Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I know it is my turn to speak, but out of deference to Senator Baucus who is negotiating on the Children's Health Insurance Program, I ask unanimous consent that he go before me, and then I ask that Senator Tester would follow him, because I don't want Senator Tester to have to sit around and listen to me. Then I ask unanimous consent after those two, I be the next in line.

Mr. GRASSLEY. Mr. President, I rise to speak to the amendment that is before the Senate--the Dorgan-Grassley amendment--on payment limitations; in other words, limiting the amount of money that one farming operation can get from a farm program in a specific year. The second reason I come to the floor is to address the issue of the President's suggested veto of the farm bill because it contains tax provisions that, presumably, the White House does not like. I would like to give a justification for the provisions that are in this bill. I think everybody in this body would agree we need to provide an adequate safety net for our family farmers. In recent years, however, assistance to farmers has come under increased scrutiny. The largest corporate farms are reaping the majority of the benefits of the farm payment program. These payments were originally designed to benefit our small- and medium-sized farmers but instead have contributed to the demise of the small- and medium-sized family farmers. I believe we need to correct our course and modify the farm programs before those programs cause further concentration and consolidation in agriculture. Today, most commodities are valued off demand, and the market dictates profitability. When farmers overproduce by planning for the farm program or expand rapidly because of the security of those programs, then the markets are not functioning. Unlimited farm payments have placed upward pressure on land prices and have contributed to overproduction and lower commodity prices. I am going to refer to a series of charts that I have. Increased land prices and cash rents are driving family farmers and making it difficult, particularly for young farmers, to get into family farming-- something that is probably there because for generations families have been farming sometimes the same land. For instance, in Iowa, you can see how the value of farmland has very dramatically increased, particularly very recently. Around my hometown of New Hartford, IA, land is selling somewhere between the poor land at $4,000 an acre and the very best land for $6,000 an acre. In my home county of Butler, the value of an acre is up 64 percent since 2000. Across the entire State of Iowa, the average land value per acre rose 72 percent just in the last 6 years. You will see from the next chart that the average typical cash rent per acre in Iowa rose 25 percent in that same timeframe. So you can legitimately ask, how are family farmers, particularly young farmers who cannot buy land and who have to rent land, going to survive when they have had such a rapid increase in either the price of land, on the one hand, or cash rents on the other hand? How are they even going to be able to get into farming for the very first start? I have been hearing directly from producers for years what former Secretary Johanns heard in the series of farm meetings. I think either the Secretary, or his staff, had well over 100 hearings on proposed farm legislation prior to--well, during the years 2005 and 2006. So I have heard what Secretary Johanns has heard in his farm bill forums: Young farmers cannot carry on the tradition of farming because they are financially unable to do so because of high land values and cash rents. What does all this have to do with farm programs? I am going to quote a famous and well-known Midwestern agricultural economist, Dr. Neil Harl, now emeritus. He came out with a report on this subject. He is and was at Iowa State University. The report states: The evidence is convincing that a significant portion of the subsidies are being bid into cash rents and capitalized into land values. If investors were to expect less Federal funding--or none at all--land values would likely decline, perhaps by as much as 25 percent. So here we have an article from last year's Washington Post, when the Post did a series of articles on the disparity that farm program supports are causing. They reported: The largest farms' share of agricultural production has climbed from 32 percent to 45 percent, while the number of small and medium-sized farms has tumbled from 42 percent to 27 percent. I assume the printing on the chart is so small that you will have to take my word for it that is what it says. The law creates a system that is clearly out of balance. If we look at the results posted here, we have a system where 10 percent of the biggest farmers get 73 percent of the benefits from the tax-supported farm programs. Worse yet--or more extraordinary, I should say--the top 1 percent get almost 30 percent of all of those payments. I tend to concentrate on the top 10 percent of the biggest farmers getting 73 percent. But I think this other top 1 percent of--how do you say it--the big farmers, the top 1 percent are getting 30 percent of all of the benefits out of the Treasury. So we are back where we were 5 years ago. This body passed as part of the farm bill, by a vote of 66 to 31, putting limits on farm payments. Well, it didn't survive a House-Senate conference. Senator Dorgan and I were working together then, and here we are back 5 years later. The farm bill is up for reauthorization, and we are filing an amendment that, I believe, will help revitalize the farm economy for young people across this country. This amendment that Senator Dorgan put before the Senate this morning--actually, Senator Reid did it for Senator Dorgan--will put a hard cap on farm payments at $250,000. No less important, it will close the loophole that has allowed large operations to avoid even the existing $360,000 limit and, as a result, receive benefits far exceeding the limit. If I could say that another way, we have a situation where we do have caps in place, but there is legal subterfuge to get around those caps. One of them is the three-entity rule--split up your farming operation into three entities, and each one of those could qualify for that $360,000 limit. The other one is where generic certificates are used. Those are not included in the limit. So that is why you read where some farmers are getting millions of dollars through the farm program. We use the adjective, hard cap; $250,000 is the absolute limit. We do away with the legal subterfuge of getting around the cap to make it so it works and so it is effective. I have another article by the Washington Post from last year outlining the ongoing abuse of farm support programs. It is entitled ``Farm Program Pays $1.3 Billion to People who Don't Farm.'' We are paying $1.3 billion to people who are not actively engaged in the business of farming. Senator Dorgan spoke better about this last night and this morning and gave better examples than I can on that point. We have examples of people who live on land collecting direct payments because a commodity was once grown on that land. Any agricultural use, including having a horse on that land, qualifies them for a direct payment, even though they are not even growing a crop. Our bill addresses these problems by doing away with the loopholes people have abused over the years to continue to get the payments. I have already referred to the three-entity rule. We also put in place a system we call direct attribution. Most importantly, we tighten up what is already in the law but not enforced by the U.S. Department of Agriculture, that you have to be ``actively engaged'' in the business of farming. I wish to make a very clear distinction. Some Members of the Senate have advocated that the Dorgan-Grassley amendment is not as tough as what is in the Senate Agriculture Committee bill before us. I wish to explain why that is not true. I have another chart. We have to compare apples to apples. Saying the committee has a hard cap on payments at $200,000 is not accurate. They only have a hard cap on two categories of payments: direct payments and countercyclical payments. The Dorgan-Grassley amendment actually caps those at $100,000. In addition, my amendment will cap marketing loan gains at $150,000, while the committee bill before us that the Dorgan-Grassley changes leaves the marketing loan unlimited in the amount of money you can get through the marketing loan. This actually weakens current law, and if you can believe, after all the bad publicity about 10 percent of the biggest farmers getting 72 or 73 percent of the benefits out of the farm program, why, the Agriculture Committee might write a bill that actually weakens current law. But I wish to make clear our bill at $250,000 is a hard cap, and it is more effective in taking care of this issue of the biggest 10 percent getting 73 percent of the benefits. I anticipate there will be other votes on other types of reforms, including even means testing, also known as the adjusted gross income limit. I wish to make sure my colleagues are aware that an adjusted gross income cap and a hard cap on payments are two very different things and each should be looked at and considered individually. Back in 2002--and I referred to this before, that Senator Dorgan and I have been working together--back in 2002, I voted against the farm bill out of conference committee. A lack of payment limits in that bill because it was lost in conference, the Senate position was lost to the House position, was one of my reasons for voting against the bill. I have been fighting to reduce large-scale subsidies since I was a Member of the House of Representatives in the 1970s. Then we were, believe it or not, arguing over a $50,000 limitation. Our amendment produces some considerable savings. Senator Dorgan and I have identified very critical and essential programs to help producers and farmers, small business owners, conservationists, and low-income people, including seniors and children. We support beginning farmer and rancher programs and the Rural Microenterprise Program. These programs are crucial to bolstering young farmers and to helping main streets across America. It will also provide funds for the organic cost-share program and the farmers Market Promotion Program. These growing components of our food supply system will create new opportunities for farmers and increase healthy food options for our consumers. A large priority of mine has always been seeing justice for Black farmers--discrimination cases brought against the USDA, but not everybody eligible got in on it. This amendment puts some money, double the amount provided by the committee, in for late filers under the Pigford consent decree for farmers who haven't gotten a chance for their claims to be heard. It is time to make it right for these farmers who were discriminated against in their attempts to get help from the Federal Government in farming. We also support the Grasslands Reserve Program and the Farmland Protection Program with additional dollars. Conserving our natural resources is one of the most important components of agriculture, and this investment will make a substantial difference in the availability of these programs. Finally, while the Agriculture Committee makes significant contributions to the nutrition and food assistance programs, they were not able to go far enough due to tight budget constraints. So Dorgan- Grassley adds money to this program so it can be adjusted for inflation and other nutrition priorities to assist low-income seniors, as well as children. I worked with Senator Dorgan on a similar measure, as I have said for the third time, in 2002, and it passed with bipartisan support by a vote of 66 to 31. Unfortunately, it was stripped out of conference. My colleagues might remember the last time we had a vote on payment limits was on the budget resolution. Many of my colleagues said they agreed with what we were trying to do, but they voted against us at that particular time because they said doing it on the budget resolution in the middle of a farm bill authorization of 5 years was not the right time. Everybody said it needed to be done the next time the farm bill came up for debate. Well, that time is right now, and I ask those who maybe thought it shouldn't be done on the budget resolution a couple years ago to remember what they said. They came up to us individually and said: We agree with what you are trying to do, but it shouldn't be in the middle of the farm bill reauthorization, and it shouldn't be done on the budget resolution. The inference was they will be with us at the right time. The time is right now, or within the next 24 hours, when we vote on this amendment. I remind this body that in addition to what was said by our colleagues at that particular time, in the last farm bill, we set up, as supposedly a sop for those of us who didn't get what we wanted in payment limitations out of conference 5 years ago, a commission on the application of payment limitations for agriculture. This commission was set up, and for a couple years they studied this issue. The purpose was to conduct a study on the potential need for further payment limitations on farm programs. The commission met. Farmers, agricultural economists--I can't think of everybody who was on it, but they knew the business of agriculture. This commission recommended the very same loophole-closing measures which we included in this amendment that is now before the Senate. Those people who thought they threw us a sop or some sort of a compromise that we ought to accept a commission instead of the real hard change in law to accomplish what we wanted to accomplish, that we would have people study it and then give some respectability to it, or maybe they thought we would forget about it and go away 5 years later, we haven't forgotten about it; we haven't gone away. We are taking the recommendations of this commission that was set up to say what we ought to do in the area of payment limitations, and we are doing exactly what they said. We not only have the promise of those people who said it shouldn't be done on the budget resolution, we have the recommendations of all these experts of how it ought to be done, when it ought to be done, and why it ought to be done. It is for all those reasons that we have Dorgan and Grassley back again suggesting what we thought should have been done 5 years ago. If it had been done 5 years ago, we wouldn't have this problem of 10 percent of the biggest farmers getting 73 percent of the benefits out of the farm program. There are several problems connected with that situation. One, when urban people read about this, they are going to say: Why do you need a farm safety net if all the help is going to biggest farmers? So we lose urban support. We lose support of a farm program in the House of Representatives controlled by urban people, and we don't have a farm safety net, and family farmers don't have the ability to withstand a lot of situations that are beyond their control. We also have a situation where we drive up the price of farmland so the next generation of farmers cannot get started. But also, we depart from the principle of a farm safety net of the last 70 years that was supposed to be directed to medium- and small-sized farmers, the very same people who produce the food we eat in a way so consumers spend less of their income on food than any other society anywhere on this globe, and to keep them strong when they cannot withstand natural disasters or the politics of agriculture or a war or energy problems. They don't have the staying power, but the larger farmers do. For 70 years, we have directed the benefit of a farm program, until very recently, to small- and medium-sized farmers. How it gets out of whack so we get 10 percent of the biggest farmers getting 73 percent of the benefits of the program is hard to explain. But it has happened, and we are trying to get back to the original purpose of farm programs to help small- and medium-sized farmers over the hurdles they have to cross, through no fault of their own, situations they cannot control, that larger farmers have the ability to have a little more staying power. So here we are. By voting in favor of the Dorgan-Grassley amendment, we can allow young people to get into farming and lessen dependence on Federal subsidies. This will help restore public respectability for Federal farm assistance by targeting this assistance to those who need it the most. So let us quit dragging our feet and let us pass real reform with a real payment for real farmers. I call upon my colleagues to support this commonsense legislation that is referred to as Dorgan-Grassley. I told you, Mr. President, in my opening remarks that I wished to address a second issue as well, directly related to the farm bill, but including some issues that are a little bit broader than the farm bill, and that deals with the tax policy. Remember, a very significant part of this farm bill is tax policy that we in the Finance Committee--Senator Baucus, me, and the other 19 members of the committee--set up that are directly related to soil conservation and drought relief, and we raise revenue to pay for it. In the process of this broad policy, we have freed up money the Agriculture Committee would otherwise spend on a lot of programs, such as disaster relief and conservation, so the Agriculture Committee would have a little more leeway to do what needs to be done in farm policy, and that is directly related to the fact that under the budget adopted by this Congress, we find the Agriculture Committee $15 billion under benchmark, and that is a big bite to swallow with the needs in American agriculture. So we have come up with, in the Finance Committee, a little bit of help for the Agriculture Committee. As recently as yesterday, the President, or his people, have suggested because of the tax policy that is in this bill, they might veto the whole farm bill. I want to tell the President why that is a crazy idea--a crazy idea--so I will take the time to comment, then, on the revenue raisers that are in this farm bill. The revenue raiser is a proposal to clarify a judicial doctrine in the tax law known as the economic substance doctrine. I am here not so much to justify revenue raising through this definition of economic substance, but I am here to say there are four circuit courts of appeal in different parts of the country that have had four different decisions on economic substance and each has said Congress ought to define economic substance. So as far as I am concerned, in putting economic substance in here, it is not just to raise revenue and to have an offset for the programs we have set up, it is for Congress to do the job of making the Tax Code on economic substance clear so the courts are not defining it, and most importantly so that four different courts aren't defining it in four different ways. We need to have some certainty, and this bill brings that certainty to the definition of economic substance. But before I get into that, I have to be a little more general. For a lot of folks, this proposal may sound like an esoteric tax policy matter, and they might wonder why I am focusing on it today. The reason is the White House has indicated the President will veto the farm bill if this proposal is included in the bill sent to the President's desk. Mr. President, I ask unanimous consent to have printed in the Record the Washington Post article reporting on the President's suggested veto of the bill.

