Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. To begin with, it is completely ridiculous to suggest that President Bush and Republicans in general did not intend or desire the permanence of tax relief. President Bush and my party generally have favored permanence of tax relief--not just because it brings in less money, but because permanence of tax policy--when investors and laborers can depend on the tax policy, you are going to get better planning long term. It is better for the economy. Mr. President, you need to look no further than the budgets to which I have referred. The administration and the Republican Congress have budgeted for an extension of the bipartisan tax relief provisions. That action has affected the bottom lines of these budgets. And as we heard over and over again, the Democratic leadership, the liberal think tanks, and sympathetic east coast media have criticized the bottom lines of those budgets. So the Democratic leadership, the liberal think tanks, and the sympathetic east coast media cannot have it both ways. We are not going to let them have it both ways. They cannot shut off the bipartisan tax relief, take credit for the supposed deficit reduction, and also claim that there is tax relief in this budget that passed the Senate 2 weeks ago and the House a week ago. Getting back to the blog I referred to, the Daily Kos, one posted as ``Ortcutt'' agrees with this point. Ortcutt, however, incorrectly identifies the purveyor of the phony logic. The blogger puts it on Congressional Republicans and President Bush. As the hard, cold numbers in the Democratic budget resolutions and floor debate in the Congressional Record show, Democrats claim that expired tax relief is not a tax hike. Let me emphasize that. Are we going to let people get away with that, when they know what the law is on December 31, 2010, and the biggest tax increase in the history of the country is going to happen, without a vote of the people? And when that happens, they are saying it is not a tax hike? Surely, they don't think the American people are that stupid. The Democratic leadership are the folks trying to claim that their budgets, which don't provide the revenue room for expired tax relief, don't contain tax hikes. Hogwash. I ask unanimous consent to have printed in the Record the Ortcutt comment.

Mr. GRASSLEY. Mr. President, 2 weeks ago we passed the budget resolution in the Senate. One week after that, the House passed their budget resolution. So we are in a position of being conferenced between the House and the Senate on a budget resolution, and I thought at this point I ought to give some updates, particularly as it relates to the work of the Committee on Finance, and particularly as it relates to the issue of taxes and an impending tax increase that is out there-- tomorrow, almost--a few years away if we don't do anything to stop the biggest tax increase in the country, or that will be, in fact, the biggest tax increase in the country. So as the budget resolution slowly works its way through Congress, one especially important issue wrapped up in this whole great big budget resolution and document is the longevity of the bipartisan tax relief that was enacted in 2001 and 2003, and this very day those tax decreases for working men and women are still in place and will be in place through the year 2010. It has always been my goal, when you have Chairman Greenspan saying that this tax relief for working men and women is the reason the economy has rebounded, that we should continue this tax relief into the future, because if it is the goose that laid the golden egg of 7.8 billion new jobs being created since the recession, then we ought to keep that golden egg working for the American taxpayer. Some people may not give the contents of a budget resolution much consideration since it does not get signed into law by the President but is merely a set of guidelines for tax and spending decisions that apply to Congress as we make permanent law and as we make decisions on tax policy for the future. Those tax and spending decisions must go to the President for his acting on them and then become law. For this reason, along with anyone who supports tax relief, we are very concerned about the budget resolutions passed by the Democratic majorities in the House and Senate that are now in conference. Yes, this is a Republican Senator. I am in the minority now since the last election. So I want to raise these concerns as a responsibility of the majority and to alert the American people about what the majority might be up to, or if they are not up to it, what the consequences are if nothing happens. This concern is derived from the fact that the two budget resolutions--the one in the House and the one in the Senate--do not provide for the extension of tax relief beyond 2010. What does it mean when I use the words the budget resolutions do not provide for ``the extension'' of tax relief beyond 2010? That means, if Congress takes no action, we will have the biggest tax increase in the history of the country, and we will have that tax increase without even a vote of the Congress. For the first time in more than 6 years, Congress is sending a message, then, that there is no guarantee of continued tax relief. In fact, the Democratic budget resolutions say the very opposite. The budget resolution passed by the Senate only provides 44 percent of the revenue necessary to extend these popular, bipartisan--and let me emphasize bipartisan--tax relief bills of 2001. Mr. President, 44 percent is not enough, but that 44 percent is more than the big fat zero percent in the House-passed budget resolution. The House-passed budget resolution provides no revenue room for the extension of tax relief, meaning that the majority of the House of Representatives right now is taking a position on the budget to let the biggest tax increase in the history of our country go into effect without a vote of Congress. What does that mean, besides the biggest tax increase in history? It means things such as no tuition deduction for people sending their kids to college, no teacher deduction for the supplies the teacher might buy out of their own pocket. Those are just a couple of popular items that would expire at that particular time that would be a small part of the biggest tax increase in the history of the country, happening without the vote of the people. I would like to think that I am an optimist, but in conferencing two resolutions, which cover 44 percent on the part of the Senate and zero percent on the part of the House, I am doubtful of reaching a number greater than the already inadequate number of 44 percent provided in the Senate. This stands in stark contrast to the budget that the President submitted this February and to the budgets the President has submitted over each of the last 6 years. All of those budgets provided the revenue room to make bipartisan tax relief permanent. In other words, the President is asking Congress to take action so that the biggest tax increase in the history of our country would not happen; and if it did happen, it would happen without a vote of the people. He thinks that Congress making a decision for tax relief for working men and women provided the incentive, according to Chairman Greenspan, for the economic recovery--and we have now created 7.8 million new jobs-- and ought to be made permanent tax policy. In other words, don't kill the goose that has laid the golden egg. The Democratic budget resolutions can be best represented by a chart that I have here which shows that in terms of the guaranteed tax relief proposal, they amount to a big goose egg for the American taxpayer. We have it right here on the chart. That is a big fat zero. If they are lucky, I suppose college-bound taxpayers could sell this goose egg back to the Democratic leaders in the House and Senate because they will need the money if they are not able to deduct the cost of tuition. What is even more inexplicable than the Democrats' failure to extend the popular and bipartisan tax relief enacted in 2001 and 2003 are some of the reasons given. The chairman of the Budget Committee this year basically said that since the Republicans wrote that law--forgetting that it was bipartisan in 2001; how clever to ignore that fact--it is our problem. The leftwing of the blogosphere has echoed that message of the Democratic leadership. In regard to the left side of the blogosphere, I will briefly describe two posts my staff found on the Internet. The first comes from a scholar of government who posts the Daily Kos under the name of ``piec.'' I may be mispronouncing that, and if so, it is unintentional. According to piec's analysis, the Tax Increase Prevention and Reconciliation Act of 2005, which was signed last May by President Bush, was a ``poison pill'' designed to sabotage the economy to increase the prospects of Republican candidates in 2012. The argument seems to be that having popular and bipartisan tax relief from 2001 and 2003 all sunset at the end of 2010 would cause such an economic mess that the Democrats, assumed by the blogger, piec, to be in power at that time, will take the blame and suffer at the polls. Wouldn't it have been nice if I could think as chairman, when we wrote that bill, that I was smart enough to see ahead from 2001 to 2012? Thank you, piec, for giving me that credit. But I didn't know that. We passed it because of the rules in place at that particular time. It had to sunset. Another observer of Government posted comments under the name of ``Blue Bunting'' to the ``Care2 News Network.'' In a posting titled ``The Monster Republican Tax Hike,'' Blue Bunting says that the ``Republican Congresses chose not to make their tax cuts . . . permanent.'' Her argument seems to be that Republicans put sunset clauses in a bill solely to improve the long-term budget projections and that responsibility for the expiration of tax relief rests completely with the Republicans, even though the Republicans are in the minority. The implication is that by lowering taxes, Republicans are responsible for a tax increase that would occur when the Democratic majorities control both Houses of Congress, even though taxes coming in from all the taxes that the Federal Government collects run to a 50- year average of what they have been, 18.6 percent of GDP. If it has been that way for 50 years, what is the problem? Now, these blogs I have just referred to, these commentaries, are available to anyone if you want to read them online. But to make it easier, I ask unanimous consent that they be printed in the Congressional Record.

