Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. I yield myself 5 minutes. Madam President, one of the things I think we have to remember is there is reform in the bill that the committee has presented to the Senate--reform that probably should have been done a long time ago. I pointed it out in my opening remarks and in closing I want to kind of emphasize that there are limits put on in the bill that sound very reasonable. But I have to tell you there is one gigantic loophole you have to consider, and out of the three forms of payments--direct payment, loan deficiency payment, and countercyclical payment--the caps that are in the bill, adding up to $200,000, are for countercyclical and direct payments. So if you don't have a cap on loan deficiency payments, that means the payments farmers can receive are unlimited and, from that standpoint, when loan deficiency payments are considered, there is not a hard cap. Now, the adjective, ``hard,'' is applicable to Dorgan- Grassley, and it is very important because we have had caps on farm programs for, I will bet, three or four decades. They have been ineffective caps because there has been legal subterfuge to get around it. The underlying bill, as well as our amendment, takes care of some of that legal subterfuge. But we maintain one for loan deficiency payments within this bill. So you, consequently, don't have a hard cap. Some people would say you don't have a cap at all. I will not go that far. But it is one gigantic opportunity for people to get payments that are really not limited. And it is particularly important for big farmers because the loan deficiency payment is paid out so much per bushel for what the market price is under the target price. So the more bushels you produce, the larger the farm, the more deficiency payments you are going to get. Consequently, we are trying to stop subsidizing farmers from getting bigger. But when the loan deficiency payment is left out, you are going to give these farmers the same opportunity they have under existing law to use a legal subterfuge that basically makes the limits less meaningful. So I hope you will consider whether you think, when we have a cap, it ought to be an effective cap and, in the words of Dorgan-Grassley, a hard cap. It is very important that we do that. Remember the background for the farm safety net. It is to help medium- and small-sized farmers, to protect them against things beyond their own control. And natural disaster is a natural one to speak about because floods and hail and windstorms and inability because of a wet spring to get the crop in, et cetera, et cetera, are all natural disasters that a farmer cannot do anything about. Only God can do something about natural disasters. Then there are political decisions. I keep mentioning them because they ruined so many farmers in the 1970s. Nixon put a freeze on beef prices, and the President also put a limit on exports of soybeans so the price would plummet when it was very high in the early 1970s. And there is international politics: the cost of energy, what OPEC does-- all of that is beyond the control of the small- and medium-sized farmers. But the larger you get, the more staying power you have in it, and we don't need to have a safety net so strong that it subsidizes big farmers to get bigger, and 10 percent of the biggest farmers are getting 73 percent of the benefits out of the farm program. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, today, I am introducing a Senate resolution to honor the life and work of Congressman Henry John Hyde of Illinois. I authored this resolution because I knew Henry Hyde for over 20 years. In fact, he and I were 2 of 16 Republicans who were first elected to the House of Representatives in 1974. Congressman Hyde was a true leader in the House of Representatives. He proved his leadership by authoring the ``Hyde Amendment'' to help protect the lives of unborn children. Because of this long-standing policy, innocent lives have been saved and taxpayers have not been forced to fund abortions. Henry Hyde was intelligent, as was proved during his tenure as chairman of two different committees--the House Committee on the Judiciary and the House Committee on International Relations. In his 32 years in the House of Representatives, he was dedicated to the rule of law as well as the expansion of freedom around the world. He was a great Representative for the people of his district, and he leaves an important legacy for our Nation. It is with great respect that I introduce this resolution in his honor.

Mr. GRASSLEY

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

Mr. GRASSLEY. I yield 3 minutes to the Senator from New Hampshire.

Mr. GRASSLEY. Mr. President, I will yield myself such time as I might consume. I am obviously very pleased that the Senate has finally come to the point of voting on something in 2007 to take care of the alternative minimum tax problem. I would rather have gone through this process several months ago but better late than never. Over the course of this year, I have given 12 Senate floor speeches analyzing the alternative minimum tax and describing the problem it poses for middle-class taxpayers, and I have done that in great detail. As I said so many times--before, hoping, and now I am glad to say the Senate Democratic leadership seems to realize--the AMT should not be offset. I also wish to thank my good friend, Chairman Baucus, for all of his hard work this year and for several years to protect middle-income taxpayers from the AMT. Chairman Baucus did our country a great service by pushing for this compromise that can garner, we hope, the support of Democrats and Republicans. Although we did not mark up in committee, Chairman Baucus rolled up his sleeves and got to work to find a middle ground. That middle ground is before us. He has consistently avoided bitter partisanship and always worked to do the right thing. Tonight, I ask my friends in the House Democratic leadership, assuming we get the votes to pass this product before us, to follow the example of Chairman Baucus and the Senate Democratic leadership and finish this job to give the assurance that is necessary to these 23 million taxpayers that they are not going to be hit by a tax they were never expected to pay in the first place. Everyone has thus far made partisan points. That episode must cease. Those obsessed with their tax-increase-biased version of pay-go must turn now to the people's business. Those who want to raise more taxes to pay for a tax that was never meant to raise revenue from the middle class have made their points. The record is clear. My friends in the House Democratic leadership need to cease punishing the 23 million middle-income taxpayers with a pay-go obsession. I say to my friends in the House Democratic leadership, we can talk until we are blue in the face. The bottom line is we need to change the tax laws with respect to AMT. That law change needs congressional action and Presidential signature. Anything else is just plain talk. Last night, I suggested a path to get all parties to an agreement on changing the law on the AMT patch. By ``all parties,'' I am referring to House Democrats, House Republicans, Senate Democrats, Senate Republicans, and I have to include the President because without an agreement we will not get a law, and a law has to be signed. Without a law change, 23 million families face an unexpected tax increase that we think will be about $2,000 per family. Without a rapid law change, we make things even worse during filing season. We are going to have a fiasco of another 27 million families and individual taxpayers hurt, waiting for a refund. I reiterate my suggestion tonight. It is in a letter from Chairman Rangel, Chairman Baucus, Ranking Member McCrery, and myself. That letter, dated October 31 this year, contains the tests that ought to be applied to any proposal in substance or process on the AMT patch legislation. Here is one sentence, ``We''--the four of us: We plan to do everything possible to enact AMT relief legislation in a form mutually agreeable to the Congress and the President before the end of the year. Chairman Baucus and the Senate Democratic leadership are trying to meet this test with this agreement which is before us now. Now the Democratic leadership in the House needs to follow through. We Senators hopefully will pass this package that is agreeable to the President and the House. What do we all agree on? We agree the patch needs to get done, so that is the base of what will pass the Senate, we hope. If House Democrats continue to insist on offsets for a patch--we hope that doesn't happen. The President and congressional Republicans disagree with the Democrats on the need for offsets. Offsets for the patch are not mutually agreeable, as the letter we sent implies. They fail the tax writer's test. On extenders, the House wants 1 year, the Senate wants 2 years. President Bush had 1 year in his budget. Maybe 2 years might be mutually agreeable. On this point, offsets are not mutually agreeable. But it looks as if we will defer on next year's extenders. On this year's AMT patch, we need to make law. To make law, the proposals must be mutually agreeable. The only proposal that is mutually agreeable is an unoffset AMT patch. Let's get to the law change and end the AMT patch dilemma. I urge the House Democratic leadership to pass the AMT patch bill and send it to the President. It is in a form the President will sign. We must change the law now. We owe it to the 23 million families who could be hit by the AMT. We owe it to the additional 27 million families and individuals who face delayed refunds. I yield the floor and reserve the remainder of my time.

Mr. GRASSLEY. I yield back our time.