Mr. GRASSLEY. The title of that article is: ``Bush Vowed to Veto Senate's Farm Bill.'' Before I discuss the specifics of the economic substance doctrine, I wish to put this revenue raiser in context. We have heard a lot about pay-go. That is short for pay as you go. If you want to spend money, either raise taxes to offset it or cut someplace else to offset it. Or if you want to cut taxes, raise taxes someplace else to pay for it or cut spending someplace else to pay for the tax decrease. But around here we use the term pay-go for short. Now, of course, pay-go was in place for many years before the current policy was put into place after a few years of absence. The difference is the old version of pay-go applied it as a backstop to a budget resolution. So if a proposal spent more than the budget permitted and added to the deficit, a pay-go point of order was possible. Likewise, if a proposal to cut taxes more than the amount of the revenue the budget assumed would come in, pay-go would apply. This year Congress is struggling because a rigid notion of pay-go has hamstrung the committees--meaning every committee of the Congress that processes revenue or spending policies. The rubber has hit the road with pay-go here, more so at the end of the session than throughout the rest of 2007, and it has been a somewhat bumpy road for all of us. Of course, I think this road is even going to get bumpier as time goes on between now and Christmas. As everyone knows, Congress has a lot of unfinished business. I am going to focus on the unfinished tax business. I have a chart here I want to point to. It is a chart I have used before. This chart shows the unfinished tax business that has got to come before the Congress between now and Christmas. It accounts for all the bills we passed out of the Finance Committee. It also accounts for the expiring provisions that are known as tax extenders. The biggest item of the revenue loss chart is the alternative minimum tax and the fix for that alternative minimum tax so 19 million additional middle-income taxpayers and their families are not paying the AMT. You see all of those various aspects listed there separately--the 2007 AMT fix, 2008 AMT fix, 2008 extenders, the Energy bill that has already passed the Senate, the airport reauthorization bill, and then eventually we will spend some time on the farm bill. But you can see they add up to a heck of a lot of money. Since we are in the 2008 fiscal year, I have included then extenders for 2008 and also carrying a fix for AMT for not only 2007 but 2008. This chart accounts for the revenue loss from the farm bill package that is there at $13 billion. My chart shows the revenue loss side as demands on the water well there. It is at the top of the well in the bucket what the shortfall is there. There are a lot of thirsty bills that have to be paid for. Those thirsty bills carry a revenue loss of $170 billion over 5 years. I have accounted for the revenue offsets. This figure includes all revenue raisers proposed by Senate Democrats that are specified and scored by the nonpartisan Joint Committee on Taxation. That figure includes $32 billion from the Finance Committee-approved proposals and $29 billion in other proposals. That total is $61 billion. That is what we know for sure that has been thought up and probably has a great deal of support to accomplish. This offset figure is calculated from the vantage point of the Senate Democratic leadership. In this total are proposals that House Democrats have opposed, such as shutting off the foreign subway leasing tax shelter, known as SILOS. In this total are proposals that most Senate Republicans have opposed, such as the reimposition of the Superfund taxes. In this total are many proposals that even the Bush administration has come out against. Now with this favorable assumption to them, the pay-go advocates in the Senate need to know that as we stand here today, there is not enough known revenue to meet the pay-go requirements that are on this chart that obviously have to be dealt with between now and Christmas. In other words, the demands on the revenue well are $170 billion, and the available revenue raisers are only $61 billion. So that is a shortfall that is clear there, in the middle of the well--a shortfall of $109 billion. In other words, the revenue well is dry. Now, $109 billion is a lot of money even here in Washington, DC. If the proposals are scored over 10 years, that shortfall does narrow slightly, from $109 billion down to $76 billion, and it is possible that some of the revenue raisers in Chairman Rangel's bill may be pursued by the Senate Democratic leadership. But as it stands now, for unfinished tax business alone, by this accounting, we cannot meet the requirements that the Senate must meet that we call pay-go. I point this out because everybody has to see this big picture. They seem to be missing the big picture on how we wrap up our overdue legislative business and meet the demands of the new pay-go rules. On the farm bill alone, my chart treats the farm bill as fully offset. My chart is created from the perspective of the Senate Democratic leadership, and so it shows the farm bill as offset. That is the way it is as it came out of the Senate Finance Committee. The problem is that President Bush's opposition to the key revenue raiser is not accounted for in this chart. President Bush's position does matter. His opposition to any revenue raiser, but specifically this one, would have to be overcome with a veto override. As my friends and the Democratic leadership know, that happens to be a very tough hurdle, as we have found out, for instance, on the Children's Health Insurance Program recently before the House of Representatives. My point is it is time to get practical around here. This chart of the water well shows that as we sit here today, looking at it from a Senate Democratic leadership perspective, the revenue well is dry. To insist on pay-go without a sense of realistically available offsets is trying to go up a blind alley. I say to my Democratic friends: At this late point in the legislative session, let us focus on what is practical. Let us apply the offsets we can agree to and in a manner we can agree on. We need to get to a posture of what can be agreed to by the House, by Senate Republicans, and by the White House. The AMT fix is the 800-pound gorilla in this discussion. It is $55 billion of the $109 billion shortfall. It affects 23 million families and could affect adversely another 27 million families. The AMT fix is long overdue. It needs to be completed expeditiously. To address this important matter solely from a pay-go perspective is to ignore the realities that it needs to get done. Republicans are ready, Republicans are willing, and Republicans are able to help get this AMT fix done, and done very shortly, but for many reasons I have discussed all year, not at the price of offsets. I will now go into the reasons why clarification of the economic substance doctrine is an appropriate revenue raiser and why it is basic to this farm bill before us, because it is a part of the farm bill; and why the President is crazy to use that as an excuse for vetoing the farm bill. The provision made the Finance Committee package revenue neutral, raising $10 billion over 10 years. But I support codification of economic substance not just to raise revenue--although it does that, and it is important that it do that because otherwise we would not have our provisions offset, according to pay-go. As ranking member of the Finance Committee, and even when I was chairman in the last two Congresses, I have supported codification of economic substance because it is the right policy. This provision is an improved version of a provision that passed the Finance Committee and the full Senate in the last two Congresses. The prior version was included in two bills passed by the full Senate in the 109th Congress, twice in the tax reconciliation bill, once in 2005 by a vote of 64 to 33, and again in 2006 by a vote of 66 to 31. It also passed the full Senate two times in the 108th Congress, once in the 2003 tax bill by a vote of 51 to 49 and again in the 2004 JOBS bill by a vote of 92 to 5. This Senate is acquainted with the need to codify economic substance for us to do our job of making the Tax Code understandable so you do not get four different circuit courts of appeal giving four different definitions to economic substance. We ought to have one national policy on what is economic substance. Codifying it will clarify the test. It is a conjunctiva test requiring both a meaningful change in economic position and a business purpose, independent of Federal taxes. The courts are split on whether a transaction must have both economic substance as well as business purpose. This will give courts, then, a uniform doctrine to apply to noneconomic transactions that are inappropriately motivated solely to avoid Federal taxes--in other words, closing loopholes. It will also ensure that a court will not overturn the doctrine, as a trial judge did in what is called the Coltec case, saying: The use of the economic substance doctrine to trump the mere compliance with the Code would violate the separation of powers. That judge--I don't have to say that judge was crazy because the court of appeals reversed that judge's decision. But I am still concerned that another strict constructionist judge might reach a similar conclusion. Most important, codifying the economic substance doctrine will provide an additional deterrent against taxpayers entering into transactions solely for tax purposes, in ways that are inconsistent with congressional intent. As I said earlier, this provision is an improved version of what has already passed the Finance Committee and the full Senate more than once. So this Senate agrees with economic substance. But maybe Senators have forgotten how they voted 2 and 3 and maybe 5 years ago, so I am here to remind them this has been overwhelmingly accepted by the full Senate. This improved version has modifications made in response to concerns of taxpayers that codification would throw legitimate tax planning into question and allow the IRS to substitute its business judgment for that of the taxpayers. I am going to talk about those modifications so people understand, and all these lawyers in this town who are concerned about our writing this, that they know we have taken some of their legitimate concerns into consideration. For instance, the strict liability nature of the penalty has been retained in order to effectively deter taxpayers from entering into tax-motivated transactions in unintended ways. Indeed, according to the Joint Committee on Taxation, the bulk of the revenue score is attributable to this strict liability penalty--not because the IRS will collect the penalty but because people are going to start obeying the law and change their behavior. The penalty will alter taxpayer behavior. It will cause taxpayers to forego entering into noneconomic, tax-motivated transactions that Congress never intended. We have heard complaints that a strict liability penalty will cause IRS field agents to overreach and courts to be reluctant to apply the doctrine. These are serious concerns, and we have addressed those concerns by requiring the IRS to nationally coordinate through the Chief Counsel's Office when the penalty is asserted and/or when it is compromised. This procedure is similar to a process currently used by the IRS to designate cases for litigation. As a protective measure, taxpayers will be permitted to make their case to the IRS at the national level before a penalty is asserted. Of course, cases involving the economic substance doctrine should be going through Chief Counsel anyway, and taxpayers currently have the ability to persuade the IRS not to assert a penalty. But because of the strict liability nature of this penalty, it is important to formalize this process and move it to a higher level of review. Getting the Chief Counsel's Office involved earlier in this controversy will help taxpayers and the IRS resolve or make litigation decisions regarding tax shelters earlier. We have also lowered the penalty for undisclosed transactions from 40 percent to 30 percent to bring it in line with the penalty on undisclosed listed transactions. The proposal to codify economic substance has been controversial, even though it has passed the Finance Committee and the full Senate in the last two Congresses. Taxpayers and practitioners expressed legitimate concerns about it. We have addressed those concerns--maybe not in the way everybody wants, but I think we have done it in a responsible way. As a general matter, in my tenure as chairman of the Finance Committee before we went into the minority this year, I am proud to have kept taxes down. During my tenure, we enacted bipartisan tax relief bills that totaled over $2 trillion over 10 years. So for critics who look at any change in the Tax Code, regardless of how legitimate it is, even regardless of not doing it for revenue-raising measures--they look at everything and say: You are changing the Tax Code; you are raising taxes--I am here to tell them on this issue of economic substance how ridiculous that is. So for the critics of this revenue raiser, I would refer them to my record of keeping taxes down. By the way, for those on the liberal side of the political spectrum, I point out, as a percentage of GDP, the Federal Treasury is taking in a percentage that is above the post-World War II average. Codifying the economic substance doctrine should be considered on its merits. It should not be dismissed because it scores as a revenue raiser. It should not be endorsed either because it scores as a revenue raiser. In my view, it should be enacted because it is the right tax policy. Folks need to take off the bean-counting green eyeshades and look at the tax policy. The same goes for the long overdue AMT fix that I have talked about. It is not about maximizing Federal revenues. It is about fair taxation for 19 million middle-income families. I am done, Mr. President, but I want to digress for one minute for the benefit of faceless bureaucrats down at the White House. I want to talk to those people who maybe were advising the President, and they put it in his veto message, that one of the reasons he was vetoing the Children's Health Insurance Program is because our bill allowed families earning up to $83,000 to have their children in a government program--when quite obviously most people making that kind of income can have health insurance. What I have said to those very same people who put that in the President's message is it was not in our bill; that States could do that. That has been in the law for 10 years. But nobody pointed that out to the President. Some stupid person said to the President: This bill allows people with $83,000 to get it. It didn't have anything to do with that. It was in the law for 10 years. I want those faceless bureaucrats to read why we are doing economic substance. It is about time Congress does its job and the courts don't do the job we are supposed to do. Four circuit courts of appeal have defined and found fault with various aspects of economic substance. They said it is time for Congress to define it. Yes, it is a revenue raiser, but it is not one of these changes in tax policy that is a change in rates of taxation that you can legitimately call tax increases. But somebody down there at the White House is telling the President this is a tax increase. What we are trying to do is do our job. This cannot be a reason for vetoing the farm bill. If anybody down at the White House wants to discuss my rationale for this, come up and I will sit down and talk with them, or I will even go down there if they want to talk about it. I yield the floor. I guess nobody else wants to speak, so I suggest the absence of a quorum.

