the responsibility tie of that committee. The bill that we are introducing is an important piece of legislation that aims to bring some overdue transparency to consumers regarding nursing home quality. It also provides long-needed improvements to our enforcement system. This legislation further strengthens nursing home staff training requirements. In America today, there are over 1.7 million elderly and disabled individuals in roughly 17,000 nursing homes. As the baby boom generation ages, that number probably will rise, unless we do something about the problems of osteoporosis and Alzheimer's and diabetes. Hopefully, we can do those things so our nursing homes do not fill up more. But those are some of the health problems that are facing 77 million baby boomers. Some of them undoubtedly will end up in nursing homes. So we have to have not only a tremendous interest in ensuring nursing home quality based upon the number of people who are already there, but we are going to have more in the future. While many people are using alternatives such as home care or other methods of community-based care, nursing homes are going to remain a critical option for our elderly and our disabled. I always think in terms of nursing homes being at the end of a continuum of care for people who need some help. People want to stay in their own home. When there is a question, can they do that without endangering them, bring some help to the home, relatives or home health care types. If that is not the right environment, then assisted living. And then other things that might eventually bring a person to a nursing home. But a nursing home is a last resort. I say that because during my tenure as chairman of the Aging Committee from 1997 to the year 2001, versus the period of time I was chairman of the Senate Finance Committee, dealing with a lot of aging issues, interacting with a lot of older people, I have never once had anybody say to me that: I am just dying to get into a nursing home. So I think it is important we do whatever we can to keep people out of nursing homes. But there are some people, a lot of people, and a growing number of people who are going to need that type of care. So we have to be concerned about the quality of care in nursing homes. We surely owe it to them to make sure they receive the safe and quality care they deserve. Unfortunately in many areas, the nursing homes, we have a few bad apples always spoiling the barrel. Too many Americans receive poor care, often in a subset of a nursing home. Unfortunately, this subset of chronic offenders stays in business, in many ways keeping their poor track records hidden from the public at large and often facing little or no enforcement from the Federal Government. As ranking member of the Senate Finance Committee, I have a longstanding commitment to ensuring that nursing home residents receive the safe and quality care we expect for our own loved ones. But this effort requires transparency, transparency in the nursing home industry so consumers are armed with information, consumers having information they need to make the best decisions possible for loved ones. This same transparency also provides additional market incentives for bad homes to improve. This effort also requires a strong mandatory enforcement and monitoring system to ensure safe and quality care at facilities that would not take the steps needed to do so voluntarily. The Grassley-Kohl legislation seeks to strengthen both areas, transparency and enforcement. It is a bill that is good for consumers, good for nursing home residents, and good even for the nursing home community. Let's look at transparency. In the market for nursing home care, similar to all markets, consumers must have adequate data to make informed choices. For years people looking at a nursing home for themselves or loved ones had no way of knowing whether that home was-- this is kind of a legal term in the regulations--a ``special focus facility,'' a designation meaning they had been singled out as a consistently poor performer. Why should consumers not have access to this information? The Government has it and so should consumers. To that end, this bill requires that the ``special focus facilities'' designation be placed on the CMS website. Nursing Home Compare is the name of that website. By giving consumers this information, we will both give consumers information necessary to make informed choices and poorly performing homes an extra incentive to shape up or consumers then can go elsewhere. This bill also requires more transparency about ownership information. What is so secretive about who owns a nursing home? Also, it provides transparency in inspection reports and more accountability for large nursing home chains and the development of a standardized resident complaint form so there is a clear and easy way to report problems and have them resolved. The bill would also bring more transparency on what portion of a nursing home's spending is used for direct care for residents and also bring more uniformity to the reporting of nursing staffing levels so people can make an apples-to-apples comparison between nursing homes. But even with improved transparency, there are some nursing homes that will not improve on their own. In the nursing home industry, most homes provide quality care on a consistent basis. But as in many sectors, this industry is given a bad name by a few bad apples that spoil the barrel. So we need to give inspectors better enforcement tools. The current system provides incentives to correct problems only temporarily and allows homes to avoid regulatory sanctions while continuing to deliver substandard care to residents. That system must be fixed. In ongoing correspondence that I have had with Terry Weems, the Acting Administrator of CMS, that agency has requested the statutory authority to collect civil monetary penalties sooner and hold them in escrow pending appeal. To that end, this bill requires penalties be collected within 90 days following a hearing; after that, they be held in escrow pending appeal. Penalties should also be meaningful. Too often they are assessed at the lowest possible amount, if at all. Penalties should be more than merely the cost of doing business, they should be collected in a reasonable timeframe and should not be rescinded easily. These changes would help prod the industry's bad actors to get their act together or get out of business. In addition to increased transparency and improved enforcement, this bill provides commonsense solutions to a number of other problems as well. This legislation requires the Secretary of Health and Human Services to establish a national independent monitoring program to tackle problems specific to interstate and large intrastate nursing home chains. This legislation directs the Government Accountability Office to, one, conduct studies on the role, if any, of financial problems in the poor performance of special focus facilities; identify best practices at the State level in temporary management programs; and, three, determine what are the barriers preventing the purchase of nursing homes with a record of poor quality. Finally, in the case of nursing homes being closed due to prior safety or quality of care, the bill requires that residents and their representatives be given a sufficient notice so they can adequately plan a transfer to a better performing nursing home. I happen to be very sensitive to the fact that nursing home residents are often old and fragile. Moving them into new facilities is often very traumatic. So we have to make sure these residents are transferred appropriately and with the time and care deserved. This bill would also strengthen training requirements for nursing staff, by including dementia and abuse prevention training as part of the preemployment training. The Grassley-Kohl bill also requires a study on the appropriateness of increasing training requirements for nurse aids and supervisory staff. I am proud to introduce this bill today, along with the distinguished Senator from Wisconsin, Mr. Kohl, the chairman of the Aging Committee. He and I have a long history of working on issues together, particularly for the elderly. We will continue to do everything we can to make sure America's nursing home residents receive the safe and quality care they deserve. Increasing transparency, improved enforcement tools, and strengthening training requirements will go a long way toward achieving this goal.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. Leader, I don't know, but we might want to have time.