Mr. GRASSLEY. Mr. President, when I am done--and I think that will be in about 15 or 20 minutes--I ask unanimous consent the Senator from Texas, Mr. Cornyn, follow me.

Mr. GRASSLEY. Mr. President, the 2001 tax relief bill passed the Senate with 58 yeas. At that time, the Senate was evenly divided--50 Republicans and 50 Democrats--with the Republicans technically having control because of the Vice President's vote. However, not every single Republican voted for that tax relief measure. Those 58 yeas included 12 Democrats, nearly one-quarter of the 50 Democrats sitting in the Senate at that particular time. If all of those Democrats had voted against the conference report, it would have failed. Clearly, it is ridiculous to say this was purely a Republican bill. Given the experience the Democratic leadership has had with cloture votes in the past few months, I would expect them to appreciate the necessity of working on a bipartisan basis in this body. This is the only political institution of our system where minority views are protected and must be respected because of no limit on debate, called a filibuster, and it takes 60 percent, a supermajority, to overcome a filibuster to get to finality. That is where Democrats were protected when they were in the minority for the last 6 years. This is where Republicans are going to be protected for the next 2 years--and hopefully no longer than 2 years--as a minority. It takes 60 votes to get permanent tax relief. The bottom line is, we didn't have the 60 votes in 2001 and 2003 for making these bipartisan tax relief plans permanent. And with a couple exceptions I will discuss shortly, over the last 6 years, we haven't had the 60 votes for permanent tax relief. So tax relief in 2001 was not made permanent because the Democratic leadership and the liberal core of the Democratic caucus have refused to support permanence, and that is apparent now more than ever with the budget that is in conference between the House and Senate. Of course, last November, the Democrats won control of both Houses of Congress. I wonder if the House Democratic leadership will be sending over any bills to make tax relief permanent. I doubt it. Even if the House Democratic leadership did send over such a bill, I would not expect the Senate Democratic leadership to take it up. When in Republican hands, the House regularly sent over bills to provide permanence for various components of the bipartisan tax relief bill which they couldn't get through the Senate. Senate Democrats are clearly capable of working with Republicans to make tax relief provisions permanent if they like what they want to make permanent. And we have done it in the past. The Holocaust Restitution Tax Fairness Act of 2001 repealed the sunset of a provision originally contained in the 2001 tax relief bill that allowed Holocaust survivors and their heirs and estates to receive restitution payments tax free. Making this provision permanent was absolutely the right thing to do, and the fact that it passed the Senate by unanimous consent proves that, and it passed it during a period when the Democrats controlled the Chamber, indicating the level of cooperation that occurred between Senate Republicans and Democrats when Democrats want to make a provision of the tax law permanent law. As I go through these examples, everyone needs to remember that holding the majority in the Senate is not a ticket for either party to force its agenda down the other party's throat. Senate rules encourage cooperation by giving the minority many opportunities to check the majority, and this becomes even more evident when those majorities are very slim as they are right now--51 Democrats, 49 Republicans. And they have been very slim for the last several Congresses. I say this to point out that the Holocaust Restitution Act became permanent because Republicans and Democrats worked together to make it permanent, and it would not have been sent to the President if one side or the other wanted to block it. I will give one more example that occurred last summer as part of the pension reform bill. We call that the Pension Protection Act of 2001. It passed the Senate 93 yea votes and made permanent--now here we have bipartisan cooperation to make permanent other parts of the tax bill-- the retirement security provisions of that 2001 tax bill. Even if every Republican supported the bill, a united Democratic caucus could have held back the five additional votes needed for final passage if they chose. Clearly, Democrats have a record of working with Republicans to make tax relief provisions permanent when they choose to do it. So why not work in the same way to make the rest of that tax law of 2001 and 2003 permanent so we don't have the biggest tax increase in the history of the country without a vote of the American people, so we will have permanence of tax law, so working men and women can plan on the future, so investors who create jobs can plan on the future as well? That is better for the economy. Let me return to the present day. The House and Senate, then, as I have said so many times, passed separate budget resolutions, now in conference, but currently would end up subjecting Americans to the largest tax increase in history, and the Democrats have responded by basically declaring it is not their responsibility. How can a majority so avoid the responsibility of being a majority? The Democratic leadership and the liberal core have the power to make these provisions permanent. I assure my colleagues we will be there working with them as we did on the retirement portions of the pension bill, as we did on the Holocaust relief bill, to make sure it becomes permanent law. I think they should, but I realize they may not agree with me. However, if they do let tax relief expire, they have to take responsibility for letting that happen. They have to take responsibility for the biggest tax increase in the history of the country happening without a vote of the people when they would have had the cooperation of Republicans to make sure it was permanent and to make sure this biggest tax increase doesn't happen. Several times since November, I have heard that elections have consequences, and one of those consequences is for the winner having increased responsibility. Since Democrats have made tax relief provisions permanent in the past--and I have given only two examples-- they can likewise do it again, and they will have Republican cooperation to make it happen. One of the bloggers I cited earlier points out the economic calamity that would befall our country if all tax relief was allowed to expire at the end of 2010. On this specific point, he is correct, and I gave a speech to this effect right here on this floor on March 1 where I cited a study done by the Wall Street firm of Goldman Sachs. If something is not done to extend or make permanent tax relief before the end of 2010, American families, working families, will be hit with a wall of tax increases that is currently built into the Democratic budget resolution. I have a chart. This chart shows, according to the U.S. Treasury, not according to this Senator from Iowa, a family of four with $40,000 of income will be subjected to an average tax increase of $2,052 all at once. The Democrats, now in the driver's seat, need to decide whether they are going to let that wall go up, whether that wall is going to stand between this taxpayer and more money for them to spend instead of more money for me to spend for them, or are they going to take advantage of the opportunity we give them to cooperate to prevent that big tax increase of 2,000 and more dollars to go into effect for a family with an income of $40,000, as though there is something about being rich making $40,000 a year. I want to conclude with a reference to a story about a man who cared a great deal about the typical taxpayer, President Ronald Reagan. During the Cold War, while in West Berlin, President Reagan challenged Soviet President Gorbachev to tear down the Berlin Wall. I challenge the Democratic leadership to tear down the wall of tax increases built into their budgets. I hope my liberal friends in the core of the Democratic caucus will urge the Democratic leaders to tear down the wall of tax increases they have built. This is not a wall Republicans built. This is a wall Democrats through their budget built because they have the power, they have a minority that is willing to cooperate with them, as we have on two other instances I have given in these remarks. Join with us in the Republican conference and tear down the wall of tax increases that has been built. I yield the floor.