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

Mr. GRASSLEY. Mr. President, within the past few weeks a series of events has occurred that can help shed light on how tax relief enacted in the past 7 years has impacted the budget of the United States. On September 27, the Senate voted to increase the debt limit so the Treasury would be able to borrow enough to meet our Nation's obligations. At the time, I made a statement that this was necessary. The proper place to take a stand for fiscal responsibility is when we are considering bills that spend money and actually create our debt. Unfortunately, some of my colleagues believe the only answer to our budget woes is to increase taxes. But I believe this point of view is misguided and would prove destructive to our budget in the long term. Especially over the past 7 years, discussion of an increase in debt limit has prompted excitable statements from my colleagues across the aisle on the current administration's fiscal record. I am sure I do not have to say these statements from across the aisle have not been positive. Another event I want to mention is the release on October 5, 2007, of the Monthly Budget Review from the Congressional Budget Office. The Congressional Budget Office budget review forecasts that the deficit for fiscal year 2007 would be significantly smaller than the deficit for 2006, and then the Final Monthly Treasury Statement, published by the Treasury Financial Management Service, confirmed that. According to the U.S. Treasury, the Federal deficit for fiscal 2007 was $162.8 billion. The deficit for 2006, the year before, was considerably higher, at $248.2 billion. The deficit for 2007 then is around $85 billion less than it was last year. The chart I am going to show you, taken from Treasury documents, shows how this decrease in the deficit has been driven by a 6.7-percent estimated increase in total receipts over fiscal year 2006. If you are determined to show that tax relief has led to less revenue from the Federal Government, then this data is difficult to explain. Of course, the conventional criticism offered against tax relief was that it was going to be directly responsible for massive increases in the deficit. This argument implies that as a result of tax relief, the Federal Government would collect less money in taxes. On May 23, 2003, the Senate voted to agree to a conference report to accompany the Jobs and Growth Tax Relief Reconciliation Act of 2003. The vote was close. The conference report was agreed to only because the Vice President cast the tie-breaking vote in favor of the report. Anyone who reviews the Congressional Record of that debate would see that the rollcall vote was preceded by a very contentious discussion. Many of my colleagues had very strong criticism of the bill which, among other things, reduced the rates for capital gains and dividends. Tax policy generally is not seen as something that attracts a lot of excitement, but the floor debate of May 23, 2003, could have given a listener the impression the sky was falling. This chart of Chicken Little reporting that the sky is falling illustrates the tone of some of the criticism made by my colleagues. One Senator claimed: The tax base of the Federal Government is being destroyed. This same Senator referred to the bill as: One of the most dangerous, destructive and dishonorable acts of Government that I have ever seen. Another one of my colleagues claimed that the bill: Is about helping the elite few with large tax cuts while burdening the majority of Americans with huge debt. Here again, you see the implication that the 2003 tax relief was going to diminish revenues collected by the Federal Government. A third colleague claimed: This bill I call the policy of the three Ds. This is the policy of debt, deficits and decline. This comment is especially interesting when examining a statement made by this very same Senator on September 27 of this year during the discussion on increasing the statutory limit on the public debt. That same Senator said at that time that: Revenue has been basically stagnant in this country for 6 years. According to my colleagues in the Congressional Budget Office, revenues in 2000 were $2 trillion, just a hair over $2 trillion, while revenues in 2007 were calculated by the Treasury to be around $2.12 trillion, taking into consideration inflation. First, I wish to point out that the word ``stagnant'' used by my colleague is a far cry from the debt, deficit, and decline that tax relief was supposed to inflict on this Nation. I am not saying we do not have a massive national debt fed by successive budget deficits, but the specific tax relief enacted in 2003 and again within the past 7 years is not the cause of that. As my esteemed colleague pointed out, even accounting for inflation, the revenues of the Federal Government are projected to be greater in 2007 than they were in 2000. So this certainly shows that our tax base was not gutted by tax relief as was so profoundly asserted by my colleagues. I also would like to say that I do not think that $90 billion is a trifling amount of money. Maybe it is to some people in some places, but it is certainly not for us people, for the Iowa farmer. To offer a different perspective, let's consider this year's appropriations bills. The Democratic leadership wants to spend $23 billion more than the President's budget on appropriations. That same group is preparing to force a showdown with the President over that $23 billion. That is one-fourth of the amount I am talking about here. So when it comes to spending, extra dollars do count, but extra revenue from lower levels of taxation is to be belittled no matter what the number might be. It just sounds so inconsistent. My excitable colleagues here in the Senate are not the only ones who predicted gloom and doom that never came because of the tax relief in August of 2003. Even the Congressional Budget Office published a document titled ``The Budget and Economic Outlook: An Update.'' The bill reducing rates on capital gains and dividends had become law at the end of May, so the Congressional Budget Office was able to take tax relief into account as they conjured their budget projections. This chart right here illustrates the discrepancy between what was forecast by the Congressional Budget Office in the summer of 2003 and what actually transpired. You can see the red line actual figure is way above the blue line that was suggested by the Congressional Budget Office. In August of 2003, the Congressional Budget Office projected that the Federal Government would collect about $1,770 billion in revenue. According to the historical budget data--also from the CBO--revenue in 2003 was actually about $1,783 billion. That difference is $13 billion. Now, $13 billion may be peanuts to some people, but I think it is a good start. In August 2003, the Congressional Budget Office projected Federal revenues for 2003 to be $2,276 billion. Actually in 2003, Federal revenues were about $2,407 billion. The Federal Government collected, then, $131 billion more in 2006 than was originally forecast in the dark days of 2003, when several of my Democratic colleagues thought that tax relief was poised to destroy our tax base. Revenues actually collected were higher than projected when considered as a percentage of gross domestic product. In August 2003, CBO projected that revenues in 2006 would be 18.2 percent of GDP. Actual revenues collected in 2006 were more than that-- at 18.4 percent compared to 18.2 percent of GDP. In 2005, they were 17.6 percent; in 2004, they were 16.3 percent; and in 2003, they were 16.5 percent. After a small downturn in 2004, Federal revenues, taken in proportion, increased faster than the GDP. Speaking of its 2007 projection, in an October 2007 monthly budget revenue, CBO states: Revenues rose to 18.8 percent of GDP, which is slightly higher than the average of 18.2 percent over the past 40 years. Even with lower taxes, the Federal Government is collecting, on average, a greater percentage of GDP in revenue year by year than it has over the past four decades. Incidentally, in 2003, CBO projected that revenues would equal 18.3 percent of GDP in 2007. Next, I want to compare the 4-year period after the 2003 tax relief plan went into effect with the 4-year period after the tax increases were enacted in the Clinton first year, 1993. The Omnibus Budget Reconciliation Act of 1993, signed into law by the President in August of that year, increased taxes on corporations and individuals while increasing taxes on gasoline and raising the taxable portion of Social Security benefits. I think this may be counterintuitive to some people, especially to those who believe that the well-being of our Nation is directly proportional to our ability to seize income from taxpayers, but as a percentage of GDP, Federal revenues increased faster after tax relief than they did after tax increases. To set the stage, in 1993, Federal revenues were 17.5 percent of gross domestic product. In 2003, Federal revenues were a percent less at 16.5 percent of GDP. By the way, all of these numbers are Congressional Budget Office numbers, and until I get to 2007, they are not projections. If you look at this chart we are now putting up, you can see that as a percentage of GDP, Federal revenues increased faster in the 4 years after the 2003 tax relief than they did after the 1993 tax increase. Let me emphasize that. Revenues came in faster after we decreased taxes in 2003 than they did after 1993 when we increased the taxes. For 1997, Federal revenues were 19.3 percent of GDP. Between 1993 and 1997, Federal revenues increased by 1.8 percent of GDP. Now, in 2007, Federal revenues are projected by the Congressional Budget Office to be 18.8 percent of GDP. If this is the case, then over the past 4 years, Federal revenues will have increased by 2.3 percent, and 1.8 percent subtracted from that 2.3 percent leaves one-half of a percent. The tax relief enacted in 2003 grew Federal revenues by one- half of a percentage point more than the tax hikes of 1993 in the 4 years following each. I like to emphasize this because I think that it just--too many people see it as common sense that if you raise tax rates, you are going to bring in more revenue; if you lower tax rates, you are going to bring in less revenue. But I just showed that tax increases under Clinton did not bring in as much revenue as tax decreases in this administration. They brought in more revenue. So I would like to disabuse people of the fact that increasing rates brings in more revenue and decreasing rates brings in less revenue. What is also important is that as a percentage of GDP, revenues were higher in 1997 than they will be this year. In my opinion, they were too high. The point that I am making is that the rate of change in revenues as a percentage of GDP has so far been greater after tax relief than after a tax hike. I think it is very important, especially for those who reflexively believe that the only way for the Federal Government to raise more money is to confiscate more income from taxpayers. Clearly, that view is false. To conclude, let me summarize the current budget situation. Right now, taxes are lower than they would have been under Democratic rule. I want to make it clear that I am not saying that no Democrats supported any tax relief. Some Democrats voted for the 2003 tax relief plan, and many more voted for the 2000 tax relief plan. However, I am skeptical that a Democratic Congress or White House would have allowed taxpayers to keep so much of their own money. The budget deficit is shrinking, and Federal revenues are increasing. Anyone who finds fault with this situation is determined to do nothing but simply find fault. They would probably be unable to enjoy a sunny day because they would constantly be on the lookout for storm clouds regardless of what the forecast said. There is a problem with debt and with Federal budget deficits, but tax increases are the wrong way to approach that problem. We have a Federal budget deficit because the Federal Government spends too much money, and the best way to get rid of deficits is to spend less. Consequently, raising taxes makes the situation worse by punishing the overall economy and making conditions more difficult for the economy--the source of Federal revenues--to function efficiently. We have to remember that our economy supports the Government and not the other way around. The budget data I have discussed today shows how we can increase revenues and reduce deficits by removing impediments to economic efficiency and allowing our economy to flourish. I yield the floor and suggest the absence of a quorum. The PRESIDING OFFICER (Mr. Salazar.) The clerk will call the roll.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, before I make my comments on the farm bill, I want to follow up on something that the Senator from North Dakota said about the bipartisanship of this bill, and that is to remind people who might be listening that what they see on the evening news about dissension within Congress does not present a very clear picture of the way Congress operates. We can all say there is too much partisanship, but in the final analysis, at least as far as the Senate goes, nothing is ever going to get done here unless it is bipartisan. So I compliment the Senator from North Dakota for speaking about the bipartisanship of the farm bill that is now before the Senate, but I take that opportunity to remind people when you have 51 Democrats and 49 Republicans and you have a filibuster, it takes 60 votes to move forward to stop a filibuster and to get finality on a bill. We would never get anything done in the Senate if it weren't at least somewhat bipartisan. I say to the American people who watch television at night and get fed up because there is talk about too much partisanship going on in the Congress and too many things being done to make one party look better than the other party and vice versa, this farm bill is an example of how things get done in the Senate because parties must work together or nothing would get done. This farm bill will be passed by the Senate for the reason that it is bipartisan. I thank my colleagues who have worked so hard on this bill, particularly the leadership of the Senate Agriculture Committee, and Senator Harkin for his leadership in this area. It is a lot of hard work to bring a bill to the floor that supports rural America when you consider only about 2 percent of the people in this country are producing the food that the other 98 percent eat. While this bill isn't perfect, it is something that will help the family farmers. The most important job the committee has to do every 5 years is to write a farm bill. It is not all we do. We operate in a lot of different areas. But one of the most important things the Agriculture Committee does is provide a safety net for farmers, and we generally review and rewrite that piece of legislation every 5 or 6 years. I am glad that in addition to the Agriculture Committee being involved in this bill, as the Senator from North Dakota has pointed out, the Finance Committee has had a part of the action, because we were able to contribute to that process and free up over $3 billion for the Agriculture Committee to spend on priorities that are very important for the Agriculture Committee. What is more, for the first time I am aware of, we will be merging our agricultural tax policy with the Agriculture Committee's authorization and spending policy. This bipartisan tax package frees up conservation dollars for programs that we have backlogs in, closes tax loopholes, provides support for our growing cellulosic technology for ethanol, encourages rural economic development, and helps family farmers to get started in the business of agriculture. I have never been a big proponent for a permanent disaster program, but there are a few key items I want to point out about the bill that is before us. This program will set up a permanent system to administer disaster aid. We won't have to go through the trouble then of setting up a new way to administer a disaster program every time we do an ad hoc disaster package, as we have done from year to year as disasters might happen. Also, what is most important to me about this part of the farm bill that comes from the Finance Committee is that it is tied directly to crop insurance. We want to promote farmers managing their own risk, and one way to do that is through the crop insurance program. Now, the crop insurance program might not cover all disasters, so that is why this program is set up. But as a precondition to participating in the disaster program that is in the Finance Committee's provisions that are going to go into this farm bill is that each farmer who wants to benefit from it has crop insurance. In my home State of Iowa, we have a very successful crop insurance system. I like that farmers have to take risk mitigation into their own hands. Tying the two together was the only way it would work. I know this body will be looking at additional provisions that might affect the crop insurance program. I am not opposed to changes, but I urge my colleagues to be careful that we don't undermine a successful risk tool for our farmers. I believe we should give producers as many tools as possible to provide them an adequate safety net. An optional revenue protection program is a step in the right direction. Farmers should be able to make the best choices for their individual operations based upon the level of risk management that they, as their own manager, decide they need. I am glad to see that option included in the farm bill, and I look forward to anybody suggesting improvements in that program. One of the most important titles in the Agriculture Committee bill, and it is added for the first time to a farm bill, is the livestock competition title. I am glad to see a compromise on legislation that we call COOL--an acronym for country-of-origin labeling--and I look forward to the law being implemented quickly. This COOL legislation was actually passed 5 years ago, but it has been held up by action on separate appropriations bills over the years so that this law has never been implemented. Hopefully, once and for all, it will be implemented, because it is a darned good time to let consumers know where their food comes from. The country of origin of their food is as important as their knowing the country of origin of any other