Mr. GRASSLEY

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

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

Mr. GRASSLEY. Mr. President, I ask unanimous consent, if there is discussion of AMT today, that my remarks be placed in the Record at that point.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased we are finally discussing solutions to the alternative minimum tax problem that is poised to swallow 19 million more filers this year. I would have rather gone through this process several months ago but better late than never. Over the course of the year, I have given many speeches analyzing the AMT and describing the problem it poses for middle-class taxpayers in great detail. On February 12, I gave a speech on the history of the AMT. On February 13, I highlighted how the AMT affects individual income tax liabilities. On February 15, I discussed ways to reform the AMT and made the case that complete repeal is the best way to deal with the AMT. Incidentally, I made the case that dealing with the alternative minimum tax 1 year at a time could be problematic, and current events have proven me right. On March 20, I pointed out the Democrats' budget had no room for AMT relief, not even for 1 year. On March 22, I explained why we need to repeal the AMT. On April 18, I made an appeal for quick action on the AMT to help taxpayers making estimated payments who are already paying the price for the lack of action in Congress. On May 14, I explained why the AMT relief or repeal should not be paid for with a tax increase someplace else on other people. On May 17, I criticized the conference report on the fiscal year 2008 budget resolution for not realistically addressing the alternative minimum tax problem. On that same day, I gave another speech exposing how Democratic offsets to the AMT relief would result in massive tax increases on other people. On June 13, I discussed the inadequacy of the lead trial balloons House Democrats were floating as possible fixes for the AMT. This was to mark the occasion of the second quarter estimated tax payments coming due because we had taxpayers who file quarterly already being hit by the lack of action on the part of the Congress. On July 24, I introduced legislation to protect taxpayers who should have been making estimated payments for 2007 but weren't because they did not realize Congress was failing to protect them from the AMT. In other words, if they didn't have to pay the AMT in 2006, why would they think they had to pay the AMT in 2007? By not doing it, they were violating our tax laws, probably innocently. On September 19, I marked the occasion of the third quarter estimated tax payments coming due by again discussing the AMT problem and how little congressional leadership was doing about it. I just cited 12 speeches delivered on the Senate floor over the past year. That doesn't even include press conferences, Finance Committee meetings, and other events where I have talked about the need for repeal of the AMT or, in the case of a shorter term fix, just making sure it was fixed for this 1 year and kicking the can down the road. I have been talking about the alternative minimum tax literally all year now. House Democrats finally managed to introduce a bill on October 30, and the majority leader turned to it in the Senate right before the Thanksgiving recess. Democratic leadership cannot blame Republicans for their own failure to act until almost literally the last minute. As I said, I am glad we are finally discussing solutions, and the Senate leadership seems to realize that the AMT should not be offset. I also want to thank my good friend, Chairman Baucus, for all his hard work this year, and for several years, to protect middle-income taxpayers from the alternative minimum tax. Chairman Baucus is doing our country a great service now by trying to work out a compromise between those who want to pay for the AMT relief and extenders with a tax increase and those who are opposed to tax increases to offset AMT. He has consistently, meaning chairman Baucus, avoided bitter partisanship and always worked to do the right thing. Those obsessed with pay-go--and for the public watching, that is pay as you go--those who are obsessed with pay-go, who want to raise more taxes to pay for a tax that was never meant to raise revenue, are punishing the American taxpayers for their obsession. Unfortunately, right now, I cannot support a package with roughly $45 billion of offsets in it for the extenders, even though the AMT relief is not offset. I am still reviewing some of the revenue raisers, but my issue is not with the raisers themselves. I will only support a raiser if I think it is good policy and will not support a raiser simply for the revenues. I am concerned then if we send this package to the House, they will try to use the offsets not for what we put them in for, for the extenders, but send it back to us as offsets against the AMT, increasing taxes on others to pay for a tax that was never meant to be collected, and then still not get the extenders passed, as we should be passing them right now. The House has shown it does not respect the need to get 60 votes in the Senate, and I do not expect that to change right now. If the majority leader is serious about reaching a compromise, and really respects the minority, as he claims, he needs to get his colleagues in the House on board. I have been around long enough not to make it too easy to stab me in the back by having things that even leadership in the House has suggested could happen with this tax ping-pong operation that might go on here. It is unfortunate congressional leadership took so long to deal with the alternative minimum tax and that some are still putting an obsession with pay-go and narrow partisan interests over the wellbeing of their own constituents. We can talk until we are blue in the face, but the bottom line is we need to change the tax laws with respect to the alternative minimum tax. That law change needs congressional action and a Presidential signature, and anything else is just plain talk. I would like to end this part of the remarks I am making today with a suggestion. I hope we get all parties to an agreement by changing the law on the AMT patch. By all parties, I am referring to House Democrats, House Republicans, Senate Democrats, Senate Republicans, and, of course, nothing is going to happen if the President can't sign it. Without an agreement, we will not get a law. And without a law change, this is what is going to happen: 23 million families face an unexpected tax increase that is going to average about $2,000 per family. Without a law change, we make worse the filing season fiasco for yet another 27 million families and individual taxpayers. That is on top of the 23 million who, for the first time, are being hit by the alternative minimum tax. So here is my suggestion. It is simple. It is black and white. It is in a letter from Chairman Rangel and Chairman Baucus and ranking Republicans McCrery in the House and myself for the Republicans in the Senate Finance Committee. We are the senior tax-writing committee members from the Congress. That letter was dated October 31 this year assuring Treasury Secretary Paulson and Acting IRS Commissioner Stiff that we would work to pass an AMT patch bill expeditiously. That letter contains the test that ought to be applied to any proposal in substance and process on an AMT patch. Let me remind you, this is a bipartisan letter by the most senior tax-writing Members of the Congress. And it starts with ``we,'' meaning Chairman Rangel, Chairman Baucus, and ranking Republican members, McCrery and Grassley. Here is what that sentence says: We plan to do everything possible to enact AMT relief legislation in a form mutually agreeable to the Congress and the President before the end of the year. That is the end of the quote, but I want to put emphasis within that quote on these words: Passing legislation in a form mutually agreeable to the Congress and to the President before the end of the year, meaning the end of 2007. Chairmen Rangel and Baucus and their ranking members made it clear in this letter. Mr. President, I ask unanimous consent the letter I have been referring to be printed in the Record.