Mr. GRASSLEY. Mr. President, responding to another criticism, it is completely off the mark to say the tax relief bills were written by Republicans. It is almost as if the Democratic leadership is saying that tax relief was passed by a National Republican Congress and not by the Congress. The 2001 bill was written by a bipartisan majority and was opposed by a partisan minority led by the Democratic leadership. The conference report to accompany the law that was entitled the Economic Growth and Tax Relief and Reconciliation Act passed the Senate on May 26, 2001. I ask unanimous consent that the information pertaining to that rollcall be printed in the Congressional Record so we can show it was a bipartisan rollcall.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased today to have the fortunate opportunity to recognize and congratulate a fellow Iowan on a magnificent achievement. On Sunday, 31-year-old Zach Johnson won the prestigious Masters golf tournament at the famed Augusta National Golf Club in Augusta, GA. I am joined by my colleague, Senator Harkin, in submitting a Senate resolution congratulating Zach for his victory. Zach not only won one of the most difficult golf tournaments in the world, he also won quite possibly one of the most difficult of all the Masters' tournaments in history. Gusting winds and bitterly cold weather combined with the traditional challenges of the golf course to create one of the toughest tournaments. His winning score of one-over- par 289 tied the highest winning score in Masters history. In the process, he beat fellow golf champions Tiger Woods and Retief Goosen by two-strokes. Zach was born in Iowa City and grew up in Cedar Rapids, playing golf at Elmcrest Country Club in Cedar Rapids. He went on to play golf at Drake University in Des Moines, graduating in 1998. To continue his pursuits as a professional golfer, Zach counted on the support of family and friends in Cedar Rapids who believed in him. His success didn't happen overnight; his dedication to the game and his hard work ethic helped him earn the prized green jacket. Even in the aftermath of winning one of golf's highest achievements, he remained humble in his acceptance. He attributed much of his success to his perseverance and patience. He recognized his family and friends who believed in him even when he wasn't so sure himself, and as a man of faith he knew there was another power guiding him. Through it all, he continued to insist that he's just a normal guy from Cedar Rapids, IA. I am proud of Zach Johnson for his brilliant win, and I am proud of him as an Iowan. I know Iowans are honored and blessed to have a person like Zach Johnson representing us in the world of professional golf. So I congratulate him on his outstanding victory, and I wish him and his family all the best.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I wish to explain to my colleagues why I will vote against S. 5 in its present form, and I believe it will probably be in its present form as we vote on it. We in Congress are petitioned every day by individuals, by families, by companies, by interest groups, and other entities that have a stake in what the Federal Government does. We were elected to this great body to represent people back home, and to provide reasonable solutions to everyday problems that we confront here in the Congress. I meet people in Iowa every week who seek cures for different diseases and different disorders. They seek results, and we fight to provide them results so that life is better, life expectancy is longer. Americans want Congress to fund medical research, and we do it in a big way. That is why we provided nearly $30 billion annually for the National Institutes of Health, which is the leading organization on health-related research. We all know and love someone who has suffered from a devastating disease or disorder. My wife is a breast cancer survivor; my brother died of a stroke; my sister died of an aortic aneurysm. I have friends with diabetes, Parkinson's, and Lou Gehrig's disease. I have known many who have lost a battle to cancer, and others who face a long struggle with Alzheimer's disease. I want cures as well as everybody else wanting cures. I want to believe that the pain and suffering will end as much as anyone wants it to end. But I cannot in good conscience support a bill that forces American taxpayers to fund research that requires the destruction of innocent human life. This is a slippery slope. I wish to address six key points that have been put forward by Robert George and by Thomas Berg. They were made in an op-ed piece from the Wall Street Journal on March 13, this year. These authors state that responsible and productive debate is often lost amidst confusion and misperceptions surrounding the issue of embryonic stem cell research. Both sides of this debate have reasonable arguments. But these authors, including this Senator, believe embryonic-destructive research cannot be morally justified. First, Professor George and Reverend Berg rightly point out there is not a ban on human embryonic stem cell research in the United States. Yet I believe people in this body leave that impression. More importantly, it has left the impression--whether from Members of Congress or other people in our society--there is a Federal ban on human embryonic stem cell research. They leave out the fact we are already doing some through the Federal Government. They leave out the fact that the private sector and State governments are doing a lot of embryonic stem cell research as well. So there is embryonic stem cell research going on. The issue is whether the Federal taxpayers ought to be paying for something that would destroy life at the beginning. What people have forgotten in this debate, then, is George W. Bush was, in fact, the first President to provide Federal dollars for embryonic stem cell research. Throughout the Clinton administration, not one penny of taxpayer dollars was allowed for this sort of research. So there is no Federal ban. In fact, companies and researchers can and are doing it now. There is no legal barrier to prohibit the private financing of it. In fact, we will continue to fund the lines President Bush authorized in 2001. Since the President announced his decision in August 2001, the Federal Government has provided almost $130 million for embryonic stem cell research. Eighty- five percent of the embryonic stem cell research studies in the world use these lines that President Bush's decision in August 2001 allowed. Because of this funding and the investment in the National Institutes of Health, America, our country, remains one of the global leaders in medical research. Why then do some generate the false impression that the Federal Government is not involved in stem cell research? Well, that brings me to the second point. The authors say we are a long way away from seeing the therapies the other side promises. Embryonic stem cell research may not be the magic potion many make it out to be. Even the most ardent pro-embryonic stem cell research experts have stated its benefits are years, if not generations, away. George and Berg quote a prominent British expert who is not entirely convinced that embryonic stem cells will, in his life and possibly anyone's lifetime, be holding quite the promise that some desperately hope they will. One expert from the University of Wisconsin fears a backlash because the cures the public expects could be decades away. I know many of my colleagues and many of my constituents believe embryonic stem cell research holds potential. They believe the hope and the promise of this research will save their lives and the lives of their loved ones. But I cannot support the expanded use of taxpayer dollars to invest in something that is generations away--even if possible--when proven therapies through adult stem cell research, with no moral strings being attached, no lives being taken, are right in front of us. Third, the authors explain that a human embryo is deserving of at least some degree of special moral status. Most people would agree the embryo being destroyed has the potential to be developed into human life. It is a fact. Therefore, it is only right that a heightened degree of sensitivity and consideration be paid to this life at this stage of development, the embryo. This bill then plays with human life. The other side's promise of cures disregards the fact that this bill will allow researchers to kill embryos, and pay for that killing, with American taxpayer dollars. The bill before us says we should fund research using embryos that were on the brink of being thrown away anyway. Thrown away? What about the many children who have been adopted through this process? They were not thrown away or they obviously would not have been here to be adopted. What about making sure that couples are not exploited and forced to create extra embryos so that industry can make a profit? Think how China makes a profit from harvesting organs from prisoners that they execute, or who knows how they die? Tourist medicine is what it is called. Do we want that sort of ethic in our research? I do not think so. What about ensuring those so-called leftover embryos are not being created through