product they might buy as a consumer in the United States. That is the law for every other product that consumers buy--that they know what country it comes from-- so why not the same requirement for food as well? We have also put a ban on mandatory arbitration in production contracts. This isn't to say a producer can't agree to arbitration once a dispute arises. In fact, I am very much a supporter of the process called arbitration, but I am very much opposed to mandatory arbitration. Because of this legislation, processors can no longer force these arbitration clauses on farmers who have no choice but to sign the contract for lack of competition. I am also very pleased that my amendment to ban packer ownership for owning or feeding livestock has been accepted into this package by Senator Harkin and other leaders on the committee. This is very good news for small livestock producers who deserve to make sure the competitive marketplace is working. One of the things that brings this about is the meat processing industry has said very clearly from time to time: Why do they own livestock? They own livestock--they say, in their words--because when prices are high, they can kill their own livestock. When prices are low, they buy from the farmer. I think it is easy to see how demoralizing that is to the family farmer when he sees, working hard to produce a product, that somehow he can be undercut by the vertical integration of meat packers owning their own livestock. While this does not accomplish all that we need in this area of enhanced competition for the family farmer, it is an important first step toward remedying the biggest problem facing farmers today, the problem of concentration in agriculture, particularly in agribusiness. Senator Harkin and I, along with other Members of this body, will be offering additional reforms that are critical to a vibrant future in the livestock industry. I call on my fellow Senators to support the livestock title and these additional reforms. Another issue I have been working to address through the farm bill relates to the administrative rules issued by a department unrelated to agriculture, the Department of Homeland Security--well, related in the sense that they have responsibilities to make sure that products coming into our country are safe. But this regulation I am talking about is their attempt to regulate stored quantities of propane energy sources. Earlier this year, the Department of Homeland Security issued regulations that required registration of all propane tanks storing 7,500 pounds of propane. These regulations were unduly burdensome and disproportionately impacting rural American homeowners, farmers, and rural small businesses. Senator Harkin included a provision in the farm bill that I authored that would reduce this impact on rural Americans. Coincidentally, after the provision was included, the Department of Homeland Security stepped up and increased the threshold quantity of propane, exempting many small homeowners, farmers, and small businesses by excluding tanks smaller than 10,000 pounds of propane and raising the threshold to 60,000 pounds per large tanks. That is a movement in the right direction. This change in regulation by the Department of Homeland Security is welcome, but the Department should have alerted everyone in advance and eliminated the need for us to include a provision in this bill at all. That said, we are currently working on some new language that would ensure that the Department of Homeland Security reports to Congress on the impact its new rule will have and ensure that rural Americans are not disproportionately impacted. As a family farmer on the Agriculture Committee, I have made it my job to look out for small- and medium-sized family farmers. However, the position of the family farmer has become increasingly weaker as there has been consolidation in agribusiness, and it seems to have reached an alltime high. Farmers today have fewer buyers for their products and fewer suppliers to buy their inputs from. It seems this concentration is more now than ever before. The result is an increasing loss of family farms and the smallest farm share of the consumer dollar in history. It is important for us to remember that family farmers ultimately derive their income from the agricultural marketplace, not from the farm belt. Family farmers have, unfortunately, been in a position of weakness in selling their products to large processors and in buying their imports from large suppliers. I have been fighting for real payment limitations since the last farm bill. I have, to some extent, over a period of decades in Congress, helped to pass farm bills. Senator Dorgan of North Dakota and I realize that a hard cap on payments is a most effective tool in helping our small farmers get a level playing field with the corporate megafarms. Ask a taxpayer if a quarter of a million dollars is enough for a farmer. That is what our cap is going to be. I think we would all know the answer to that question would be very positive. The family farmer continues to struggle with land prices literally skyrocketing. Landlords know what kind of payments the farmer is getting and takes that into account in the rent they charge. We cannot sit idly by and do nothing while family farmers suffer. I certainly am not going to. That is why I pushed for reform in our laws that has an effect on family farmers and particularly in helping young farmers get started in farming. The time for real reform is now. Our family farmers deserve it. I think we have a good start on a good package for rural America. An adequate safety net will assure us a safe and abundant food supply. It is critical to our economic and energy independence for the future. I look forward to the debate over the next few days to improve this bill, and I would like to highlight the issue of a hard cap on farm payments. Presently, we have 10 percent of the large farmers in America getting 72 percent of all the money we put into a farm bill. There is nothing wrong with big farmers getting bigger, but there is something wrong when we have subsidies and farm programs going to big farmers who are getting bigger partly because of subsidies. What we want to do is maintain urban support for a farm safety net for farmers. It seems, in order to maintain that safety net, we are going to have to maintain credibility with urban taxpayers and urban consumers. We cannot do that very easily when big farmers--10 percent--are getting 72 percent of the benefits out of it because the taxpayers in the cities are going to start raising the question: What is this farm safety net all about if it is only helping the biggest of farmers? To get a farm bill through the House of Representatives, where urban representation is so all-powerful, it is very important for us to take that into consideration. Another factor we need to take into consideration is the extent, as I have already alluded to, this drives up the cash rent, so it is very difficult for a generation of new farmers to start farming when they have the unfair competition of 10 percent of biggest farmers getting 72 percent of the benefits out of the farm program. Then it seems to me we ought to take into consideration what has been the history of the safety net for family farmers. It generally has been targeted toward medium- and small-sized farmers. Why? Because these are the people, when they have an opportunity to farm and things happen that are beyond their control--that could be a natural disaster; that could be Nixon freezing beef prices, as he did; it could be, in the same administration, prohibiting the export of soybeans when they got $13 a bushel, driving it down to maybe $3 a bushel in just a matter of a few days. You can have international war. You can have energy at a high price as it is now because of OPEC. All of these are beyond the control of the family farmer. The small- and medium-sized farmer does not have the ability to withstand some of these things that are beyond his control. But there is a certain level of efficiency, a certain level of bigness in farming where you have enough staying power so that you can withstand some of that. We, through payment limits, have tended to target the farm program toward small- and medium-sized farmers. It is quite obvious that when 10 percent of the biggest farmers get 72 percent of the benefit out of the farm program, that targeting is no longer the case. What Senator Dorgan and I are trying to do in our amendments that will come up shortly is to make sure we keep that targeting and safety net what it really is--a safety net to help people when they have problems beyond their own control, to overcome them, to survive in business, to keep producing. Why? Because we have come to the conclusion, after a century and a half, that the family farmer is the most efficient food-producing institution anywhere in the world. We ought to maintain it. We ought to keep it strong. This legislation will do that. Some improvements we can make in that legislation in the areas of payment caps will help even more so. I yield the floor.

Mr. GRASSLEY. Mr. President, I ask unanimous consent to speak for 10 minutes as in morning business.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, earlier this year, the Senate tried to solve the very complex and emotional issue of immigration reform. The immigration bill we considered included border security, interior enforcement, and amnesty. It also included many needed reforms to our legal immigration process. I said throughout the debate that Congress needs a long-term solution to the immigration issue. We cannot pass a bandaid approach that includes a path to citizenship for law breakers; rather, Congress needs to improve our legal immigration channels. I firmly believe companies want to hire legal workers, and people want to enter the United States legally. If we fix our visa policies, we can restore integrity to our immigration system, and all parties can benefit. But if we cannot pass a comprehensive bill--and I think as time goes on it is going to look more difficult as we go into an election year--if we cannot pass such a comprehensive bill, I think that we should consider passing legislation we can agree on. I am taking the floor at this time to talk about the H-1B visa provisions that were included in the immigration bill and ask my colleagues to take a second look at these needed reforms. Many companies use H-1B programs. It has served a valuable purpose. But we need to reevaluate how this program operates and work to make it more effective. The H-1B program was officially created in 1990, although we have brought foreign workers legally into our country for over 30 years. It was brought into existence to serve American employers that needed high-tech workers. It was created to file a void in the U.S. labor force. The visa holders were intended to file jobs for a temporary amount of time, while the country invested in American workers to pick up the skills our economy needed. We attached fees to the visas that now bring in millions of dollars. These fees and the dollars that come with it are invested in training grants to educate our own workforce. We use the funds to put kids through school for science, technology, engineering, and math skills. We provide students with scholarships with the hope that they will replace imported foreign workers. Unfortunately, the H-1B program is so popular, it is now replacing the U.S. labor force rather than supplementing it. The high-tech and business community is begging Congress to raise or eliminate the annual cap that currently stands at 85,000 visas each year. These numbers do not include and account for those who are exempt from the cap. For instance, we don't count employees at institutions of higher education or nonprofit research organizations. We don't count those who change jobs or renew their H-1B visa. My point is, we have many more than 85,000 H-1B visas distributed each year. I am here to tell my colleagues that increasing the visa supply is not the only solution to the so-called shortage of high-tech workers. Since March of this year, the Senator from Illinois, Mr. Durbin, and I have taken a good look at the H-1B visa program. We have raised issues with the Citizenship and Immigration Service as well as the Department of Labor. We have asked questions of companies that use the H-1B visa, and I have raised issues with attorneys who advise their clients on how to get around the permanent employment regulations. I would like to share what I have learned. I want to give some fraud and abuse examples. Unfortunately, there are some bad apples in the H-1B visa program. In 2005, a man was charged with fraud and misuse of visas, money laundering, and mail fraud for his participation in a multistate scam to smuggle Indian and Pakistani nationals into the United States with fraudulently obtained H-1B visas. The man created fictitious companies, often renting only a cubicle simply to have a mailing address. He fabricated tax returns and submitted over 1,000 false visa petitions. Another man pled guilty last August to charges of fraud and conspiracy. This man and an attorney charged foreign nationals thousands of dollars to fraudulently obtain H-1B visas. He provided false documents to substantiate their H-1B petitions. The Programmer's Guild, a group representing U.S. worker interests, filed over 300 discrimination complaints in the first half of 2006 against companies that posted ``H-1B visa holder only'' ads on job boards. Anyone can go on the Internet and find jobs that target H-1B visa holders. There are more than just national anecdotes, however. Everyday Americans are affected. Since looking into the H-1B visa program, some of my constituents have come to me and spoken out against abuses they see. One of my constituents has shared copies of e-mails showing how he is often bombarded with requests by companies that want to lease their H-1B workers to that Iowan. There are companies with H-1B workers who are so-called ``on the bench,'' meaning they are ready to be deployed to a project. Hundreds of foreign workers are standing by waiting for work. Some call these H-1B ``factory firms.'' This Iowan even said one company went so far as to require him to sign a memorandum of understanding that helps the H-1B factory firm justify to the Federal Government that they have adequate business opportunity that requires additional visa holders. It is a complete falsification of the market justification for additional H-1B workers. These firms are making a commodity out of H-1B workers. They have visa holders but are looking for work. It is supposed to be the other way around. There should be a shortage or a need, first and foremost. Then and only then do we allow foreign workers to fill these jobs temporarily. Another constituent sent me a letter saying that he saw firsthand how foreign workers were brought in while Iowans with similar qualifications were let go. He tells me he is a computer professional with over 20 years experience. He was laid off and has yet to find a job. He states: I believe [my employer] has a history of hiring H-1B computer personnel at the expense of qualified American citizens. Another Iowan from Cedar Falls wrote in support of our review of the H-1B program. He is a computer programmer with a master's degree and over 20 years of work experience in that field. He says: Despite all of my qualifications, in the last four years I have applied to over 3,700 positions and have received no job offers. He believes he is in constant competition with H-1B visa holders. I received a letter from a man in Arizona who works for a company that employs dozens of H-1B workers. When he asked his supervisor why so many foreign nationals were being hired, the head of human resources said: If the company has an American and a person from India, both with the same skill set, the company will hire the person from India because they can pay them less. These are firsthand stories from U.S. workers. I ask those begging for an increase in foreign workers to explain these cases to me. Why are Americans struggling to get jobs as software developers, data processors, and program analysts? Senator Durbin and I inquired with several foreign-based companies that use the H-1B program. Rather than sending a letter to all companies that use the program, which would be over 200 companies, we decided to start our investigation with foreign-based entities. Our intention was to learn how foreign companies are using our visas. We learned that the top nine foreign-based companies used 20,000 visas in 2006. Think of what a high percentage that is of the 85,000, just nine foreign-based companies, 20,000 visas in the year 2006. I say that twice for emphasis. It just so happens that Indian companies are using one-third of the available visas we allocate each year, but there is more to learn. We are not done asking questions. We, meaning Senator Durbin and I, continue to talk to U.S.-based companies and companies in our own States that use the program. The Citizenship and Immigration Service also has concerns. Our review has prompted discussion among the executive branch, businesses, labor unions, and workers, and workers are the ones we are concerned about. So we are not the only ones asking questions. The U.S. Citizenship and Immigration Service is also worried about fraud in the program. This agency's investigative arm, that subdivision called the Fraud Detection and National Security unit, is doing a fraud assessment of the H-1B and L visa programs. I asked the unit to brief my staff on their work, and they reported they are not finished with analyzing the data. Senator Collins of Maine and I put the agency on notice that we are anxiously awaiting this report so we may continue our quest to reform the program appropriately. In the meantime, the bill Senator Durbin and I introduced includes measures to rein in the abuse. It goes a long ways to close some loopholes to protect American workers. It is our hope that these measures will bring the program back to its original mission; that is, to help U.S.