Mr. GRASSLEY. Now, our leaders in both the House and the Senate need to back up the tax writers. We Senators need to pass a package that is agreeable to the President and to the House. What do we all agree on? We agree the patch needs to get done right now. So that is the base of what should pass the Senate, if we are to get a law enacted. House and Senate Democrats insist on offsets for a patch. The old joke is that you better make certain the light at the end of the tunnel isn't a train coming toward you. Unfortunately, the joke is on the American people when it comes to the upcoming tax-filing season. Because of the failure of the Congress to act, the taxpayers are going to feel as if they have been hit by a freight train come April 15. The sad part is this was not necessary. Congress could have done the right thing. Congress could have acted. We have never in this century gone this late without passing the AMT patch and having it in place. The IRS and the Treasury have made it clear that the failure to act would cause very real problems in the filing season, in terms of confusion and in terms, especially, of a delay in providing taxpayers their refunds. I am astonished when I hear that some in the Democratic leadership are telling reporters these claims of a filing fiasco are all somehow a bluff. The Democratic leadership certainly didn't think the problems of the filing season were a bluff when we were delayed in passing an extenders package last year. That is when the Republicans were in control. I strongly advocated then that we needed to pass the extenders package and warned of its negative impact on the filing season, and I was not listened to by my Republican leadership. But Democrats, now in the majority but back then in the minority, joined me in those statements. Now the clamor is much smaller with the alternative minimum tax which will affect 25 million taxpayers and will be, in many ways, significantly more disruptive to the filing season than the extenders delay last year. As you can see from a chart I have here--I am going to ask my staff to hold that chart up. We all know the story of Chicken Little. But every once in a while, Chicken Little is right. When it comes to the filing season, the sky is falling. It is important that my colleagues understand that by failing before Thanksgiving, we have already gummed up the works. As my colleagues can see from this next chart, the deadline of October 15 for finalizing forms and instructions has already passed. We have passed the November 7 deadline for printing the tax forms--as you can also see in the chart--and the absolute drop dead date for printing was November 16. Every week that we don't act, this problem will get worse and worse. I should make it clear that we are not only hearing from the IRS that the delays have created a filing fiasco; the tax preparer community is making it clear that the problems are real and they are big. We recently received a letter from the independent IRS Oversight Board that voiced ``grave concerns about the serious risks to the 2008 filing season if legislation to change the AMT is delayed.'' The IRS Oversight Board makes it clear that there is a big, big difference from Congress passing AMT relief this week as opposed to the third week of December. The board specifically says that another 2 or 3 week delay by Congress could mean that another 31 million taxpayers will face a delay in filing returns and that another approximately $70 billion in refunds could be delayed. These numbers would be on top of the 6.7 million taxpayers who already face a delay in filing returns and the $17 billion in refunds that are going to be delayed because we have not acted to pass the AMT ``patch.'' So if we continue to dilly-dally and delay on AMT relief until Christmas, it will be a total of 37.7 million return filings delayed and $86.9 billion in refunds delayed. These delayed refunds are not just paper; they represent real money that many working families are counting on to help them to pay the bills, make an important purchase or even have an important medical procedure done. To be blunt, we are already in the soup and it is a question of how bad it is going to get. I recently joined the ranking member of the Ways and Means Committee in writing to Ms. Stiff, the Acting Commissioner of the Internal Revenue Service, asking that the IRS do the following: No. 1, take steps to educate taxpayers about the possible changes in the law and tax forms; No. 2, work closely with the tax preparation community to keep them aware of the IRS to update programming and minimize delays and to encourage the tax preparation community to inform their clients and consumers about likely delays in processing returns and distributing refunds; No. 3, ensure that all IRS call center employees are fully informed about the status of the tax filing season and can provide accurate and timely information to callers; No. 4, within available resources, increase staffing of IRS call centers to accommodate the increased call volume that will likely result from taxpayer confusion. I think these steps will allow us to do the best we can with a very bad hand. But there should be no doubt, the real answer is to pass AMT relief and pass it now. For many years now, and certainly many times this year, I have tried to shed light on the monstrosity that is the alternative minimum tax and how the failure to index the AMT for inflation threatens middle- class taxpayers. While I have consistently fought for full repeal of the alternative minimum tax, I have had to be content with enacting a series of provisions, since 2001, to increase the exemption amounts pertaining to the AMT to prevent new taxpayers from being caught by it. However, similar action has not yet been taken for tax year 2007. Despite plenty of advanced warning, congressional leadership's failure to act means that time for proactive action has already passed. The IRS is printing tax forms and making other arrangements to process tax returns submitted for the upcoming filing season. Any legislative fix undertaken now to check the advance of the AMT will not eliminate a problem, but will only manage it. Despite being deeply disappointed that congressional leadership has not seen fit to act faster, I was hopeful that the magnitude of around 19 million additional tax filers paying the AMT for tax year 2007 was finally beginning to hit home. The AMT finally seemed to be getting the attention it deserved, but recent rhetoric has again put me into a negative frame of mind. Rather than offer new ideas and insights into how to solve the AMT problem, which in the case of many would be to offer any ideas at all, some of my colleagues are merely recycling the same old and tired talking points of years past. More specifically, I'm referring to the accusation, made by left-leaning think tanks and also by the House Committee on Ways and Means majority, that advocates of tax relief in 2001 and 2003 deliberately--I want to emphasize they are accusing use of deliberately using the AMT as a trick to minimize the revenue cost to the Federal treasury as a result of those policies. While it is true that some families benefit less from 2001 and 2003 tax relief than they otherwise would have, to say this is by design, as is indeed done in a Committee on Ways and Means press release issued on November 14, is absolutely ridiculous. Republicans have consistently fought, even before the 2001 tax relief bill, to curtail and eradicate the alternative minimum tax. In 1999, congressional Republicans passed the Taxpayer Refund and Relief Act of 1999, which completely repealed the AMT, and this bill was vetoed by President Clinton. Getting back to the Ways and Means press release of November 14, in it I myself am cited as critiquing President Bush for not doing more in his 2001 and 2003 tax packages to counteract AMT effects. I do absolutely want to make clear that despite my belief that the AMT was also a pressing problem at that time, I wholeheartedly supported tax relief in 2001 and 2003 and still think it was absolutely the right thing to do. In fact, I think the provisions in both bills should be made permanent. In order to counteract the effect of the AMT, Congress passed and President Bush signed into law a series of provisions to increase AMT exemption amounts to keep inflation from pushing new tax filers into the clutches of the AMT. If Ways and Means Democrats were serious in their implied concern for the effectiveness of 2001 and 2003 tax relief, they could do two very simple things: First, House Democrats could make 2001 and 2003 tax relief permanent; second, they could fully repeal the AMT. Of course they have shown no sign of doing either of these two things. In fact, opposition to the 2003 tax relief package was so intense among Democrats that the Vice President was called upon to break a tie during a vote in the Senate. The provisions of the 2001 and 2003 tax relief bills were not made permanent because doing so might have made it impossible for the bills to overcome Democratic opposition. I believe that including AMT repeal in those bills would have had the same effect. Aside from being quoted in the November 14 Ways and Means press release, I found it unintentionally humorous in that it reveals that House Democrats are doing exactly what they accuse Republicans of having done since 2001. While they accuse Republicans of using the AMT as a budgeting gimmick, they are using the AMT as a gimmick to make it appear they are easing the tax burden when they are not. In the release, Ways and Means Chairman Rangel is quoted saying ``The house passed a bill to prevent the AMT from hitting 23 million families this year without hurting the economy by adding to the national debt.'' What this means is that the House is protecting some people from the AMT by subjecting other filers to additional taxes. This is the same as if your community's animal control officer caught a rabid dog on your street and let it go someplace else across town. Your problem appears to have been immediately solved, but in the longer-term, the fundamental problem still exists. The fundamental problem with the AMT is the massive amount of unintended revenue it is forecast to collect, and the unwillingness of many of my colleagues to forego that revenue. If Ways and Means Democrats are serious in their appeal to the administration regarding the AMT to ``work with Congress to do the right thing and kill it,'' they will abandon any notion that revenues not collected because of AMT relief or repeal ought to be offset. Finally, I want to address the baseless claim that the Bush administration's tax priorities were responsible for the AMT problem on a technical level. This exact point was raised in 2005 by Democratic Ways and Means staffers in a letter to ``Tax Note,'' a prominent publication for tax professionals. At the time I requested that the nonpartisan Joint Committee on Taxation look into this matter. Their analysis showed that, as I have long maintained, the biggest problem with the alternative minimum tax was it was never indexed for inflation. In response, I received from the Joint Committee on Taxation a letter dated October 3, 2005. I have requested an update of that document and will discuss the updated numbers as soon as they are available. That estimate could be interpreted to indicate that if the Bush tax cuts were repealed, alternative minimum tax revenues could be expected to drop by $302 billion, or 27 percent. At the time, the Joint Committee on Taxation estimate also found that extending and indexing the hold-harmless provision in effect at the time would reduce alternative minimum tax revenues by around $667 billion, or 59 percent. Of course, the analysis of this question is complicated by the fact that the variables we are examining overlap and interact with each other. But responsible analysis of available information certainly does not support the allegation that the tax relief packages signed by the President in 2001 and 2003 are responsible for the explosion of the alternative minimum tax. If anything, House Democrats and their pet think tanks have illustrated the fallacy of using projected revenue reductions as a proxy for percentage causation. Madam President, I ask unanimous consent that the October 2005 Joint Committee on Taxation revenue estimate I referred to be printed in the Record.