cloning? How do we ensure human cloning is not made more attractive, and that researchers are limited to how they create and destroy life? Where do we draw the line? Point number four: There are noncontroversial methods that are worth exploring if you want to do something for curing maladies with stem cells. Other noncontroversial methods of cutting-edge research, those which do not destroy human embryos, offer near equal promise for future medical benefit. Those methods are treating people this very day. Stem cells derived from bone marrow, umbilical cord blood, amniotic fluid, have opened the doors to many therapies. Adult stem cells have already proven effective in treating over 70 diseases and disorders, not something anybody interested in embryonic stem cells can point to. This alternative research has proven effective. We are investing taxpayers' money in research that people are reaping benefits in today. Last year, I talked about an acquaintance of mine by the name of David Foege whom I happen to know from the years when he was a page in the Iowa Legislature in the 1960s. He grew up in Iowa and now resides in Florida. Four years ago, David Foege was told that he had little chance of survival. His heart was losing all function, and there was little that doctors could do. David turned to stem cell therapy. He found doctors in Bangkok who would harvest his own stem cells and inject them back into his own heart. This year, 25 million of his own stem cells were taken from his blood and injected into his heart. He went from a life-threatening situation to a nearly normal heart function. He went from a life expectancy of 90 days to 10 or 15 more years. He is fighting that death warrant that he received years ago. David Foege is evidence that adult stem cells work, that the investment we have made in adult stem cells is paying off, and it is evidence that we ought to put our money where product is received as opposed to the quandary of when will we get therapies or when will we get maladies fixed by the research in adult stem cells. I wish I could list the advances with embryonic stem cell research, but I cannot. There aren't any. There are no treatments for human patients derived from embryonic stem cells. So there is no evidence on which to argue that this research should be expanded with public resources; in other words, tax dollars being used. We in Congress have to realize that there is a difference between hope and hype. The fifth point these authors make, moral concerns are not exclusively religious in nature. Everybody thinks that anyone who is fighting this research is some religious fanatic. Nobody says it better than Charles Krauthammer, a highly regarded columnist and former member of the President's Council on Bioethics. Mr. Krauthammer doesn't believe that life begins at conception, as many who have a feeling about embryonic stem cells and the destruction of life at that stage. But Mr. Krauthammer says that ``many secularly''--I emphasize secularly; I didn't say religious--``inclined people have great trepidation about the inherent dangers of wanton and unrestricted manipulation''--to the point of dismemberment--``of human embryos.'' Mr. Krauthammer says that we don't need religion to simply ``have a healthy respect for the human capacity for doing evil in the pursuit of doing good.'' Mr. Krauthammer knows firsthand what it is like to live with a debilitating disease. He suffers from spinal cord injury. He spends every day of his life in a wheelchair. Even he knows that it is cruel to play on the hearts of those who suffer by saying that a cure is within reach. He said: There's nothing less compassionate than to construct a political constituency of sufferers by falsely and cruelly intimating that their disease is on the very cusp of cure if only the President would stop playing politics with the issue. We aren't playing politics. Reasonable people can disagree on the moral or fiscal consequences of this bill without being labeled religiously minded obstructionists. The sixth and final point that Berg and George make is that medical advancements are not the only interest of stem cell researchers. Because the benefit of embryonic stem cell research is only speculative and many years from producing results, most scientists have acknowledged that the primary interest of this type of research is to enhance the basic knowledge of early human development. S. 5 does not ban human cloning, and it doesn't help draw the line on what researchers should or should not do with so- called leftover embryos. This puts us on a very slippery slope. I urge my colleagues to think long and hard about this issue before casting their vote. S. 5 disregards respect for human life at the expense of prolonging the pain of those who seek a cure. We in Congress and across the country need to think rationally and to make tough choices. The right choice is to invest in what works. I have spent a great deal of time explaining that I thought that was adult stem cell research. I urge my colleagues to join in defeating S. 5 and supporting the proven and noncontroversial field of adult stem cell research. I thank the Chair.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, when we debated the Senate budget resolution in committee and on the floor over the last few weeks, I raised a concern about the transparency of the budget. One of the problems I pointed out was the over reliance of the budget resolution on unspecified revenue raisers. As ranking member of the Finance Committee, I referred mainly to Finance Committee policy demands that weren't realistically reflected in the budget. I referred to currently expiring tax, trade, and health and welfare spending provisions. The expiring tax relief provisions within the first year of the budget resolution alone amount to $135 billion. In discussing the budget, I also referred to the track record of the Democratic leadership, while in the minority, of spending the same revenue raising offsets over and over again. There is a clear risk of this deceptive behavior having a real fiscal impact now that Democrats are in the majority. As has been proven over the last few weeks, the Democratic majority can't reduce spending. So taxes are raised to pay for more spending while the spending-driven deficit remains high. What we have seen is an obsession by the Democratic leadership for going to the tax side of the ledger and gross up the spending side of the ledger. Once again, spending wins out and the taxpayer loses. Now, comes the Wyden-Craig amendment. It increases popular spending-- in this case we are talking about rural schools--and uses revenue raisers to mask the deficit effect of the spending. The budget resolution contains 39 reserve funds that authorize new spending, paid for with unspecified revenue raisers. This rural schools spending program is the subject of 1 of those 39 reserve funds. So, today, Senators Wyden and Craig go to the tax ledger and remove some of the work product of the Finance Committee tax staff to use for their new spending program. As ranking member of the Finance Committee, I view this effort as an intrusion on the jurisdiction of the Finance Committee. During my tenure as chairman, I am pleased to say that this jurisdiction was protected. I have indicated my concern to my friend, Chairman Baucus, that this is the start to a slippery slope of erosion of our committee's jurisdiction. We have seen that those who advocate new spending can't find a dollar of spending offset within a $2.7 trillion budget. From this fiscal behavior, we can expect that the spending of these amendments will continue to be offset from the same pool of offsets. The Finance Committee tax staff can't do the heavy lifting of finding offsets for every new popular spending program. By the terms of the Senate Democratic budget resolution, that pool of offsets has already been subscribed for expiring tax, trade, and health and welfare spending. The Wyden-Craig amendment goes to part of the limited group of offsets and draws from previously passed Senate offsets and a small group of already identified tax gap offsets. These offsets are drawn from the limited group of $43 billion in revenue raising offsets I referred to in my floor statements. There is a new revenue raiser in the Wyden-Craig amendment. I support it. It would permit section 457 retirement plans to employ a Roth IRA option. Some will recall from last year's tax reconciliation conference report a similar proposal. The proposal permitted more taxpayers to convert traditional IRAs to Roth IRAs. That proposal met with severe criticism from the Democratic leadership, their allied liberal think tanks, and some in the east coast media who tend to be sympathetic to the views of the Democratic leadership. I am pleased to see the Democratic leadership has changed its mind. With the Wyden amendment, and the Roth section 457 plan proposal, the Democratic leadership is now on board with the merits of the Roth IRA conversion concept. It will be interesting to see if the liberal think tanks and east coast media are consistent critics or whether they have changed their minds, now that this concept is employed by Senate Democrats. I will be looking for their reaction.