-based companies find highly skilled workers to fill the shortage for a temporary period of time. That is what the H-1B visa program is all about. Under current law, companies can bring in foreign workers on an H-1B visa without first attempting to hire an American. Our bill would require every employer to attest that it is not displacing a U.S. worker by hiring an H-1B visa holder and that the employer has taken good-faith steps to recruit U.S. workers for the jobs in which an H-1B visa holder is being sought. Why would anyone oppose this measure? Our bill also gives more oversight and investigative authority to the Department of Labor. Right now the Department may only review labor certification for ``clear indication of fraud and misrepresentation.'' The Secretary of Labor is unable to review applications for anything but what the law calls incompleteness and cannot initiate an investigation unless requested. This means the Labor Department in effect is required to turn a blind eye to information that is suspicious. To remedy this problem, our bill provides the Department of Labor the ability to initiate an investigation on its own and gives the Department of Labor more time to review applications. The Department could also do random audits of any company that uses the program. Aside from these measures, our bill would prohibit employers to only advertise available jobs to H-1B visa holders. It would encourage information sharing between the Department of Labor and the Department of Homeland Security. It would double the penalties for employer noncompliance with the H-1B program requirements. I am happy to report that most of these commonsense solutions were included in the immigration bill. I challenge any of my colleagues to oppose these needed reforms before we talk about increasing the number of H-1B visas or at the very least in conjunction with that process. Today I take the floor to tell my colleagues that I am willing to work on this issue before the end of the year. I know businesses want more visas. I know groups that represent workers and visa holders want reforms. I know the American people want a sensible system in place that gives their children a chance at these highly skilled jobs. Some of my colleagues think the solution is increasing the annual cap on H- 1B visas and doing nothing else. Before we agree to import more foreign workers, let's restore integrity in this H-1B program. The system needs a makeover. I am willing to consider an increase in the H-1B visa supply, but only if reforms are included. We must fix the loopholes before we just allow more foreign workers to come in and take jobs that Americans want to do. I would think my colleagues would want this program to work as it was intended by its original authors. My colleagues should want to protect the jobs of our various constituencies and help our businesses find the workers they truly need. I yield the floor and suggest the absence of a quorum.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that Amanda Taylor be granted the privilege of the floor for the duration of the consideration of the farm bill.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, with the debate coming to a conclusion the way that it has today, I am really starting to wonder if Congress really wants to reauthorize the SCHIP program. I worked with my colleagues on the other side of the aisle Senators Baucus and Rockefeller and my good friend Senator Hatch to come up with a bipartisan compromise. We passed a bill in the Senate with a remarkable 68 votes. Who would have predicted that when this session began? We sat down with our House colleagues and hammered out a compromise that very closely followed the Senate bill. That compromise bill again passed the Senate by a wide bipartisan margin and received 265 votes in the House. As we all know that bill was vetoed, and 2 weeks ago, the veto was sustained in the House. In the 2 weeks since that vote, I have seen some of the strangest twists and turns I have seen in all my years in politics. First, I sat down with Democratic leadership in both Houses. We agreed on the compromises we thought we could make to get the final votes we needed to pass the House. At the same time, the minority leader of the House released a letter with the conditions his Members needed to vote for a bill. Seeing as the compromises we were willing to make seemed to resemble the conditions in the leader's letter, we began meeting with House Republicans to see if we could bridge the final gap. We started a process and made some real progress. Then all of the sudden House Democratic leadership decided it was time for a vote. No matter that we hadn't successfully concluded negotiations with House Republicans, it was time to vote. That bill passed and it is the bill we are voting on here in a few minutes. Moving ahead like that in the House created tremendous mistrust. But undaunted, we picked up the pieces and tried again to get a deal with House Republicans. The minority leader in the House released another letter with the conditions his Members needed to support a bill. Of course, the goalposts moved from the original letter. But we still felt a deal was possible and forged ahead. The majority leader of the Senate started the clock ticking on the bill here in the Senate. Again we were making progress with House Republicans. So when the majority leader saw we were making progress, he asked for more time here in the Senate. Incredibly, Senate Republicans objected. In the House, Republicans objected because we moved too fast. In the Senate, Republicans objected because we wanted to move more slowly. Yes, you should note the incredible irony. So today faced with continued objections, a decision was made to move forward with a vote this afternoon. I ask all my colleagues. Why? To my colleagues on the Democrat side; the President will veto this bill and the House has the votes to stop an override. Why go through with this? To my colleagues on the Republican side; we have the votes to pass the bill and were quite close to having a deal to satisfy House Republicans. Did you force the vote today to keep us from reaching a deal? What the heck is going on around here? My patience is a little thin right now. But come tomorrow, I will go back to working with the folks who want a bill that we can get enacted into law. This bill actually improves upon the bill that was vetoed by the President. All my colleagues who supported the bill before should certainly support the bill today. But as we all know, this bill is getting vetoed and there aren't the votes to override in the House. That is really too bad, because this is a very good bill. It is really too bad for the more than 3 million children who don't have health care coverage today that would get coverage under this bill. It is for those kids that I will pick up the pieces tomorrow and try to move forward. It is my hope that leadership on both sides of Congress and both sides of the aisle will set the gamesmanship aside so we can finally finish this bill.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to join my colleague, Senator Biden, in introducing the Dextromethorphan Abuse Reduction Act of 2007. As senior members of the U.S. Senate, and as chairman and co- chairman of the Senate Caucus on International Narcotics Control, we have seen firsthand how trends in drug abuse have changed over the years and we have worked to provide effective solutions to the drug problem whether the matter is foreign or domestic. Together, we have been monitoring the recent reports in the media and in the health community detailing new and emerging trends in drug abuse among teens. The reports have established that the fastest rising area of drug abuse among teens is the abuse of prescription drugs that are available in the drug cabinets of parents, family, and friends. These reports indicate that there is also a trend among teens to abuse nonprescription cough and cold medicines that are available without a prescription, over the counter, OTC, at pharmacies and grocery stores across the country. These trends highlight a new danger to America's youth as these products are readily available and are often times perceived to be safe even if used outside their intended use. We cannot afford to ignore this trend and need to ensure that we are doing all we can to protect our kids. If we don't address this problem now, the use of prescription drugs and OTC cough and cold medicines could become more prevalent than the use of traditional illegal narcotics such as marijuana, cocaine, heroin, and methamphetamine. To illustrate this point, the 2006 University of Michigan annual survey of U.S. adolescents found that while illicit drug use among teens is down, use and abuse of prescription drugs remains high. This includes the abuse of powerful painkillers such as OxyContin and Vicodin. Another survey by the Partnership for a Drug Free America released just last year also found similar results stating that 1 in 5 teens admitted to abusing prescription drugs. These surveys also included new questions on nonprescription drugs. The University of Michigan survey found that nearly 1 in 14 12th grade students had used nonprescription drugs to get high. The Partnership for a Drug Free America also found that nearly 10 percent of teens have abused cold and cough medicines that contain dextromethorphan or DXM, the active ingredient in OTC cough suppressants. Taken together, these surveys are further evidence that abuse of both prescription and nonprescription OTC drugs is more common than abuse of many illicit drugs. As such, it is our duty to ensure that the laws on the books are adequate to address the new trends in drug abuse. Of particular concern to me is the abuse of medicines that are available OTC because of how prevalent these products are. Further, many parents may not know about the abuse of such products. For instance, many parents have never heard of dextromethorphan or DXM and are unaware that there is a problem with the abuse of this drug. For those unfamiliar, DXM is the main active ingredient in a number of OTC products, primarily in cough medicines. DXM is the active ingredient and is generally available in two forms, a ``finished dosage form'' and an ``unfinished dosage form''. Finished dosage form means a product contains DXM and other inactive ingredients that are approved for human use, such as cough and cold syrups and pills. Unfinished dosage form refers to the raw chemical DXM in any concentrated amount that is not in finished dosage form for consumption. Unfinished DXM is generally not available at local pharmacies and grocery stores; however, it is available over the Internet and finding its way into our communities. Because both forms, finished and unfinished, are readily available to teens, we need to ensure that reasonable controls are put in place to ensure that access to DXM is limited to those who need the products for true medicinal purposes. So why regulate DXM at all? Aside from the increasing number of teens abusing the product, the potential dangers are cause enough. Abuse of DXM produces a hallucinogenic effect similar to that of PCP or LSD. To get this effect, teens must often ingest large quantities of DXM and given the uncertain dosage to reach this hallucinogenic effect, overdosing on the product is a real danger. If an overdose occurs, the effects can include an irregular heartbeat, elevated blood pressure, seizures, brain damage, and even death. In fact, both the Food and Drug Administration, FDA, and the Substance Abuse and Mental Health Services Administration, SAMSHA, have posted warnings about the abuse of DXM in OTC finished dosage form and the unfinished dosage powdered form that kids are obtaining over the Internet. Because of these dangers that abuse and overdose pose, we are here today introducing legislation that will place reasonable restrictions on the sale of DXM. The Dextromethorphan Abuse Reduction Act of 2007 strikes the appropriate balance of regulating access to DXM and products that contain DXM for those under 18 years old while making sure these products remain available for those who have a legitimate medical need. First, our legislation will regulate the sale of unfinished DXM by placing it on Schedule V of the Controlled Substances Act. This is the tier of the controlled substances list that currently regulates other forms of cough syrup that contains codeine. As a Schedule V product, DXM will be regulated by the Drug Enforcement Administration, DEA, and will allow the Attorney General to regulate the sale of unfinished DXM over the Internet. Second, the legislation provides civil penalties for retailers who knowingly or intentionally sell DXM in finished dosage form to an individual under the age of 18. This requirement will ensure that stores and retailers sell products containing DXM in a responsible manner. However, to ensure that retailers are not improperly fined, the bill contains an affirmative defense for those who are presented false or fraudulent identification. The bill also provides the Attorney General the authority to tier the scheduled fines to reduce the penalties for retailers who provide an effective employee training program. Lastly, this legislation provides vital funding to three important programs for the prevention of abuse of prescription and nonprescription drugs. The legislation authorizes funding to the National Youth Anti-Drug Media Campaign for education to children under age 18 about the dangers of prescription and OTC drug abuse. I have been an outspoken critic about the National Youth Anti-Drug Media Campaign's latest efforts; however, there is a clear need for further education to parents and communities across the country about the dangers of prescription drug abuse and the abuse of nonprescription drugs such as DXM. These funds should help provide an immediate impact in informing parents of the danger that can be found in a medicine cabinet at home. This bill also authorizes funding for the Community Anti-Drug Coalitions of America, CADCA, to provide education to children under 18 about prescription and OTC drug abuse. It also creates a small federal grant program under SAMHSA at the Department of Health and Human Services to provide communities across the country funding if they demonstrate a major prescription or OTC drug problem and have an effective strategy to deal with that problem. This legislation is part of an ongoing effort to prevent the abuse of DXM, along with other nonprescription and prescription drugs. This legislation is supported by number of groups including the National Association of Chain Drug Stores, NACDS, the Food Marketing Institute, FMI, their member organizations, and the Community Anti-Drug Coalitions of America among others. I urge my colleagues to support this important legislation and help prevent the abuse of prescription and OTC drugs.

Mr. GRASSLEY

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

Mr. GRASSLEY. Mr. President, to quote Yogi Berra: It feels like deja vu all over again. Here we are again debating the State children's health insurance bill, or SCHIP as we all know it by. I know colleagues are tired of this issue and frustrated by the process. I do think, though, we have an opportunity to move forward and to bring this issue to closure. I think my colleagues should be aware of many of the improvements that have been made to the bill that has passed the Senate twice. These improvements were negotiated in a bipartisan manner with the Senate and the House in order to help persuade Members who have indicated a willingness to support the SCHIP bill. A lot has been said about who is or is not negotiating the bill. Some have been critical because they have not been part of those discussions. To them I would say: Stop trying to kill the bill if you want to be a part of the negotiations. It makes no sense to negotiate with Members who have said they are never going to vote for the bill. So we have been trying to figure out a way to make the bill better. Here is where we are so far: There is more of an emphasis upon poor kids. Everybody has been saying: We ought to emphasize getting kids under 200 percent of poverty into the program. We have rewritten the bill to make that more certain. It is probably still not satisfactory to some people so far, but we will continue to work on that. Then there is the whole New York $83,000 red herring issue, and that was in the President's veto address. But remember, it was not in our bill. But somehow somebody told the President it was in the bill, and then the President, in his veto message, referred to a reason for vetoing the bill was the $83,000 issue with New York. That has been in the law for 10 years. What we did--so the President could not say that anymore--is we made clear this was not going to happen in any State. Then we took care of the childless adult issue. In the original bill, you remember, we phased out childless adults covered by the SCHIP legislation, and we phased them out in that bill over a 2-year period of time. We now have that down to a 1-year period of time. Premium assistance is strengthened. A technical clarification to the citizenship documentation provision in the bill has been made. That is not all. More work yet this morning--with Senator Baucus and me and some House Members--more work is underway trying to work with those who are sincerely wanting to vote for a children's health insurance bill. We are working on a potential amendment to this bill that will go further to address putting kids under 200 percent of poverty first, strengthening the private coverage options, and further clarifying that no illegals can get onto the program. Now, you understand, all these things are what our intention is. But somehow, through statutory language, we have not been able to make it clear enough. So we are going back and trying to make it more clear as a practical matter, maybe doing in a real way what we intended to do that maybe when we wrote the language unintentionally was not accomplished. Now, to the point of illegals, Members who are working to kill this bill have tried to make it seem like this bill opens the floodgates to people who are in our country illegally getting onto the health programs. To keep asserting this is as responsible as yelling ``fire'' in a crowded movie theater. The latest assault is being leveled at the provision based on a bill authored by no other than Senator Lugar. It is a provision called ExpressLane, which allows States the option--just the option--to establish income eligibility based on eligibility for other means- tested programs. ``ExpressLane'' is the new poster child now for those who scream ``illegals'' as a way to kill the bill. I ask unanimous consent to speak for 1 more minute.