Mr. GRASSLEY. Madam President, as I said, I will discuss those updated numbers when they are given to me by JCT. I mentioned earlier that the argument that our recent tax policies are responsible for the wild growth in the alternative minimum tax is an old and a very tired argument, intellectually dishonest. The Ways and Means press release of November 14, 2007 refers to a letter of March 6, 2001, sent by Mr. Rangel to President Bush. I just talked about a Democratic staffer making the same point in Tax Notes in 2005. I am not bothered by these arguments in and of themselves. They are based upon poor analysis, if that, and it is easy for me to respond to them. What does bother me, however, is that clearly many people are more interested in trying to make cheap political points than actually dealing with the alternative minimum tax. If House Democrats were concerned about the tax burden, they would repeal the alternative minimum tax without raising taxes on other taxpayers to replace revenue that was never supposed to come into the Federal Treasury, because these 23 million middle-income taxpayers were never supposed to be hit by the alternative minimum tax, because it was only meant to be paid by the superrich. I have made the point many times, that this alternative minimum tax was never meant as a revenue source, and I do not care if I made it twice in a row, three times in a row, it is a fact of life: These 23 million people were never meant to pay it. The alternative minimum tax is only supposed to hit the superrich--it was an unsuccessful attempt-- when the alternative minimum tax was passed in 1969, to promote tax fairness. This point has not been challenged. Rather, my friends in the House and elsewhere have distorted that argument into a claim that Republicans intended to use the alternative minimum tax to secretly diminish the impact of the 2001 and 2003 tax relief packages. I have shown how that argument is flawed every time it is dug out of the closet by someone. The alternative minimum tax certainly is not a secret. But it is a mystery how so many people can engage in so much pointless discussion when what we need now right now, actually several months late, is urgent action. I yield the floor, and I suggest the absence of a quorum. The PRESIDING OFFICER (Mrs. McCaskill.) The clerk will call the roll.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, with today's passage of the United States- Peru Trade Promotion Agreement Implementation Act, we have taken a long-overdue step to strengthen our relationship with Peru, a close friend and important ally in Latin America. This agreement will result in new economic opportunities for U.S. farmers, manufacturers, and service providers, and I am pleased that the Senate has finally voted in favor of its implementation. None of this would have been possible without the leadership of two of our United States Trade Representatives, Susan Schwab and her predecessor, Rob Portman. I want to thank Ambassador Portman for his hard work at the negotiating table that resulted in a solid agreement that will level the playing field for U.S. producers and exporters. And, I want to thank Ambassador Schwab for her dedication and perseverance that culminated in the May 10 bipartisan trade compromise, which set the stage for today's successful vote. Also meriting special mention for their tireless efforts are the Assistant United States Trade Representative for the Americas, Everett Eissenstat, and his predecessor, Regina Vargo. Here in the Senate, I want to begin by thanking the chairman of the Finance Committee, Senator Max Baucus. He is a true leader on trade and on the committee. And he is supported by a strong staff. That starts with the Democratic staff director on the Finance Committee, Russ Sullivan, and the deputy staff director, Bill Dauster, who were critical to the process. I also want to thank his chief international trade counsel, Demetrios Marantis, as well as the other members of the Democratic trade staff, Amber Cottle, Janis Lazda, Chelsea Thomas, Darci Vetter, and Hun Quach, and two individuals serving on detail to Senator Baucus, Russ Ugone and Ayesha Khanna. Of course, I am grateful for the outstanding effort of my staff as well. First, my chief counsel and staff director, Kolan Davis, merits special mention. His legislative expertise has been instrumental in moving countless bills and this is no exception. I also want to thank my chief international trade counsel, Stephen Schaefer, as well as David Johanson, David Ross, and Claudia Bridgeford Poteet. And, I want to thank John Kalitka, who is on detail to my office from the U.S. Department of Commerce. Finally, I want to thank Polly Craighill and Margaret Roth-Warren of the Office of the Senate Legislative Counsel for their hard work on this legislation. As always, Polly's patience and expertise have been invaluable in producing a top-notch bill. Margaret is a relatively recent addition to the office and already she is proving herself a very strong asset to our legislative team. Today's vote is long overdue. The May 10 compromise was expected to pave the way for quick consideration of all four of our pending free trade agreements, as well as the renewal of trade promotion authority. That hasn't happened as quickly as I would have liked. Still, today's vote is a critical first step, and I hope we can use this vote to build momentum toward implementing the next agreement in line, which is our trade agreement with Colombia. We should move the Colombia trade agreement as soon as possible, and I will work hard toward that outcome in the 110th Congress.