Mr. GRASSLEY. At this time, then, I would ask unanimous consent to set aside the amendment before the body and that we take up Grassley amendment No. 701 to the Durbin amendment.

Mr. GRASSLEY. I heard the objection. I can't believe anyone would object. So we are objecting to protecting Medicaid from fraud? We are objecting to protecting the integrity of the Medicaid Program? We are objecting to stopping inappropriate Medicaid payments? We are making a mistake. I hope this gets fixed in conference, and I am going to work to do that. I regret the objection, but I understand why. Madam President, I yield the floor.

Mr. GRASSLEY. Madam President, the Durbin amendment is a perfect example of why authorizing on an appropriations bill ought to be discouraged. I know many Members are under extreme pressure from their hospitals to support the Durbin amendment, but I would encourage you to read the actual language and consider the consequences of what this amendment actually does. This amendment will lead to anarchy in the Medicaid financial arrangements. As a result of the amendment, CMS will be prohibited from banning bad-actor States from reinstating the questionable schemes Congress has been trying to root out since 1991. This is because the Durbin amendment broadly--very broadly--prevents CMS from taking any action relating to this rule or any rule that would affect Medicaid or SCHIP in a similar manner. For years, Medicaid was plagued by financial gamesmanship. States used so-called intergovernmental transfers to create scams that milked taxpayers out of millions, even billions of dollars. An example: A State bills the Federal Government for a $100 hospital charge. The hospital gets the $100 payment, and then the State would require the hospital to give $25 of it back to the State. In my view, that is a scam. What happens, then, to the $25? In the days before Congress and CMS cracked down on the behavior, the money could go to roads or to stadium construction. That is right, Medicaid paid for roads and stadiums instead of health care for the very poor. Because of the way the Durbin amendment is written, States could return to the financial schemes where they used Medicaid funds for porkbarrel projects. In 1991, 1997, and again in the year 2000, Congress took specific action to limit a State's ability to use payment schemes to avoid paying a State's share of Medicaid. The Durbin amendment blows all that away. I would like to read from a letter from Leslie Norwalk, Acting Commissioner of CMS, released today: The Durbin amendment is so broadly drafted that it would seriously limit the agency's ability to do the normal program oversight to ensure program integrity. If enacted, it could prevent CMS from disapproving State plan amendments that violate, for example, the 1991 provisions on taxes and donations, the 1997 limitations on limiting Federal expenditures to the State plan, and the 2000 phase-down of upper payment limits. She goes on to say: We are deeply concerned that if enacted, the Durbin amendment would reverse this progress and reopen the Federal Treasury to the abuses of the past. Madam President, it is one thing to complain about the CMS rule; it is quite another thing entirely to overturn 16 years of congressional action with this amendment. Let us talk for a moment about the rule in question. The core goal of the rule is to limit provider reimbursement to actual cost. What is wrong with just paying actual cost? I know some people consider this a radical idea, but I just don't understand why anyone thinks it is a good idea to have hospitals paid more than the cost so that they can be part of these scams which rob the taxpayers to fund State pork. Restricting payments to cost is not exactly a new idea. In 1994, the Government Accountability Office recommended that payments to Government providers be limited to cost. This is a fundamental issue of program integrity. What did the GAO find in their 1994 report leading to that conclusion? The State of Michigan used these questionable transfers to reduce its share of Medicaid programs from 68 percent, which is what it should have been, to 56 percent. The GAO found evidence that in October of 1993, the State of Michigan made a $489 million payment to the University of Michigan. Within hours, the entire $489 million was returned to the State. The report found that in fiscal year 1993, Michigan, Tennessee, and Texas were able to obtain $800 million in Federal matching funds without putting up the State's share. Congress and CMS have spent the last 15 years combating this behavior. It makes no sense for Congress to roll back the clock and allow these crazy practices to come back. Over the past 4 years, CMS has been working with States to try to limit these scams. These efforts have not been without their controversy. States have been very concerned about exactly what the new standards are. Senator Baucus and I wrote to the Government Accountability Office and asked them to look into what CMS has been up to. We have been concerned that there has not been enough transparency in what CMS has done. CMS has now published a rule. It is out there in the--government for everybody to look at. The rule stops improper transfers. The rule limits providers to cost. The rule requires payments matched up to claim. Just good accounting. Let me speak to that last one specifically--matched up to claim. Too often in Medicaid, States are allowed to bill for services without being able to document that an actual service occurred. We have a program which spends hundreds of billions of taxpayer dollars. We have a rule which requires that the program better document where the money is spent. What on Earth is going on that I have to come down to the floor to object to an amendment on an appropriations bill that tries to prevent a rule that protects the integrity of the Medicaid Program from going into effect, especially a responsible rule? In 2005, the Finance Committee held a 2-day oversight hearing on the Medicaid Program. As a part of that hearing, we focused on continuing problems of States recycling funds. CMS has acted to stop that. If some people think CMS has gone too far, then we should review their actions in the Finance Committee. We should call CMS in, make them testify, and ask the tough questions to which we need answers. If we think there are things we should have done differently, then we should legislate. That is the way it ought to be done. I want us to ask tough questions about the definition of ``Government provider.'' I want to make sure that requiring schools to file claims isn't going to impede access to care for kids. I would like to know if the rule overturns arrangements such as the one the State of Iowa has created to provide a lump-sum payment to the University of Iowa and Broadlawns Hospital in Des Moines to care for the Medicaid patients. That is the right way to operate. We should deal with it in the Finance Committee. That is why I have, as a general rule, objected to moving legislation in our jurisdiction on appropriations bills. The issues here are extremely complex. They deserve thorough consideration so we can assure the right action. Instead, we are here with this amendment. No hearings have been held, no testimony submitted, nothing. This amendment throws the baby out with the bathwater. Then the bathtub goes out, and then the bathroom--this is the whole house. It undoes 16 years of sound public policy. My amendment allows CMS to move forward to protect the Medicaid Program from fraud, to protect Medicaid integrity, and to ensure payments are not made inappropriately. We should stop an amendment that gives CMS a 2-year holiday from stopping fraud. We should stop an amendment that gives CMS a 2-year holiday from protecting program integrity. We should stop an amendment that gives CMS a 2-year holiday from stopping inappropriate payments. Members should vote on my amendment so that it forces us to sit down and take a serious look at what we are doing here before we make a serious mistake we will all regret. Madam President, how much time do I have remaining?

Mr. GRASSLEY

Mr. GRASSLEY. Do I have to wait for my amendment to be reported?

Mr. GRASSLEY. Mr. President, do we have any time on this side?