Mr. GRASSLEY. Mr. President, the ``ExpressLane'' option in the bill clearly requires a State to confirm the citizenship of applicants. I want to make that clear. The ``ExpressLane'' makes sure you have to be a citizen of the United States. Since some Members clearly are not reading the bill, let me read from those provisions: Verification of citizenship or Nationality status: The State shall satisfy the requirements of section 1902(a) (460)(B) or section 2105(c)(10), as applicable for verifications of citizenship or nationality status. I don't know how much more clear it can be, and I hope it puts to rest a very sad mischaracterization of the bill. To sum up, the bill before us now is an improvement on the bill that passed the Senate. It strengthens the number of provisions that Republicans have been concerned about. I hope with the amendment I am working on with Chairman Baucus, Senator Hatch, Senator Rockefeller, and Members of both parties from the House of Representatives, that we will be able to increase the number of Republicans who vote to support this bill here in the Senate. I support cloture in the vote just coming up and I ask my colleagues to do it so we can proceed on this bill. I urge my colleagues to vote the same way. I yield the floor. Cloture Motion

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to join my colleague, Senator Biden, in introducing the Dextromethorphan Abuse Reduction Act of 2007. As senior members of the U.S. Senate, and as chairman and co- chairman of the Senate Caucus on International Narcotics Control, we have seen firsthand how trends in drug abuse have changed over the years and we have worked to provide effective solutions to the drug problem whether the matter is foreign or domestic. Together, we have been monitoring the recent reports in the media and in the health community detailing new and emerging trends in drug abuse among teens. The reports have established that the fastest rising area of drug abuse among teens is the abuse of prescription drugs that are available in the drug cabinets of parents, family, and friends. These reports indicate that there is also a trend among teens to abuse nonprescription cough and cold medicines that are available without a prescription, over the counter, OTC, at pharmacies and grocery stores across the country. These trends highlight a new danger to America's youth as these products are readily available and are often times perceived to be safe even if used outside their intended use. We cannot afford to ignore this trend and need to ensure that we are doing all we can to protect our kids. If we don't address this problem now, the use of prescription drugs and OTC cough and cold medicines could become more prevalent than the use of traditional illegal narcotics such as marijuana, cocaine, heroin, and methamphetamine. To illustrate this point, the 2006 University of Michigan annual survey of U.S. adolescents found that while illicit drug use among teens is down, use and abuse of prescription drugs remains high. This includes the abuse of powerful painkillers such as OxyContin and Vicodin. Another survey by the Partnership for a Drug Free America released just last year also found similar results stating that 1 in 5 teens admitted to abusing prescription drugs. These surveys also included new questions on nonprescription drugs. The University of Michigan survey found that nearly 1 in 14 12th grade students had used nonprescription drugs to get high. The Partnership for a Drug Free America also found that nearly 10 percent of teens have abused cold and cough medicines that contain dextromethorphan or DXM, the active ingredient in OTC cough suppressants. Taken together, these surveys are further evidence that abuse of both prescription and nonprescription OTC drugs is more common than abuse of many illicit drugs. As such, it is our duty to ensure that the laws on the books are adequate to address the new trends in drug abuse. Of particular concern to me is the abuse of medicines that are available OTC because of how prevalent these products are. Further, many parents may not know about the abuse of such products. For instance, many parents have never heard of dextromethorphan or DXM and are unaware that there is a problem with the abuse of this drug. For those unfamiliar, DXM is the main active ingredient in a number of OTC products, primarily in cough medicines. DXM is the active ingredient and is generally available in two forms, a ``finished dosage form'' and an ``unfinished dosage form''. Finished dosage form means a product contains DXM and other inactive ingredients that are approved for human use, such as cough and cold syrups and pills. Unfinished dosage form refers to the raw chemical DXM in any concentrated amount that is not in finished dosage form for consumption. Unfinished DXM is generally not available at local pharmacies and grocery stores; however, it is available over the Internet and finding its way into our communities. Because both forms, finished and unfinished, are readily available to teens, we need to ensure that reasonable controls are put in place to ensure that access to DXM is limited to those who need the products for true medicinal purposes. So why regulate DXM at all? Aside from the increasing number of teens abusing the product, the potential dangers are cause enough. Abuse of DXM produces a hallucinogenic effect similar to that of PCP or LSD. To get this effect, teens must often ingest large quantities of DXM and given the uncertain dosage to reach this hallucinogenic effect, overdosing on the product is a real danger. If an overdose occurs, the effects can include an irregular heartbeat, elevated blood pressure, seizures, brain damage, and even death. In fact, both the Food and Drug Administration, FDA, and the Substance Abuse and Mental Health Services Administration, SAMSHA, have posted warnings about the abuse of DXM in OTC finished dosage form and the unfinished dosage powdered form that kids are obtaining over the Internet. Because of these dangers that abuse and overdose pose, we are here today introducing legislation that will place reasonable restrictions on the sale of DXM. The Dextromethorphan Abuse Reduction Act of 2007 strikes the appropriate balance of regulating access to DXM and products that contain DXM for those under 18 years old while making sure these products remain available for those who have a legitimate medical need. First, our legislation will regulate the sale of unfinished DXM by placing it on Schedule V of the Controlled Substances Act. This is the tier of the controlled substances list that currently regulates other forms of cough syrup that contains codeine. As a Schedule V product, DXM will be regulated by the Drug Enforcement Administration, DEA, and will allow the Attorney General to regulate the sale of unfinished DXM over the Internet. Second, the legislation provides civil penalties for retailers who knowingly or intentionally sell DXM in finished dosage form to an individual under the age of 18. This requirement will ensure that stores and retailers sell products containing DXM in a responsible manner. However, to ensure that retailers are not improperly fined, the bill contains an affirmative defense for those who are presented false or fraudulent identification. The bill also provides the Attorney General the authority to tier the scheduled fines to reduce the penalties for retailers who provide an effective employee training program. Lastly, this legislation provides vital funding to three important programs for the prevention of abuse of prescription and nonprescription drugs. The legislation authorizes funding to the National Youth Anti-Drug Media Campaign for education to children under age 18 about the dangers of prescription and OTC drug abuse. I have been an outspoken critic about the National Youth Anti-Drug Media Campaign's latest efforts; however, there is a clear need for further education to parents and communities across the country about the dangers of prescription drug abuse and the abuse of nonprescription drugs such as DXM. These funds should help provide an immediate impact in informing parents of the danger that can be found in a medicine cabinet at home. This bill also authorizes funding for the Community Anti-Drug Coalitions of America, CADCA, to provide education to children under 18 about prescription and OTC drug abuse. It also creates a small federal grant program under SAMHSA at the Department of Health and Human Services to provide communities across the country funding if they demonstrate a major prescription or OTC drug problem and have an effective strategy to deal with that problem. This legislation is part of an ongoing effort to prevent the abuse of DXM, along with other nonprescription and prescription drugs. This legislation is supported by number of groups including the National Association of Chain Drug Stores, NACDS, the Food Marketing Institute, FMI, their member organizations, and the Community Anti-Drug Coalitions of America among others. I urge my colleagues to support this important legislation and help prevent the abuse of prescription and OTC drugs.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am voting against the motion to proceed to the DREAM Act today. Even though I support the end goal of this legislation; that is, to provide children with an education, I do not think the bill is perfect. I would like to see changes made. The bill didn't go through the proper channels and was not approved by the Judiciary Committee. Moreover, the majority leader has indicated that he will fill the tree and prevent the minority from offering amendments to the bill. ``Filling the tree'' by the majority leader is what this process is called and it freezes me out of offering amendments to improve the DREAM Act. For these reasons, I will oppose proceeding to the bill today.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, do we have an opportunity to address it?

Mr. GRASSLEY. Mr. President, I rise in support of the goals of this amendment. I want to speak about process so that nobody gets the understanding that the Committee on Finance has given up jurisdiction over this area. We also want to explain that the offset is coming from the Medicare physician assistance and quality initiative fund, which we have set aside to make sure doctors don't get a 10-percent cut this year in their formula. That is something which is going to come out of the Finance Committee in the next few weeks. The reason we are going along with this offset is we have found another offset that will fill the void in this fund I just referred to, so that we will be able to keep this whole. I advise people that just because we are allowing this fund to be tapped, we are not going to tap this fund again because we are going to save this to make sure we can help doctors not get cut in their reimbursement on Medicare.

Mr. GRASSLEY. Mr. President, I wish to speak to what this bill does or does not do for our most promising students. In his best selling book, ``The World Is Flat,'' Thomas Friedman discusses the challenges of globalism using the metaphor of the world getting flatter. What he means is that international barriers to the movement of goods, services, people, and ideas are breaking down. That means that American businesses are facing competition from different sources, and the competition will only get fiercer. If Americans want us to remain an economic leader and keep high paying jobs, we will need to stay one step ahead of others around the world in coming up with new ideas and innovative products and services. Thomas Friedman likens this moment in American history to the height of the Cold War when the Soviet Union leaped ahead of America in the space race by putting up the Sputnik satellite. In response to Sputnik, Congress passed the National Defense Education Act, which really started the Federal involvement in education. According to Thomas Friedman, to meet the challenges of what he calls ``flatism'' will require, ``as comprehensive, energetic, and focused a response as did meeting the challenge of communism.'' We have heard a lot of talk in Congress about the need to do something about American competitiveness. In fact, earlier this year we passed the America COMPETES bill, authorizing a series of new programs designed to stimulate advanced learning by young Americans. But are we serious about that? The bill before us today is a $5.35 billion increase over the previous year. That is not small potatoes. That is enough to give a boost to a lot of programs. But one program that is not seeing a boost is the only source of Federal funds currently focused on helping meet the unique learning needs of gifted and talented students. The Javits Gifted and Talented Students Education Act has suffered a series of cuts in recent years due to across-the-board rescissions. For the current fiscal year, Congress passed an unusual type of modified continuing resolution. While the continuing resolution contained no specific language further cutting funding for gifted education, the program mysteriously suffered a significant 21 percent cut. In total, gifted and talented education has taken a 33 percent cut since 2002, and that is not adjusted for inflation. The current bill retains that cut. If we are serious about maintaining America's competitive edge internationally, our most promising students must be challenged and supported to reach their full potential. We need these talented young people to go on to pursue advanced degrees and make the technological innovations that drive our economy. Make no mistake, that will not happen by itself. Gifted students learn faster and to a greater depth than other students and often look at the world differently than other students. As a result, it takes a great deal more to keep them challenged and stimulated. If gifted students are not sufficiently stimulated, they often learn to get by with minimum effort and adopt poor learning habits that can prevent them from achieving their potential. In fact, many gifted and talented students underachieve or even drop out of school. The book ``Genius Denied,'' by Jan and Bob Davidson from the majority leader's home, the State of Nevada, chronicles how we are letting gifted students throughout the Nation fall through the cracks, wasting their potential. The Belin-Blank Center in my home State of Iowa produced a report titled, ``A Nation Deceived: How Schools Hold Back America's Brightest Students.'' We must do a better job of developing American talent if America is to remain competitive in the global economy. Twice now, on the competitiveness bill and the immigration bill, I have proposed an amendment to provide an appropriate funding source for gifted and talented education. My proposal would increase the fee employers pay for H-1B visas for highly skilled foreign workers to come to the United States and use that additional funding for the Jacob Javits Gifted and Talented Students Education Act. H-1B visas are temporary visas. Highly skilled foreign workers come to the United States, often working for less than Americans, and garner useful experience with American companies. Then, by the nature of the H-1B program, they go home to use their talent in their native country. That is hardly a permanent solution to our need for talented workers. Doesn't it make sense to charge a fee to those investing in temporary talent from abroad and use it to invest in permanent talent for the future here at home? The modified amendment at the desk is a compromise that I worked out with the Senator from Vermont, Mr. Sanders. The modification includes language that was agreed to during the immigration debate. In fact, a similar amendment passed the Senate with a 59-vote majority. It would increase the fee for H-1B visas and use the revenue to support gifted and talented education as well as an American Competitiveness Scholarship Program that the Senator from Vermont has authored. I support his goal of creating a scholarship program for students pursuing a degree in math, engineering, health care, or computer science. I appreciate Senator Sanders's willingness to help me and to provide needed funding for gifted and talented students. We cannot continue to shortchange our best and brightest students and still expect excellence from them. Gifted students are the innovators of tomorrow that will keep our economic pump primed. For their sake and ours, we cannot afford to squander this vital national resource. I urge the adoption of my amendment.