Mr. GRASSLEY

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

Mr. GRASSLEY. Mr. President, this day is long overdue. But the fact that this day has arrived for the consideration of the Peru Trade Promotion Agreement Implementation Act is still a good day to have happen, even though it should have happened several months ago. In fact, I would say it should have happened last year. But the same problems that kept it from coming up this year were in place last year. I strongly support this bill. I urge my colleagues to do the same. Over the past 7 years, Congress has passed implementing bills for trade agreements with 12 countries. Of these 12, 7 are located in Latin America. The implementation of those agreements demonstrated our commitment to strengthening our relations with our neighbors in Latin America. We now have an opportunity to build on that commitment by implementing our trade agreement with the country of Peru. At the same time, these agreements serve to advance our national interest. Too often we talk in terms of the economic interests of the United States when it comes to trade. We ought to be looking at things beyond the economics of trade. I say these agreements advance more than our economic interests; they advance a broader national interest because they foster transparency and increased respect for the rule of law in international business transactions. I think it goes beyond the business transactions, because with every business transaction, there are millions of people involved. And even though we in the political world or our diplomats feel we are more important than anybody else in bringing about peaceful relations, our work is kind of a spit in the ocean compared to what millions of business people every day do for America and for other countries interacting among each other, breaking down barriers that often lead to misunderstandings and an enhanced understanding between people. They have an awful lot to do with the promotion of international peace. I think it goes even further, and I don't remember who I quote when I say this because I have been quoting it for so many years, but it is something such as: Nations that trade together do not war, or something of that nature. That is a paraphrasing of that concept. But I believe that. That is why I believe in breaking down trade barriers, as this Peru bill does. It enhances international understanding and peace as well as enhancing our economic interests. This bill then creates more opportunities for increased economic growth and prosperity in neighboring economies which help to foster political stability which is important within those borders. But political stability within a country's borders also enhances international stability. That is particularly important in the Western Hemisphere and the South American Continent, as well as the part of the Western Hemisphere we call Central America. Because we need meaningful alternatives to combat the production and trade of elicit narcotics, another factor that maybe applies to these countries more than a lot of countries we trade with. Perhaps most importantly, these trade agreements level the playing field for U.S. producers and exporters. I had a chance, before speaking, to hear Senator Nelson of Florida speak. To hear this from the Democratic side of the aisle is very important because it is a fact: This bill levels the playing field to give our exporters and producers access to Peru the same way Peru has had access to our markets and our people for decades under trade preference. During my time in the Senate, I have heard some of my colleagues complain that the global trade situation reflects an uneven playing field. Now, to some extent, I agree. That is why I am a promoter of more free trade agreements. The Doha round of the World Trade Organization negotiations is leveling this playing field. So right now it is uneven. It is not as level for American exporters as it ought to be. But if you looked at the last 50 years when this process started, soon after World War II, under the General Agreement on Tariffs and Trade, you would find it was much more--or a lot less level than it is right now. So we have made considerable progress and we need to build on what is a success, very much a success. Because in too many cases, the duties that our trading partners impose on U.S. exports are much higher than the duties we impose on theirs. As I have said, that is certainly the situation with Peru. Right now, some 97 percent of imports from Peru enter the United States duty free. I do not know whether Senator Nelson used that specific percentage that I gave, but he was speaking of the fact that Peru had preference to coming into the United States. This bill gives our producers and exporters the same preference there. Our exports to Peru face duties that range from 12 to 25 percent. Specific examples: Peru's tariff on U.S. pork exports to that country, and this is a major product of my State of Iowa, is as high as 25 percent, while Peru's exports to the United States are duty free. Now, that is what I call a one-way street. This unbalanced situation is largely the result of unilateral trade benefits that we extended to Peru under what I called the preference situation. But this is specifically under what we call the Andean Trade Preferences Act. This trade agreement before the Senate today will restore balance to our trade relationships with Peru. I do not want you to take my word for it. The impartial U.S. International Trade Commission analyzed our trade agreement with Peru. The Agency found, and I quote: Given the substantially larger tariffs faced by U.S. exporters to Peru, than Peruvian exporters to the United States, the trade agreement is likely to result in a much larger increase in U.S. Exports than U.S. imports. The International Trade Commission of our U.S. Government goes on to state that: The agreement will likely increase U.S. exports to Peru by 25 percent, while Peruvian exports to the United States will grow by 8 percent. Now, that is a win-win situation for U.S. producers and exporters. And why anybody would vote against an agreement like that I could not understand, and I am not anticipating that people will vote against it, but I do know, in the months of this year that we have discussed trade, I have heard a lot of negative attitude toward trade, how harmful it is to the U.S. economy. But if any Member who has said those things during the course of this year would look at the bill that is before the Senate right now, that is going to increase U.S. exports to Peru by 25 percent while Peruvian exports to the United States will grow by 8 percent, then if they vote against this, they are not addressing the concerns they are giving speeches about all this year. The benefits of this trade agreement are going to spread across all major sectors of the economy. I say that because I quoted agricultural benefits. But besides U.S. agricultural producers, manufacturers and service providers all stand to gain from this agreement. The ITC--the International Trade Commission--predicts the agreement will have a ``substantial, positive'' effect on U.S. exports to Peru of the major U.S. commodities of pork, beef, corn, wheat, and rice. The American Farm Bureau Federation predicts that U.S. farm sales to Peru could increase by more than $700 million with full implementation of the trade agreement. U.S. rice exports to Peru will grow tenfold to fifteenfold as a result of this agreement, while U.S. exports of corn will double. The National Pork Producers Council says that the Peru trade agreement is a ``state-of-the-art agreement for pork producers to which all future trade agreements will be compared.'' Our manufacturers will enjoy significant benefits as well. For example, Whirlpool Corporation--this is a Michigan corporation which recently bought Maytag in Newton, IA, and closed that plant down, but they still have a massive manufacturing plant in Amana, IA--appeared before the Finance Committee to testify on behalf of this trade agreement. Whirlpool exports refrigerators, ranges, and clothes washers to Peru. It manufactures those products in several States besides Iowa, including Arkansas, Indiana, Ohio, and Tennessee. Whirlpool told the Finance Committee that the Peru agreement will eliminate the 15- to 20-percent tariffs Peru imposes on Whirlpool products. In part because of this agreement, Whirlpool expects its U.S. exports to Peru to increase 400 percent within the next 2 years. In Whirlpool's view, the elimination of Peru's tariffs on its products will allow Whirlpool to maintain jobs in the United States rather than relocating or expanding operations abroad. Here again, how many times have we heard on this floor the legitimate concern--I am not finding fault--about outsourcing of manufacturing jobs to other countries? You can imagine why that might happen if we have a 10- to 12-percent tariff going into Peru. But people who say those things in this body ought to vote for this bill if it is going to level the playing field for Whirlpool workers so we can maintain those jobs in the States I cited. U.S. service providers will also gain from this agreement because Peru has agreed to exceed the commitments it made on services, even in the World Trade Organization. So we get something better than we have under WTO rules right now when we have a free-trade agreement with Peru. Peru, thus, has agreed to accord substantial market access across the entire service regime, with very few exceptions, using the so- called negative list approach. So to those of my colleagues who complain that the current world trade situation is unfair, here is a chance to improve that situation. By implementing this agreement, Congress will level the playing field for U.S. farmers, U.S. manufacturers, and U.S. service providers in this important market. The agreement will boost U.S. exports, creating jobs, keeping existing jobs in the United States. There have been studies, various studies, but the one I always quote says that jobs in the United States--that those products or services that are exported, those jobs are jobs that pay 15 percent above the national average. So they are not only jobs, they are good-paying jobs. I understand there is a rising sense of protectionism in the Congress. I alluded to that in my remarks today. But I would like to have Members look at the facts. Take, for example, the Central American Free Trade Agreement, otherwise known as CAFTA. CAFTA entered into force for four of our trading partners last year. It is already possible to see the results of bringing their tariffs in line with ours. Guess what. As you might expect, leveling the playing field has brought positive results. I wish to use the U.S. Department of Commerce as a source. They say our exports to the four countries increased 18 percent in 2006, while our imports were up 3 percent. I don't know how many Members voted against that last year, but I would imagine it was close to 40, give or take a few. I would like to have those 40 Members who probably voted against this, saying that free-trade agreements are not good, look at the facts. So far, our exports have increased 18 percent, while our imports from those countries of Central America were up 3 percent. Leveling the playing field helps American farmers, manufacturers, and service providers. Then maybe you would think it was wrong to vote against CAFTA last year. As a result of this increase of our exports by 18 percent, our trade balance swung from a $1.2 billion deficit in 2005 to a $1 billion surplus in 2006. How many times on the Senate floor have we heard one of the examples of something that is bad about free-trade agreements is because of our terrible trade deficit? Our trade deficit is too high. If American consumers would quit spending on imports and if they would save some of their money, we wouldn't have as much of a trade deficit as we have. But the American consumer, including probably this consumer, lives too much for today and forgets about tomorrow. Chuck Grassley may be too materialistic for the good of our trade deficit. If we spend a little less money and save a little bit more, invest in Treasury bonds instead of letting foreign countries buy them up, we would be better off. But for those Senators who have made speeches against how terrible our trade deficit is and then use that as an excuse to vote against CAFTA, don't they feel they were wrong by voting against a bill that finally passed that brought us from a $1.2 billion trade deficit with these countries to a $1 billion surplus in just 1 year? That is what happens when you level the playing field. We are not the only ones who stand to benefit from our agreement with Peru. Peruvians will benefit significantly as well. They have already benefited from the goodness of the U.S. people by letting them have trade preferences for all these decades. But even beyond what they have already had, a bill that is significantly much more benefit to the United States than it is to Peru, Peru is still going to benefit. The agreement will increase opportunities for continued economic growth in Peru and help Peru further develop and modernize its economy. By entering into the agreement, Peru has demonstrated its intention to strengthen its ties with the United States and lock in economic reform--economic reforms that they are going to benefit from, not us-- and it is going to enhance their transparency and respect for the rule of law. Agreements such as this are what the rule of law is all about. The rule of law in international trade is just as important as the rule of law for domestic America because within our own rule of law, everything is predictable. It has credibility and predictability. When you put the same regime in international trade, you have predictability and credibility. You enhance opportunities for people to work closer because they know what the other side is going to do, if you have equal respect for the law. All of this will serve to increase investor confidence in Peru and its economy. These are critically important objectives. We live in a challenging time. There is a growing division in Latin America today. Venezuela's President is using oil wealth to lure allies to his socialist vision. He has announced plans to turn Venezuela into a socialist republic. He has nationalized Venezuela's telecom and electricity companies and wrested the oil industry from private companies. He has demonstrated once again that those who withdraw economic rights often seek to withdraw political rights. Those who centralize economic power tend to also centralize political power. For example, he pulled the broadcasting license of one of Venezuela's oldest television broadcasters, which also happens to be one of his major critics. He assumed new powers that allow him to rule by decree, and he pushed for a new constitution that would abolish Presidential term limits, allowing him to stay in power indefinitely. His former Defense Minister has called the plan ``fraudulent'' and akin to a coup. I don't know whether the final results are in, but he may have lost that referendum yesterday. At lease for my part, I hope that is what the final results show. But he is still going to be the dictator and the authoritarian that he has been for the last 9 years. Chavez has said that this rejection, if it happens by the voters, is not a defeat, and he plans to proceed on whatever his goals are. His former Defense Minister has cautioned that he may seek to impose these changes through a different route than constitutional reform. So you lose an election, and you find some other way to accomplish the same thing. I have talked about Venezuela and the environment of the Peru trade agreement because our relationships with Latin America will be enhanced through free-trade agreements. We ought to help countries like Peru that are not going in the direction of Venezuela as much as we should, particularly in light of the fact that two other countries in the region--Bolivia and Ecuador--are also trending in a similar direction. Bolivia's President Morales nationalized the hydrocarbon sector by executive decree. As a result, investors were forced to sign new contracts that guarantee a greater percentage of revenue for the Government. He also seized a foreign-owned tin smelter without compensation. Instead of a free-trade agreement with the United States, President Morales joined President Chavez's so-called Bolivarian alternative for the Americas. He strengthened ties, at the same time, with Cuba and Iran. President Correa of Ecuador has also reached out to Iran. He has called the United States ``the most protectionist country in history.'' He also said that free trade is ``dangerous'' for countries like Ecuador. I hope Correa, the President of Ecuador, will remember these statements he has made about the United States, saying the United States is ``the most protectionist country in history.'' He also said that free trade is ``dangerous'' for countries like his. I hope he remembers those things when he comes around to the Congress in about 2 or 3 months wanting an extension of the Andean trade pact, where he wants preferences from our taxpayers so he can say these dastardly things about our country, which obviously are not true, but they are good for the propaganda purposes that he makes them, because he said these things even though we give imports from Ecuador duty-free access to our markets under our unilateral preference programs. Now, the difference between Peru and Ecuador is this: Ecuador and Peru have had the same trade preferences with our country to get their products in here duty free for the last several decades, but Ecuador stops negotiating with the United States on a free-trade agreement and Peru goes ahead and negotiates with us. Yet Ecuador is going to be coming to us in a couple months saying to us we ought to continue the trade preferences with them, when they say these things about us: They feel more comfortable with Chavez and the Cuban and Iranian dictators than they do with us Americans. I have questioned why we should continue providing such duty-free access to our markets, but that is an issue we will deal with in 2 or 3 months. The point is, there is a growing divide in Latin America. On the other side of the divide you find countries such as Peru and Colombia, allies of the United States whose Governments have gone out on a limb to strengthen bilateral relations with us. It is imperative we respond in kind and not turn our backs on these important allies. I expect we will soon approve our trade agreement with Peru. After that, we should move as quickly as possible to implement our trade agreements with Colombia and Panama, for the same reasons we ought to be approving this Peruvian agreement. That is what I envisioned when the bipartisan compromise on trade was reached May 10. I will return to that point in just a moment. I am not alone in calling for approval and implementation of the Peruvian agreement. Just last month, the New York Times called for passage of our trade agreement with Peru. They editorialized that ``it would be a folly for the United States to turn its back on trade.'' The paper also noted that all eight living former Secretaries of State have urged Congress to approve the Peru agreement. In October, the Agriculture Coalition for Latin American Trade, which is comprised of 50 different agricultural organizations, called for congressional approval of the Peru trade agreement. This agreement is also supported by the National Association of Manufacturers and the Coalition of Service Industries, among other business groups. In sum, there is widespread recognition of the benefits of this trade agreement for the United States. Before concluding, I would like to address three other issues that have arisen with respect to free-trade agreements even beyond the Peruvian agreement. The first is the claim by some that these agreements undermine our food safety laws. The second is the charge that we are not enforcing our existing trade agreements. And the third is the May 10 bipartisan compromise on trade between the administration and the new congressional leadership that took over on the Hill in January. In recent days, some of my Senate colleagues have criticized the passage of the Peru agreement in the House. One Senator went so far as to say the agreement ``will result in more unsafe food in our kitchens and consumer products in our children's bedrooms.'' Now, let's just think about that for a minute. That is quite an accusation. How could Congress possibly support such an agreement? The answer is simple: We are not supporting that position by voting for this agreement because the accusation is false. If you do not believe me, then just look at the text of the agreement. Chapter 6 of the agreement addresses the types of ``sanitary'' laws related to food safety. There is absolutely nothing in the chapter that would lead to a lowering of our food safety standards. In fact, one of the explicit objectives of the chapter is to ``protect human, animal, or plant life or health in the Parties' territories.'' ``[T]he Parties' territories'' means the United States and Peru. In addition, this chapter is not even subject to dispute settlement. So there is no way Peru could use the chapter to challenge our food safety laws, even if the chapter provided a basis to do so; and the agreement does not. For over 20 years, opponents of our trade agreements have argued they would undermine our food and product safety laws. Yet, in those 20 years, there has not been a single challenge to any one of these laws-- not a single challenge. That is because these complaints have no foundation. If people want to criticize our trade agreements, they are certainly free to do that. That is their right. But they should base their criticisms on facts, not on scare tactics. I have also heard colleagues say that we should not enter into any trade agreements until the administration does a better job of enforcing existing agreements. In my view, the administration is doing a pretty good job of enforcing our trade agreements. But I suppose that even Chuck Grassley will look at specific problems we have. Maybe we ought to be doing more. But there are some examples that I think you ought to give the administration credit for. The administration is challenging Europe's subsidies to Airbus, and up until last week it was pursuing at least four different cases against China in the World Trade Organization. So you might say: What has changed? Well, our U.S. Trade Representative, Ambassador Schwab, announced we had concluded an agreement by which China agreed to terminate eight subsidies we were challenging under World Trade Organization rules. This was just last Friday. The termination of those subsidies will bring significant relief to our manufacturers and exporters who have been confronting unfairly subsidized competition from the Chinese. In this case, we achieved our objectives without having to resort to that lengthy WTO process of litigation. That is a complete success story, in my book. As for the other three pending cases, we will continue to pursue our rights in the World Trade Organization. If you ask me, the problem is not a shortage of enforcement. The bigger problem is that people are complaining about foreign government actions that are not yet subject to agreed-upon rules. In other words, the problem is not the failure to enforce the rules; it is that there are no rules to enforce in certain areas. If you want to solve problems that are not currently subject to rules, we should be negotiating more trade agreements, not fewer. Get the rules in place, and then get those rules violated--if that is what is going to happen, and you hope that does not happen--and then enforce them. But you cannot enforce a rule that is not there. For example, the administration recently announced it is negotiating a new anticounterfeiting trade agreement. That is a step in the right direction. Such an agreement would help get at problems such as the counterfeiting of the Underwriters Laboratories logo. That is an important safety issue. If we are serious about wanting to get at these types of problems, we should give the President a new grant of trade promotion authority and send our negotiators out to solve those problems. If we turn our back on new agreements, our trading partners will continue negotiating among themselves, leaving us behind. That is what happened the last time Congress denied President Clinton trade promotion authority, I think in 1995. It was not reinstated until 2002. During that period of time, our trading partners concluded over 130 preferential trade agreements. We had only two. So do you folks in this body who say we should not give the President trade promotion authority want to go back to the regime of other countries doing what they want to do? They will do it anyway, but we do not have an opportunity to keep up if we do not give our President that authority. Do you want to have the United States have an unlevel playing field in the case of the history of those 130 preferential trade agreements that were negotiated while our President did not have authority to do it, while we did, too, or do you think maybe our President ought to be negotiating the same number, to level the same playing field for the workers in America that other governments are giving their workers for an opportunity to have a level playing field? That cannot happen if the President does not have trade promotion authority. We have only managed to regain some lost ground in the last 5 years. These agreements before the Senate--Peru and the 14 over the last few years--are examples. So the President needs to have trade promotion authority so he can continue to keep negotiating so we can create more jobs in America and export more and have a level playing field where we do not have that level playing field. Finally, I want to mention the bipartisan May 10 agreement on trade that made it possible for us to move forward with this Peru agreement and, hopefully, makes it possible to move forward in the case of Panama and Colombia. This year, the Democratic majorities in the House and Senate demanded additional provisions in our trade agreements before they would agree to implement them. That is the result of the last election. When people give their will to a different majority in this Congress, we have to respect that. I think the Democrats were fair and responsible in the agreements that were reached. I am willing to go along with them. Those are not necessarily things I would have agreed to if we had still been in a majority and probably would not have had to negotiate. But the Democrats won the last election. So after lengthy negotiations, the administration agreed to a compromise that the House Democratic leadership announced with great fanfare on May 10, 2007. The Democratic leadership described the deal as a ``historic breakthrough'' and a ``fundamental shift in U.S. trade policy'' that achieved results they have been seeking for years. As a result of this compromise, the administration negotiated conforming changes in the labor and environment chapters and the provisions on Government procurement, investment, and intellectual property. For example, in the wake of the agreement, disputes arising under the labor and environment chapters are subject to the same dispute settlement procedures as every other obligation of the agreement. Now, we can debate whether that change was actually a good idea, but it satisfied a longstanding demand of the Democrats who have opposed our trade agreements in the past. The same goes for the other changes encompassed in the May 10 compromise. The administration followed through by negotiating the necessary changes to incorporate the May 10 compromise into each of our pending trade agreements with Peru, Colombia, Panama, and South Korea. Now we are moving on Peru. But since the administration has carried out its responsibilities under the May 10 compromise with the Democrats and it is good enough to get Peru passed, it ought to be good enough to get Colombia and Panama passed real quickly and South Korea after some kinks are worked out in the South Korean negotiations. Unfortunately, we have very little to show for those efforts other than Peru right now. It has been almost 7 months. We still have not implemented a single pending trade agreement. We will soon change that with our vote on the Peru trade agreement. But there is no sign of movement on the horizon for the next pending trade agreements, and our druthers there are to go with the agreement with Colombia first. The fact there is not movement in these other areas troubles me greatly. I hope to see most of my Democratic colleagues join me in voting to implement this trade agreement with Peru. After we have done so, I very much hope they will join me again in supporting implementation of our trade agreement with Colombia as soon as possible in this Congress. Our agriculture producers, manufacturers, and our service providers are counting on us. Our allies are counting on us. It is in our economic interest, and it is in our national interest. It is in the interest of greater opportunities for international peace. We cannot let those opportunities embodied in these trade agreements slip by us. One final, concluding remark, and it is repeating the same thing several times, and that is that Peru has had opportunities to come and bring their products to the United States without tariffs for decades. We have had to pay duties to get our products into Peru. This gives our manufacturers, our farmers, and our service providers the opportunity to finally get our products into Peru duty free. I yield the floor. Madam President, I suggest the absence of a quorum.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that John Kalitka, who is a detailee on my staff from the Department of Commerce, be granted floor privileges for the duration of the Senate's consideration of H.R. 3688.