Mr. GRASSLEY. Mr. President, I want to lend my support to the Bunning amendment No. 594. In the Deficit Reduction Act of 2005, we gave the States the ability to create flexible benefit plans. Section 6044 of the Deficit Reduction Act established a new section 1937 in title XIX, which allows States the option to provide a benefit package that meets a benchmark standard or benchmark equivalent standard of coverage for certain Medicaid beneficiaries. Under this section, States are required to provide Early and Periodic Screening Diagnostic and Treatment, EPSDT, services to children enrolled in benchmark coverage or benchmark equivalent coverage. Specifically, section 1937(a)(1)(A) contained two related provisions. First, section 1937(a)(1)(A)(i), provides that States choosing to provide coverage under this section must provide benchmark coverage or benchmark equivalent coverage in the case of beneficiaries for whom a benchmark is an option. Second, section 1937(a)(1)(A)(ii), provides that in the case of children under age 19 receiving benchmark coverage or benchmark equivalent coverage, States must cover ``wraparound'' benefits to the benchmark coverage or benchmark equivalent coverage consisting of EPSDT services and benefits specified in section 1905(r). In other words, an EPSDT ``wraparound'' consisting of all benefits and services enumerated in section 1905(r) is a requirement for States electing the benchmark option or benchmark equivalent coverage. The use of the term ``wraparound'' in this section should not be confused with the optional ``wraparound'' flexibility afforded states under section 1937(a)(1)(C). This section allows States to offer one or more ``wraparound'' benefits to enrollees, who otherwise would be limited to benchmark or benchmark equivalent coverage. EPSDT is not made optional but remains a required benefit. On March 31, 2006, the Center for Medicare and Medicaid Services, CMS, issued guidance to states in a Dear State Medicaid Director letter on the implementation of the benchmark coverage. The CMS letter stated the following: Individuals under age 19 who are covered under the State plan under section 1902(a)(10)(A) of the Act must receive wrap-around benefits to the benchmark, or benchmark- equivalent plan, consisting of early and periodic screening, diagnostic, and treatment (EPSDT) services defined in section 1905(r). Wrap-around benefits must be sufficient so that, in combination with the benchmark or benchmark-equivalent benefits package, these individuals receive the full EPSDT benefit. The State plan must include a description of how wrap-around benefits or additional services will be provided to ensure that these beneficiaries receive full EPSDT services. It is my belief that the requirement of the provision of ESPDT to all children receiving benefits through a benchmark benefit package is a settled issue, both as a matter of law and of implementation of the law. Giving States the ability to design benefit packages that are appropriate to the people receiving the benefits is key to Medicaid's future. The purpose of this important provision is to free States from a one-size-fits-all approach to Medicaid. Several States, including Kentucky, West Virginia, Idaho and Kansas, are taking the lead with these innovative plans to cover Medicaid recipients. We should resist any effort to limit the ability of the States to develop and implement these flexible, benchmark benefit plans. This flexibility will strengthen the long-term viability of the Medicaid Program and thereby protects coverage for low income children, pregnant women and families. A vote against the Bunning amendment is a vote against the tools that States desperately need to manage their Medicaid Program. To me, the vote here is obvious. Vote to protect the Medicaid Program and state flexibility in Medicaid. Vote to protect the EPSDT benefit for children. Vote for the Bunning amendment.

Mr. GRASSLEY. I ask for the yeas and nays.

Mr. GRASSLEY. Mr. President, my amendment repeals the AMT. Except for the telephone tax, the alternative minimum tax is the phoniest tax we have ever passed. The AMT, in 1969, was meant to hit 155 taxpayers who used legal means to avoid taxation, under the theory that everybody ought to pay some income tax. This very year, more than 2,000 people who are very wealthy are not paying any income tax or alternative minimum income tax. So it is not even working and hitting the people it is supposed to hit. Right now, this year, 2007, the year we are in, there are 23 million families that are going to be hit by this tax. It is a phony revenue machine, over 5 years, $467 billion dollars. We are going to have to have a point of order this year to keep these 23 million taxpayers from paying this tax. We might as well do away with it right now, once and for all, and be honest about it.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, this budget proposal does not allow the Senate to address the unfair burden of the death tax. By 2011, the tax will affect all farms and businesses worth more than $1 million at a tax rate as high as 55 percent. In the State of Iowa alone, according to the USDA, we have more than 20,000 farms worth more then $1 million. Those families may be land rich, but they are cash poor, and they have to spend too much money today to plan on how to survive the unfair death tax. These are not big farms. With land prices today, you can have as few as 350 acres in Iowa to have a million dollars in value. If the Senate fails to put money in the budget today and we leave the death tax in place in its punitive form, our failure to amend this budget will create the economic uncertainty that could dismantle our farms and small businesses in rural America. I will be voting ``yes'' on the Kyl amendment. It puts money in the budget. It is the responsible thing to do.

Mr. GRASSLEY. Mr. President, the Senate just voted on an amendment that makes a good first step to putting kids first in SCHIP. However, it is all well and good to say we are putting kids first. But the amendment we just voted on is not worth the paper it is printed on if the Senate does not take the next step and back up these words with policy. The Cornyn amendment represents actual kids-first policy. I ask Senators to support the needed next step to putting kids first. Support the Cornyn amendment. Amendment No. 511

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

Mr. GRASSLEY. Mr. President, I ask unanimous consent to withdraw my amendment dealing with payment limitations on farm programs.