Mr. GRASSLEY. Senator Sanders should go first.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to introduce today with Senator Specter the Transparency in Medical Device Pricing Act of 2007. As we all know, both parties to a transaction need information in order for the free market to properly work. If only one party has information, the market does not properly function because you have a one-sided negotiation. The purpose of this legislation is to bring transparency to medical device pricing so that there will be sufficient information available for market forces to truly work. In the Medicare program, most hospitals receive a single payment for all the health care goods and services provided during a beneficiary's stay. This payment structure is designed to give hospitals incentives to provide efficient, effective, and economical care. Why? Because when a hospital lowers its costs, more of the Medicare payment can go toward the hospital's bottom line. Hospitals normally have many resources like consultants or reference materials to help them when they negotiate prices for things like drugs, nursing care, or hospital gowns. Unfortunately, this is not the case with implantable medical devices like pacemakers, stents, and artificial hips and knees. Hospitals have no way of knowing what a fair market price for a medical device is, because in this one industry there is a veil of secrecy over pricing information. In fact, manufacturers typically require hospitals to agree to secrecy or gag clauses in their contracts. The device makers actually prohibit hospitals from disclosing the price of a medical device to others. So hospitals have no idea of what is a fair price. Instead they must engage in one-sided negotiations with medical device manufacturers. We all know that there must be enough transparency for market forces to work. The free market, after all, thrives on complete information and open competition--not on gag rules and secrecy clauses. As a farmer, when I go out and buy a tractor, I first go out and talk to a number of people to help me figure out what is a fair price. Having this information puts me on equal footing with the dealer when we negotiate the price. After all, I don't want to be taken to the cleaners. Today, there is no level playing field when hospitals negotiate with device manufacturers. It shows. This is a major reason why many hospitals pay absurdly more than others for the same medical device. The inflated prices many hospitals pay have implications for the health care system on multiple levels. First, higher medical device costs take up more of the Medicare payment. That means hospitals have less to spend on other crucial components of care such as staff. And hospitals have less of the Medicare payment to devote toward their bottom line. So they have less money for activities to improve hospital quality and safety. They have less money to spend on health information technology systems. Most importantly, they have less money to keep their doors open and provide care to Medicare beneficiaries. In rural areas in my state where hospitals are barely squeaking by, this is a problem. Also, I want to point out how hospitals paying more than the fair market price for medical devices adds to skyrocketing entitlement spending. Medicare hospital payments are updated every year. The update takes into account the increased cost of goods and services used to provide care to beneficiaries. Let us say medical device prices are higher than they should be. As a result, Medicare hospital payment updates and Medicare spending will rise faster than they should. Also, let us remember that there are cost-sharing requirements for certain hospital services. And so Medicare beneficiaries will be paying more out-of-pocket than they should. All this adds up to one thing: a need for greater transparency in medical device pricing. My good friend and colleague, Senator Specter, and I have developed a way to provide greater transparency. The Transparency in Medical Device Pricing Act of 2007 would bring this needed transparency to medical device pricing by building on current initiatives at the Department of Health and Human Services, HHS. Under the act, here are some conditions device manufacturers would have to receive direct or indirect payments under Medicare, Medicaid, or SCHIP. Every quarter they would have to submit to the HHS Secretary data on average and median sales prices for all medical devices that are implanted during inpatient and outpatient procedures. Manufacturers would be subject to civil money penalties from $10,000 to $100,000 for failure to report or misrepresentations of price data. Collecting such data is not new to HHS. The Secretary has been collecting average sales price data for drugs covered under Part B of the Medicare program for a number of years now. The Secretary would also be required to make the data available to the public on the website of the Centers for Medicare & Medicaid Services, CMS. CMS would have to update the website on a quarterly basis. Again, this is nothing new at HHS. It has been promoting transparency in Medicare for quite some time. The Secretary already publicly reports quality and price data of various Medicare providers. This is so beneficiaries can use these resources when selecting a provider. Publicly reporting implantable medical device pricing would help hospitals negotiate fair prices. For once, they would have a resource to consult so negotiations would be fairer. Mr. President, let me be clear. I fully support the medical device industry making a profit. I just think it should not be at the expense of hospitals, beneficiaries and the American taxpayer paying much more than they should. We must let the market work, and markets depend on information. The Transparency in Medical Device Pricing Act of 2007 would go a long way toward ensuring that free market forces actually work. The act would enable hospitals to obtain medical devices at fair prices.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to introduce today with Senator Specter the Transparency in Medical Device Pricing Act of 2007. As we all know, both parties to a transaction need information in order for the free market to properly work. If only one party has information, the market does not properly function because you have a one-sided negotiation. The purpose of this legislation is to bring transparency to medical device pricing so that there will be sufficient information available for market forces to truly work. In the Medicare program, most hospitals receive a single payment for all the health care goods and services provided during a beneficiary's stay. This payment structure is designed to give hospitals incentives to provide efficient, effective, and economical care. Why? Because when a hospital lowers its costs, more of the Medicare payment can go toward the hospital's bottom line. Hospitals normally have many resources like consultants or reference materials to help them when they negotiate prices for things like drugs, nursing care, or hospital gowns. Unfortunately, this is not the case with implantable medical devices like pacemakers, stents, and artificial hips and knees. Hospitals have no way of knowing what a fair market price for a medical device is, because in this one industry there is a veil of secrecy over pricing information. In fact, manufacturers typically require hospitals to agree to secrecy or gag clauses in their contracts. The device makers actually prohibit hospitals from disclosing the price of a medical device to others. So hospitals have no idea of what is a fair price. Instead they must engage in one-sided negotiations with medical device manufacturers. We all know that there must be enough transparency for market forces to work. The free market, after all, thrives on complete information and open competition--not on gag rules and secrecy clauses. As a farmer, when I go out and buy a tractor, I first go out and talk to a number of people to help me figure out what is a fair price. Having this information puts me on equal footing with the dealer when we negotiate the price. After all, I don't want to be taken to the cleaners. Today, there is no level playing field when hospitals negotiate with device manufacturers. It shows. This is a major reason why many hospitals pay absurdly more than others for the same medical device. The inflated prices many hospitals pay have implications for the health care system on multiple levels. First, higher medical device costs take up more of the Medicare payment. That means hospitals have less to spend on other crucial components of care such as staff. And hospitals have less of the Medicare payment to devote toward their bottom line. So they have less money for activities to improve hospital quality and safety. They have less money to spend on health information technology systems. Most importantly, they have less money to keep their doors open and provide care to Medicare beneficiaries. In rural areas in my state where hospitals are barely squeaking by, this is a problem. Also, I want to point out how hospitals paying more than the fair market price for medical devices adds to skyrocketing entitlement spending. Medicare hospital payments are updated every year. The update takes into account the increased cost of goods and services used to provide care to beneficiaries. Let us say medical device prices are higher than they should be. As a result, Medicare hospital payment updates and Medicare spending will rise faster than they should. Also, let us remember that there are cost-sharing requirements for certain hospital services. And so Medicare beneficiaries will be paying more out-of-pocket than they should. All this adds up to one thing: a need for greater transparency in medical device pricing. My good friend and colleague, Senator Specter, and I have developed a way to provide greater transparency. The Transparency in Medical Device Pricing Act of 2007 would bring this needed transparency to medical device pricing by building on current initiatives at the Department of Health and Human Services, HHS. Under the act, here are some conditions device manufacturers would have to receive direct or indirect payments under Medicare, Medicaid, or SCHIP. Every quarter they would have to submit to the HHS Secretary data on average and median sales prices for all medical devices that are implanted during inpatient and outpatient procedures. Manufacturers would be subject to civil money penalties from $10,000 to $100,000 for failure to report or misrepresentations of price data. Collecting such data is not new to HHS. The Secretary has been collecting average sales price data for drugs covered under Part B of the Medicare program for a number of years now. The Secretary would also be required to make the data available to the public on the website of the Centers for Medicare & Medicaid Services, CMS. CMS would have to update the website on a quarterly basis. Again, this is nothing new at HHS. It has been promoting transparency in Medicare for quite some time. The Secretary already publicly reports quality and price data of various Medicare providers. This is so beneficiaries can use these resources when selecting a provider. Publicly reporting implantable medical device pricing would help hospitals negotiate fair prices. For once, they would have a resource to consult so negotiations would be fairer. Mr. President, let me be clear. I fully support the medical device industry making a profit. I just think it should not be at the expense of hospitals, beneficiaries and the American taxpayer paying much more than they should. We must let the market work, and markets depend on information. The Transparency in Medical Device Pricing Act of 2007 would go a long way toward ensuring that free market forces actually work. The act would enable hospitals to obtain medical devices at fair prices.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I came to the Chamber to speak on an oversight issue on which I have been working for well over a year. But before I speak on that subject, I wish to take advantage of the opportunity to respond to incorrect impressions about the compromise State Children's Health Insurance Program bill on which the House is going to be voting tomorrow. I am speaking as much to Republicans in the House of Representatives as I am responding to some of the points Senator Lott has made. These reminded me that regardless of how many speeches one gives around here, regardless of how many explanations one gives of what our bill does and does not do, nobody listens. We get the same wrong statements being made time after time. I wonder, does anybody ever listen? Maybe they don't like to have Chuck Grassley say it. I was a negotiator for the Republicans. I never had a single Republican tell me since January that they didn't want the SCHIP program reauthorized after a 10-year sunset. I never had one of them say it wasn't a program that was serving a good purpose. I had a lot of people express faults about what is wrong with the present program. Most of those issues have been corrected in the legislation the President vetoed. I finally got people to realize the $5 billion the President put in his budget on top of baseline is not enough to do what we are already doing. Even the Republicans on this side offered $14.5 billion over baseline, which still is not enough to do what needs to be done to take care of the kids we are taking care of now and extend coverage to other eligible but uninsured low income children. Some people are saying this bill should have been vetoed because there are adults in the program. But it was this Administration that approved the waivers to cover adults. The bill that the President vetoed did away with waivers. What has been in the program for 10 years this bill does away with. Childless adults are not going to be on the program. New waivers for parents under SCHIP is prohibited. For states that currently cover parents, the federal match is reduced. But yet people are still saying to me, from the other body, as I talk with Republicans over there to vote to override the President's veto: Why are we letting all these adults on? The waivers did that, and we do away with the waivers. Also, in my conversations with people in the other body, as I try to convince them they ought to vote to override the veto, this $83,000 number keeps coming up. There was an inference made to it in the previous speech. That is not in our bill, and yet the President in his veto message referred to our bill allowing people up to $83,000 to get on SCHIP. That is in the law. It has been in the law for 10 years, and that can only happen if the President of the United States says a State can do that upon that State's request. Only the President can allow that to happen. That has been that way for 10 years. So don't tell me our bill allows States to go up to $83,000. That has been the law. What about the statement of having genuine poor children on this program? I agree. Do you know that 92 percent of the kids on the program are in families under 200 percent of poverty? Somebody can say: What about the other 8 percent? OK, so what do we do about that? Because there has been an inference to a State Health Official letter to states released on August 17, 2007 that we did away with what would have prevented that. But the policies in that letter were flawed and unworkable. What we did is we made those policies workable in our legislation. So the emphasis on kids under 200 percent of poverty works out this way: First, we reduce the Federal match to the Medicaid match for any state that wants to go over 300 percent of poverty, beginning upon enactment of the bill. Then, by 2010, any State that wants to go or to continue to go above 300 percent of poverty for children has to demonstrate that they have reached the targets determined by the 10 best States covering kids under 200 percent of poverty. If they do not meet the target, they get no Federal match for kids over 300 percent. So don't tell me the bill before us does not have emphasis on low- income kids. It has emphasis on low-income kids. It was not brought up in the previous speech, but in my conversations with the House of Representatives, I have had this other smokescreen thrown at me: Our bill allows illegal immigrants to get on the program. For the first time, we are doing in SCHIP what has never been done before, what we have done for Medicaid in the Deficit Reduction Act. We are making it so that illegal immigrants cannot get on the SCHIP program. People are paid to read legislation, and I don't know how the President of the United States, who gets paid a heck of a lot more than I do and has a lot of advisers who get paid a heck of a lot more than I do--I don't know how they can have him put in a speech that this bill allows people over $83,000 to get into the program, or there can be speeches in the Chamber of the other body saying we are opening the door for illegal immigrants to be covered by this program when we are doing more than existing law does in that area and where existing law already allows, if the President approves it. And then this business of adults being in the program--absolutely right, three States have more adults on the program than other States. How did that happen? This administration gave waivers for that to happen. We do away with those waivers. I have heard all the complaints from this side of the Senate, the Republican side of the Senate, that there is no ``A'' in SCHIP--and I agree, it shouldn't be for adults-- and I even heard Democrats strongly speak to this point. This program should never have gone in that direction. We do away with waivers. I ask everybody to read the legislation, and particularly Republicans in the other body, before they vote tomorrow to override or not override because all these inaccurate representations of the compromise bill are creating a very bad mistake. It's so bad politically that the White House is looking for some way to get out of this situation. Probably that some way to get out of it is negotiating another bill with us. But it would be smart if the White House would send a signal to the House of Representatives: Override our veto; we made a mistake.