Mr. GRASSLEY

Mr. GRASSLEY. Technical corrections are derived from a deliberative and consultative process among the Congressional and Administration tax staffs. That means the Republican and Democratic staffs of the House Ways and Means and Senate Finance Committees are involved, as is the staff of the Treasury Department. All of this work is performed with the participation and guidance of the nonpartisan staff of the Joint Committee on Taxation. A technical enters the list only if all staffs agree it is appropriate.

Mr. GRASSLEY. Mr. President, this legislation that Senator Baucus and I are introducing changes the current rules governing tax patents. Recently, the U.S. Patent and Trademark Office, PTO, has allowed the patenting of tax strategies. Because of the serious policy concerns about this practice, our legislation would make tax strategies an unpatentable subject matter. Tax patents are a relatively recent phenomenon. The rise of these patents can be traced back to the 1998 opinion of the Federal Circuit in State Street Bank v. Signature Financial Group that rejected a per se rule that business methods could not be patented. As of September 2007, the U.S. Patent and Trademark Office had identified 60 issued tax related patents, with another 99 published tax patent applications pending. The recent growth of these patents, coupled with their deleterious effect on the tax system, necessitates legislative action in this area. Tax patents undermine the integrity and fairness of the Federal tax system. They place taxpayers in the undesirable position of having to choose between paying more than legally required in taxes or paying a royalty to a third party for use of a tax planning invention that reduces those taxes. A patent holder can preclude others from using their tax strategy. This may result in taxpayers paying more in taxes than is otherwise legally required. An exclusive proprietary right should not be granted for methods of compliance with the tax law, which is obligatory for all. The patentability of tax strategies also adds another layer of complexity to the tax laws by requiring patent searches and potential exposure to patent infringement suits. This legislation contains a general prohibition on ``tax planning inventions,'' with an exception for tax preparation software and other tools or systems used solely to prepare tax or information returns. I hope that we can move this legislation quickly. The House has already included a version of prohibiting tax strategy patents in their comprehensive patent reform bill. The Senate should act as well.