Mr. GRASSLEY. Madam President, lately we have heard a lot about the alternative minimum tax. It is a problem around here we have talked about and not done much about over a long period of time, whether Republicans have controlled this body or Democrats have controlled this body. Most often, we talk about the difficulties of really fixing the alternative minimum tax. Obviously, then, it is not a new problem. It has been with us for several decades. The individual minimum tax, the precursor to the alternative minimum tax, as we call it now, dates from 1969. Congress then discovered, somehow, 155 taxpayers with incomes greater than $200,000 a year were not paying any taxes because they could legally avoid those taxes. So it was calculated that everybody ought to be paying a little minimum tax, and that is where the alternative minimum tax comes from. At that particular time, it was affecting about one taxpayer in half a million. Now, clearly, the situation has changed in the last 38 years. Although not its only flaw, the alternative minimum tax's most significant defect is it is not indexed for inflation. This failure to index the exemption and rate brackets--the parameters of the alternative minimum tax system--is also a bipartisan problem. Though $200,000 was not an incredible amount of money in 1969, the situation is different today. I am not saying $200,000 is not a lot of money today, because it is, but $200,000 today will not buy what it would buy in 1969. In 2004--the most recent year for which the Internal Revenue Service has complete tax data--instead of having 155 people paying this tax, more than 3 million families and individuals were hit by the alternative minimum tax. This chart I have in the Chamber has the numbers for every State in the Union. I am not going to go down those numbers now because we do not have time. But you can see, State by State by State, there are tens of thousands of people paying the alternative minimum tax who were never intended to pay it, even though we have taken some action in recent years so yet more people are not paying the alternative minimum tax. This does not even begin to hint at what will happen if we do not continue to protect taxpayers from the alternative minimum tax. Barring an extension of the hold harmless contained in the 2006 tax bill, the alternative minimum tax exemptions will return to their pre-2001 levels. At the end of 2006, provisions allowing nonrefundable personal tax credits to offset AMT tax liability expired. If further action is not taken, it is estimated the alternative minimum tax will claim 35 million families and individuals by the end of this decade. Now, think of that: A tax originally conceived to counter the actions of just 155 taxpayers could hit 35 million filers in just a few years, and I am talking about just around the corner. Some analyses show that in the next decade, it may be less costly to repeal the regular income tax than it would be to repeal the alternative minimum tax. The AMT is a problem that has been developing for almost 40 years. On numerous occasions, Congress has made adjustments to the exemptions and the rates, though not as part of a sustained effort to keep the AMT from further absorbing our Nation's middle class until 2001. We did repeal it in 1998, but President Clinton vetoed it. We never, then, were able to get it repealed. So I am arguing for repeal. Despite the temporary measures we have taken, the alternative minimum tax is still a very real threat to millions of taxpayers who were never supposed to be subject to the minimum tax. That the AMT has grown grossly beyond its original purpose, which was to ensure the wealthy were not exempt from an income tax, is indisputable, and that the AMT is inherently flawed would seem to be common sense. Despite widespread agreement that something needs to be done about the AMT, agreement on what exactly to do is not very widespread. A major factor in the disagreement relates to the massive amount of money the AMT is supposed to be bringing into the Federal Government over the next few years--but remember, supposed to be bringing in from taxpayers who were never supposed to pay it in the first place. In 2004, AMT filers paid more than $12.8 billion into the Treasury. If we do not extend the most recent AMT hold-harmless provisions that expired at the end of 2006, that number is projected to balloon to a much greater amount, and long-term budget forecasts currently show this greater amount coming into the Treasury. When forecasters put their projections together, they are working under the assumption that the hold harmless which was extended in last year's tax bill will not be extended, that we will not take care of this problem. So they are guessing there is a whole bunch of revenue coming in from people who were never intended to pay it in the first place. Because of this, budget planners make the assumption that revenues will be much higher than everyone who is frustrated with the AMT thinks they ought to be. The reason for this is that the AMT ``balloons'' the revenue base, as it is projected to increase revenues as a percentage of gross national product. There is a great deal of evidence to support this. Now, the nonpartisan Congressional Budget Office has consistently forecast the ballooning of AMT revenues year after year. This chart I have in the Chamber shows that with the red line. It takes into consideration that we are going to bring revenue in from people who were never supposed to pay it in the first place. I just want