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I now wish to address this body about some investigations I have been doing over a long period of time. This is a report to my colleagues that senior executives at the General Services Administration may have failed to meet their responsibilities to the American taxpayers. These issues were carefully examined in two oversight investigations conducted by my staff. These investigations have uncovered a disturbing change of circumstances at the General Services Administration. In a nutshell, it is this way: These studies indicate that top-level General Services Administration management interfered in contract negotiations with Sun Microsystems. They put pressure on contract officers to sign a potentially bad contract. When that person refused, they had that contract officer removed under duress. All the evidence from this investigation suggests that this particular contractor had been overcharging the Federal Government for years. The contract officer believed the proposed terms were still not fair to the Government. Even worse, these reports also indicate that allegations of intimidation against the General Services Administration Office of Inspector General and its auditors may have been fabricated. This may have been done to cover high-level pressure on contract officers or maybe because the new contract was signed on terms dictated by the contractor. When I asked for audits of the new contract, this contractor resisted tooth and nail, and in the end they canceled the contract before audits could be completed. I want to repeat that, because this is the bottom line. When I asked for audits of this new contract, this contractor resisted tooth and nail, and in the end they canceled the contract before the audit could be completed. That ought to tell you something about that contract. I think it is important my colleagues know what my staff uncovered at the GSA, not merely for the purpose of pointing out mistakes but for the purpose of seeking solutions, because these investigations are about fixing a problem. Let me set the record straight. This is not some sort of witch hunt for the Administrator of GSA or anything else. Quite simply, this is oversight and investigation, or O&I, as we call it around here on the Hill. In doing this oversight and investigation work, I am fulfilling one of the most sacred responsibilities of a Member of Congress. As with all my investigations, I want to be certain every tax dollar is spent wisely and according to law--nothing more, nothing less. With that in mind, I want to address the findings of these investigations that are documented in separate staff reports. The oversight work began last September when I was informed Administrator Lurita Doan of the GSA was attempting to cut the inspector general's budget for audits. These are the policemen to see that the money we appropriate is spent wisely. It appeared that this administrator was attempting to neutralize the inspector general, especially in the area of oversight of Government contracts. This was a red warning flag, so I decided to dig deeper. The Administrator was alleging that the Office of Inspector General-- or I might refer to that as the OIG--was abusing its power by threatening and intimidating Government contracting officers and vendors. These allegations were raised by the Administrator in numerous statements, publicly and internally, and in letters to me. According to three separate witnesses, Administrator Doan even compared the inspector general officials to terrorists. These allegations concerned me for two reasons: First, I was extremely concerned that sworn Federal law enforcement agencies and agents, and accredited auditors, might be abusing their power. Second, if there was no factual foundation for these allegations, if they were fabricated, where did they come from and why did they come? I asked Administrator Doan to provide me with specific examples of the alleged intimidation. Since she had aired these allegations in public, I thought she would provide me with specific details to support the charges. The fact is, she could not. In reality, only one specific instance was brought to my attention. In the end, my staff could find no evidence whatsoever to support those allegations. Sadly, it appears as if that one specific allegation was fabricated to cover up intense top-down pressure on contract auditors to award a contract that was detrimental to the taxpayers. It was a bureaucratic smokescreen that opened a much larger can of worms. That can of worms was a contract awarded to Sun Microsystems, Inc. in 1999 for computer products and services. The inspector general had this particular contract under a microscope for several years. The IG audits indicated that Sun had failed to report significant discounts given to commercial contractors, as mandated by the contract; in other words, transparency when you are doing business with the Federal Government. Because this information was withheld--in other words, their commercial contract arrangements--Government customers paid much higher prices than Sun's commercial customers. The Government was losing money because of these unfair pricing policies, losses potentially in the tens of millions of dollars. These and other alleged contract violations, including potential fraud, were referred to the Department of Justice and now are in the Federal courts. The alleged fraud was first reported to General Services Administration management in February of 2005. GSA management had several options, including seeking a better contract, canceling that contract, or suspension. In fact, three GSA contracting officers who handled the Sun contract attempted all three remedies. In each case, intervention from upper management at GSA blocked those moves. Upper management turned a blind eye to the alleged fraud, preferring instead to do business as usual. Then they began applying serious pressure on the contracting officer to extend the contract with Sun for another 5 years. In August of last year, the GSA contracting officer assigned to the Sun contract dug in his heels, holding out for a better deal, protecting the taxpayers of the United States. He believed the terms offered by Sun in negotiations were not fair to the Government. Now, if you ask senior GSA management, you get a very different story. Those individuals, including Ms. Doan and FAS Commissioner Williams, claimed this contracting officer was so intimidated, browbeaten, even, by OIG auditors, that he had to be replaced. The facts, however, do not support that allegation or explanation. The contracting officer and his immediate supervisor both deny experiencing any intimidation from the inspector general auditors. They say, in fact, it never even happened. The source of the allegations has changed her story several times. In fact, she continued to support the contracting officer's position in negotiations--a position that was fully aligned with the inspector general auditors' position--even after claiming he was being intimidated into that position by the same auditors. If that position was tainted by the inspector general auditor intimidation, why would she support it? One other fact seems to have escaped the GSA managers making these allegations. IG auditors have no direct influence over a contracting officer's career. The only person with that kind of authority is the contracting officer's supervisors, not the inspector general. There is some irony here too. The same GSA managers who accuse the OIG auditors of intimidating this contracting officer had themselves attempted in vain to intimidate him into awarding the contract. So it seems that GSA management tried to turn the concept of intimidation upside down. Now, why would they do that? The evidence suggests these allegations were a smokescreen to hide the actions of the General Services Administration management. They used it for cover while ramming through a contract that may be bad for the taxpayers. There should be no greater motivation for those in Government procurement than protecting the taxpayers' money. Contracting officers who are warranted by this Government should be allowed to fight in negotiations for the best deal for the taxpayers, saving money where they can. Any pressure, any suggestion, any direct involvement by management to thwart that mission would be out of line. What Administrator Doan, Commissioner Williams, and others did to short circuit this process, then, is entirely wrong. To turn up the pressure, senior GSA officials, including Administrator Doan, were communicating directly with Sun Microsystems, Inc. and their lobbyists during negotiations. They made sure that contracting officer knew about that contact they were having. What kind of message does that send to a contracting officer fighting for a good contract to save the taxpayers' money? What kind of message does that send to the current and potential Government contractors, wherever they might be? I would say that, at the very least, it tells them that if you don't like the deal offered by the contracting officer, go over his or her head. Go to the very top. Get the problem fixed. Get the price you want out of the taxpayers. It also says if the contracting officer is in the way, get rid of the contracting officer and get one who will do the dirty deed. It would be bad enough were this the end of the story, but it isn't. After forcing out the contracting officer, GSA management assigned a new officer. It took her 9 days to negotiate a final deal with Sun. But what did the Government get? In interviews, this new contracting officer claimed that she didn't need to talk to IG auditors who had years of knowledge on the Sun contract. She claimed she could solve any impasse in negotiations by listening to what the contractor had to say. Many of the provisions she adopted were ones steadfastly opposed by the previous contracting officer--the very same ones that led to the so-called ``impasse'' and the removal of that contracting officer. The new contracting officer even admitted during questioning that she did not fully understand key provisions of the contract. She admitted making ``big oversights'' in some of the contract terms. I fear the Government got a contract based on terms that were dictated by the contractor. I ask you: Is this GSA management's idea of how to negotiate? After my staff interviewed the new contracting officer, I realized I needed to know more about the new contract. That is the one signed in September 2006. Was the Government continuing to lose money due to the unfair pricing and unreported discounts that they had with the commercial sector? As a Member of the Senate who cares deeply about oversight, I would have been remiss in not asking more questions. So on June 5, 2007, I asked the GSA inspector general to conduct an audit. I asked the IG to look at the terms of this new contract. Now, if this contract was such a ``good deal for America,'' as has been suggested by Sun on the one hand and GSA management on the other hand, then one would think Sun would rush to cooperate. Wouldn't they? Well, they did not. Instead, for 3 months, Sun complained to me, they procrastinated, they withheld information and fought the audit at every step. They also lashed out at the GSA inspector general, claiming bias--maybe because the IG had nailed him in the past. To his credit, IG Brian Miller held his ground and forged ahead with the audit. This is what happened, and sadly so, because you don't get to the bottom of it then. Sun chose to cancel this contract on September 13 of this year, without waiting for the completion of those audits. This entire situation is extremely unfortunate, possibly preventable, and certainly baffling. Why would Sun cancel a contract that it had fought so hard to get? Did Sun have something to hide? Government contracting, particularly multiple award schedule contracting, appears to be in serious jeopardy. Contracting officers are in short supply and are quitting in alarming numbers. They are overworked, they are stressed, and some try to juggle 100 or more contracts at any given time. With that kind of workload, assuring contract compliance is out of the question. One of the culprits here may be the industrial funding fee structure we use in Government. This is money that the GSA charges other agencies that tap into governmentwide contracts negotiated by GSA. These fees are the lifeblood of the General Services Administration and are responsible for the lion's share of the agency's budget. The incentive is to maximize fees and agency profits. This creates what has been described as a ``perverse incentive.'' Getting the best deal for the Government and the taxpayers gets lost in the drive for more contracts that generate more fees to fill that agency's coffers. I feel the Sun contract fiasco may be only the tip of the iceberg. I hope it is an exception, but many contracting officials suggested otherwise. Am I suggesting that Government procurement is broken beyond repair? No. I do think that GSA procurement officials have a lot of work to do to make sure these situations are corrected. They certainly need to clean up their act, and they will need to make hard choices to fix these problems. GSA has a professional force of contracting officers. GSA management needs to let them negotiate the best deal possible without interference from the top. Interference in that process as evidenced by the Sun negotiations may not violate the law, but it is not right and it does not protect the taxpayers. Senior GSA management needs to realize that what may be profitable or strategically important for the GSA may not always be in the best interests of the taxpayers. GSA managers also need to recognize the need for oversight and followup on awarded contracts. Contract officers need to be able to fight for the best possible deal for the taxpayers, even if it means the loss of a contract that is lucrative to the agency for their operating expenses, or for the vendor. GSA must never forget that the real customer is the American taxpayer. Today, I am forwarding three investigative reports to Administrator Doan, to the GSA inspector general, to the House and Senate oversight committees, and the White House Chief of Staff for review. These reports contain proprietary and privacy-protected information and will not be made public by me. The reports provide in great detail the results of these significant investigations into the allegations of inspector general auditor intimidation and top-level GSA management intervention in the Sun Microsystems contract negotiations. As I said, it is not my intent to point the finger at any one individual or company. My sole purpose is to get to the bottom of what may be a significant problem in Government contracting and, of course, get it fixed. I respectfully ask GSA Administrator Doan and the inspector general to address the problems identified in these reports and to take appropriate action in the future. I hope GSA will do a better job of protecting the taxpayers' money. I apologize to the chairman and ranking member of the Labor-HHS Subcommittee for taking this time, but I believed I needed to respond to some of the speeches that were made about the health program before I gave my report on my investigation. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I would like to comment on the status of the alternative minimum tax, AMT. There is some good news regarding the need to do a patch to protect 19 million families. If you look back over the last few months, I have come to the floor several times to urge my friends in the Democratic leadership in both bodies to focus on this problem and get legislation ready. Earlier today, I urged the House to begin work on an AMT patch bill. I urged them to send it to the Senate so that Chairman Baucus and I will have a vehicle to deal with this pressing problem. We have a few weeks to act before the IRS forms are finalized. After that time, there could be big problems for taxpayers and the Internal Revenue Service. I was pleased to read in this afternoon's press reports that Chairman Rangel is going to process an AMT patch bill. I also want to commend our Finance chairman, my friend, Senator Baucus, for convening an informal meeting of the Finance Committee to discuss this pressing matter. I hope the Democratic leadership provides Chairman Baucus floor time to take up a committee bill. On a related point, at a press event earlier today, in answer to a reporter's question, I indicated that we could look at measures to insure that certain high-income taxpayers who pay no regular income tax or AMT pay some tax. I would like to elaborate on that comment. I have referred many times to the IRS statistic of high income taxpayers who pay no regular income tax or AMT. The statistic is that, for the tax year 2004, IRS Statistics of Income reported that 2,833 taxpayers with incomes over $200,000 paid no income tax. That same group paid no AMT as well. I will ask to have inserted in the Record a copy of that statistic. The reason this group does not pay tax is defects in the AMT. What I was saying is that the AMT is defective in its original purpose. That is, to make sure that all high-income taxpayers pay some tax. I was not arguing for a tax increase on high-income taxpayers who are paying either regular income tax or AMT. I was arguing that, if anything, if the AMT's original purpose is to be served, then insure that those not paying ANY tax, pay it. Mr. Presdient, I ask unanimous consent to have a copy of the statistic to which I referred printed in the Record.