Mr. GRASSLEY

Mr. GRASSLEY. Technical corrections are derived from a deliberative and consultative process among the Congressional and Administration tax staffs. That means the Republican and Democratic staffs of the House Ways and Means and Senate Finance Committees are involved, as is the staff of the Treasury Department. All of this work is performed with the participation and guidance of the nonpartisan staff of the Joint Committee on Taxation. A technical enters the list only if all staffs agree it is appropriate.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise to follow Senator Baucus on exactly the same subject. I thank him for the period of time now, this year, he has been chairman of the committee, succeeding my chairmanship, because he has been very cooperative in my efforts to finish investigations that carried over with the change of Congress from Republican to Democratic, and also for helping us initiate new, needed investigations. But I also wish to take some time to comment exactly on what he had made reference to in the very report he has now submitted for the Record. Since he has submitted a copy, I will not ask permission to do that. It was about 3 years ago--in fact, the exact date was November 18, 2004--I convened a hearing on the worldwide withdrawal of Vioxx, a blockbuster pain medication. That hearing turned a spotlight on systemic problems at the Food and Drug Administration. We found that the Food and Drug Administration maintained a very cozy relationship with the drug industry and suppressed scientific dissent regarding agency actions on drug safety. At that Vioxx hearing, we also heard about Merck using its power, its influence, and access to try and discredit an FDA safety expert, Dr. David Graham--a person who is still on the staff at the FDA trying to do the job of being a policeman for safety for the consumers of American pharmaceutical products. Merck also tried to intimidate a Stanford researcher, Dr. Gurkirpal Singh. The company warned him to stop asking for more safety data on Vioxx, despite the fact he was one of their paid consultants. What is troubling is that 3 years later, I am here with my colleague, Senator Baucus, to talk about yet another case where pharmaceutical executives use power, use their influence, and use access to intimidate a medical researcher. In essence, another company wanted to put an end to another scientist who was voicing concerns about the cardiovascular risks associated with a drug. Now, in this case--similar to Vioxx--we are talking about a diabetes drug, Avandia. Today, Senator Baucus and I are releasing a staff report showing how executives at GlaxoSmithKline intimidated Dr. John Buse, a medical researcher at the University of North Carolina. Together, our respective staffs reviewed documents provided by the company and by others, and they found bothersome internal e-mails that reveal how these pharmaceutical executives think. In these e-mails, high-level company officials discussed the possibility of threats--I am talking about threats by pharmaceutical executives--against Dr. Buse of North Carolina University. These threats included the possibility of filing a lawsuit. Company executives called Dr. Buse an ``Avandia Renegade'' and had him sign a retraction letter they wanted to give to financial analysts. These analysts were evaluating the company's products for investors. So what we have are three cases--starting with Dr. Graham, then Dr. Singh, and now Dr. Buse--where companies intimidated researchers who dared to express concerns about the safety of what they thought were risky drugs. In the case of both Vioxx and Avandia, the drugs actually turned out to carry some very serious risks. What I am here to say today is that attacks on medical researchers by the pharmaceutical industry must stop. And it has to stop right this minute. Until this practice ends, I wish to let America's scientists know I am very interested in their concerns. Scientists should feel free to contact my office if a pharmaceutical company threatens their career or attacks their reputation when they raise the alarm about possible dangerous drugs. They can also anonymously provide information and documents by mail or by fax to the committee. Here is the fax number: 202-228-2131. That is the warning that I put out, and the invitation that I put out. I yield the floor. Mr. President, it does not look like anybody else wants to speak, so I suggest the absence of a quorum.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I have the responsibility to pay tribute to a soldier from my home State of Iowa who has fallen in the line of duty. SPC Adrian Hike was killed while serving his country in Afghanistan. He was assigned to A Troop, 1st Squadron, 91st Cavalry Regiment, 173rd Airborne Brigade. My prayers go out to his mother and father in Iowa and all his family and friends. I understand that his loss has come as a shock to those living in and around Sac City where Adrian attended high school. I know that many Iowans will be saddened to learn of his fate. At the same time, we can be very proud to call him a fellow Iowan. Specialist Hike was wounded in Iraq, receiving the Purple Heart. After several surgeries, he returned to duty and was even talking about reenlisting. This kind of selfless dedication to our Armed Forces and our country is what has kept us free since the founding of our Nation. Adrian Hike's honorable service and tremendous sacrifice on behalf of the United States of America should never be forgotten. His was a true patriot and deserves to be remembered as such.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, this legislation that Senator Baucus and I are introducing changes the current rules governing tax patents. Recently, the U.S. Patent and Trademark Office, PTO, has allowed the patenting of tax strategies. Because of the serious policy concerns about this practice, our legislation would make tax strategies an unpatentable subject matter. Tax patents are a relatively recent phenomenon. The rise of these patents can be traced back to the 1998 opinion of the Federal Circuit in State Street Bank v. Signature Financial Group that rejected a per se rule that business methods could not be patented. As of September 2007, the U.S. Patent and Trademark Office had identified 60 issued tax related patents, with another 99 published tax patent applications pending. The recent growth of these patents, coupled with their deleterious effect on the tax system, necessitates legislative action in this area. Tax patents undermine the integrity and fairness of the Federal tax system. They place taxpayers in the undesirable position of having to choose between paying more than legally required in taxes or paying a royalty to a third party for use of a tax planning invention that reduces those taxes. A patent holder can preclude others from using their tax strategy. This may result in taxpayers paying more in taxes than is otherwise legally required. An exclusive proprietary right should not be granted for methods of compliance with the tax law, which is obligatory for all. The patentability of tax strategies also adds another layer of complexity to the tax laws by requiring patent searches and potential exposure to patent infringement suits. This legislation contains a general prohibition on ``tax planning inventions,'' with an exception for tax preparation software and other tools or systems used solely to prepare tax or information returns. I hope that we can move this legislation quickly. The House has already included a version of prohibiting tax strategy patents in their comprehensive patent reform bill. The Senate should act as well.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, Saturday, November 10, marked the last day of Long-Term Care Awareness Week--this was a week where our Nation recognized that now more than ever, Americans need to pay attention to long-term care issues. My colleagues Senators Lincoln, Snowe, Stabenow, Smith and I couldn't think of a better way to cap off the Week than by introducing the Long-Term Care Affordability and Security Act of 2007. Our Nation is graying. Research shows that the elderly population will nearly double by 2030. By 2050, the population of those aged 85 and older will have grown by more than 300 percent. Research also shows that the average age at which individuals need long-term care services, such as home health care or a private room at a nursing home, is 75. Currently, the average annual cost for a private room at a nursing home is more than $75,000. This cost is expected to be in excess of $140,000 by 2030. Based on these facts, we can see that our Nation needs to prepare its citizens for the challenges they may face in old age. One way to prepare for these challenges is by encouraging more Americans to obtain long-term care insurance coverage. To date, only 10 percent of seniors have long-term care insurance policies, and only 7 percent of all private-sector employees are offered long-term care insurance as a voluntary benefit. Under current law, employees may pay for certain health-related benefits, which may include health insurance premiums, co-pays, and disability or life insurance, on a pre-tax basis under cafeteria plans and flexible spending arrangements, FSAs. Essentially, an employee may elect to reduce his or her annual salary to pay for these benefits, and the employee doesn't pay taxes on the amounts used to pay these costs. Employees, however, are explicitly prohibited from paying for the cost of long-term care insurance coverage tax-free. Our bill would allow employers, for the first time, to offer qualified long-term care insurance to employees under FSAs and cafeteria plans. This means employees would be permitted to pay for qualified long-term care insurance premiums on a tax-free basis. This would make it easier for employees to purchase long-term care insurance, which many find unaffordable. This should also encourage younger individuals to purchase long-term care insurance. The younger the person is at the time the long-care insurance contract is purchased, the lower the insurance premium. An aging Nation has no time to waste in preparing for long-term care, and the need to help people afford long-term care is more pressing than ever. I look forward to working with Senators Lincoln, Snowe, Stabenow, Smith and all of our Senate colleagues toward enacting the Long-Term Care Affordability and Security Act of 2007. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, Saturday, November 10, marked the last day of Long-Term Care Awareness Week--this was a week where our Nation recognized that now more than ever, Americans need to pay attention to long-term care issues. My colleagues Senators Lincoln, Snowe, Stabenow, Smith and I couldn't think of a better way to cap off the Week than by introducing the Long-Term Care Affordability and Security Act of 2007. Our Nation is graying. Research shows that the elderly population will nearly double by 2030. By 2050, the population of those aged 85 and older will have grown by more than 300 percent. Research also shows that the average age at which individuals need long-term care services, such as home health care or a private room at a nursing home, is 75. Currently, the average annual cost for a private room at a nursing home is more than $75,000. This cost is expected to be in excess of $140,000 by 2030. Based on these facts, we can see that our Nation needs to prepare its citizens for the challenges they may face in old age. One way to prepare for these challenges is by encouraging more Americans to obtain long-term care insurance coverage. To date, only 10 percent of seniors have long-term care insurance policies, and only 7 percent of all private-sector employees are offered long-term care insurance as a voluntary benefit. Under current law, employees may pay for certain health-related benefits, which may include health insurance premiums, co-pays, and disability or life insurance, on a pre-tax basis under cafeteria plans and flexible spending arrangements, FSAs. Essentially, an employee may elect to reduce his or her annual salary to pay for these benefits, and the employee doesn't pay taxes on the amounts used to pay these costs. Employees, however, are explicitly prohibited from paying for the cost of long-term care insurance coverage tax-free. Our bill would allow employers, for the first time, to offer qualified long-term care insurance to employees under FSAs and cafeteria plans. This means employees would be permitted to pay for qualified long-term care insurance premiums on a tax-free basis. This would make it easier for employees to purchase long-term care insurance, which many find unaffordable. This should also encourage younger individuals to purchase long-term care insurance. The younger the person is at the time the long-care insurance contract is purchased, the lower the insurance premium. An aging Nation has no time to waste in preparing for long-term care, and the need to help people afford long-term care is more pressing than ever. I look forward to working with Senators Lincoln, Snowe, Stabenow, Smith and all of our Senate colleagues toward enacting the Long-Term Care Affordability and Security Act of 2007. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I am pleased to join my colleague, Senator Baucus, in sponsoring the National Methamphetamine Awareness Month resolution of 2007. As a senior Member of the Senate representing a State confronting an epidemic of methamphetamine abuse and as cochairman of the Senate Caucus on International Narcotics Control, I have often been confronted with heartbreaking stories of the destructive nature meth abuse has on families and children. All too often, meth abuse not only ruins the life of the user, it disrupts the lives of the users family, friends, and the community at large. That is why Members of Congress must do everything we can to ensure that communities across the country have the tools and support they need to stop meth in its tracks. Since the passage of the Combat Meth Act in 2005, an act that restricted the sale of a main ingredient of meth known as pseudoephedrine, or PSE, the number of home-grown meth labs has dramatically decreased throughout the Nation. In spite of this encouraging development, the National Association of Counties reports, in its recent survey of county sheriffs, that meth remains the No. 1 drug problem in almost half the counties across the country. In some cases, sheriffs reported, in this survey, that not only has the rate of meth abuse stayed the same, it has actually increased. The Drug Enforcement Administration, DEA, estimates that over 80 percent of the meth in this country is smuggled in from Mexico by drug cartels who produce this poison in superlabs. Senator Baucus and I have held hearings to examine ways in which the Government could break the meth supply chain while helping to reduce the number of people suffering from meth. One of the areas discussed, to help achieve these goals, was to boost our efforts to educate and raise awareness among the public. We have to do a better job to reach those who don't view meth as a deadly drug, and we have to ensure that our children never try meth. Studies show that the longer you keep a child drug-free, before the age of 20, chances are very good that they will never try or become addicted to drugs. In my State of Iowa, we have 22 community based organizations that are designed just for this purpose. One of these organizations, that I founded, called Face It Together, or FIT, encourages parents, educators, businesses, religious leaders, law enforcement officials, health care providers, youth groups, and news organizations to work together to come up with new and creative ways to confront drug abuse within their communities. While some of these community coalitions receive some financial support from the Federal Government, the real difference is made by all of those who volunteer within their communities to ensure they remain drug-free. Although much remains to be done to eradicate meth from our communities, this resolution is part of a vast, ongoing effort to ensure meth abuse does not expand further into our society. I am please that this resolution is supported by the Community Anti-Drug Coalitions of America, CADCA, and I urge my colleagues to join us in support of our efforts against meth abuse.