to note that although the Tax Increase Prevention and Reconciliation Act of 2005 was signed into law after this analysis was published, the 2006 tax bill extended the AMT hold harmless only through December 31 of last year, and this chart shows Federal revenues all the way to the year 2050. It is important to note the long-term effects of the AMT on the revenue base because that is what is at issue: the basic idea that we are going to receive a lot of revenue from middle-income taxpayers who were never intended to pay it--which is part of that red line we have to get rid of because why tax people if they were not supposed to be taxed? The law is corrected from time to time to keep it from happening. There may be some doubters who hesitate to attribute this ballooning of revenues to the AMT. But this next chart illustrates the drastic expansion of the AMT under current law over the next 43 years. The Congressional Budget Office's report also states: [B]y 2050, roughly 15 percent of individual income tax liability would be generated by the AMT, compared with about 2 percent today. This is what will happen if we do not do anything. The problem with all of the projections showing the AMT ballooning revenues is that these projections are used to put together the budget we have before us. Now, this is not a Senator Conrad problem. This is not a Democratic problem. This is a bipartisan problem. Republican and Democratic budgeteers rely on the same source of revenue--or I should say a source of revenue the Congressional Budget Office says is going to come in from people who were never intended to pay it. This means the central problem in dealing with the alternative minimum tax is money. There are some people who say we can only solve the AMT if we offset the revenue and it can be found elsewhere to replace the money the AMT is currently forecast to collect. But we never intended to collect it from the people who we suppose are going to pay it. Anyone who says this sees the forecasts showing revenues being pushed up as a percentage of gross domestic product and wants big government to keep them up there. These arguments are especially ridiculous when one considers that the alternative minimum tax was never meant to collect so much revenue. It is a failed policy in many ways. The alternative minimum tax has even failed in its objective to ensure no citizen, no matter how wealthy, was able to completely avoid the Federal income tax, because in 2004, the Commissioner of IRS, Mr. Everson, informed the Finance Committee that the same number of taxpayers, as a percentage of the tax-filing population at large, continues to pay no Federal income tax. It boils down to the fact that the class of 155 people the law was set up for in the first place, in 1969, is even finding ways out of getting hit by the alternative minimum tax, and doing it legally because we have 2,366 taxpayers with incomes of $200,000 or more who do not use the medical and dental deduction had no income tax and no alternative minimum tax. The AMT has failed in every way except the ability to make Government bigger, or at least make it look bigger, and for those who think you ought to have an offset, to keep it big. The AMT has failed. While it may be hard for some to turn down taxpayers' money, whether we are supposed to collect it or not, no one has trouble spending the money--even the blue smoke money that is in that red line there. It is simply unfair to expect taxpayers to pay a tax they were never intended to pay, and it is even more unfair to expect them to continue to pay for that tax once we get rid of it. The reform or repeal of the AMT should not be offset because it is money we were never supposed to collect in the first place. The way to solve this problem is to look on the other side of the ledger, to the spending side. Budget planners need to take off their rose-colored glasses, because that never materializes, and if it does, you are going to ruin the middle class. So take off your rose-colored glasses when looking at long-term revenue projections and read the fine print. In general, it is a good idea to spend money within your means, and this is true in this case for the Government as well. If we start trying to spend revenues we expect to collect in the future because of the alternative minimum tax, we are living beyond our means. We need to stop assuming record levels of revenue are available to be spent and recognize the alternative minimum tax is a phony revenue source. As we consider how to deal with the alternative minimum tax, we must first remember we do not have the option of not dealing with it. The problems will only get worse every year and make any solution even more difficult. We must also be clear the revenue the AMT would not collect as a result of repeal or reform should not be offset as a condition of a repeal or reform. We shouldn't call it lost revenue because it is revenue we never had to begin with. A few weeks ago I presented to this body a joint tax estimate of how various proposed fixes to the AMT will impact revenues expected to be collected under current law. I noted at that time that full repeal aside, each of these proposals will still allow the alternative minimum tax to bring in hundreds of billions of dollars into the Treasury. If you consider any proposal aside from full repeal, you are saying hundreds of thousands, if not millions, of taxpayers out there deserve to bear the burden of the AMT. In other words, the middle class that is so talked about on this floor of this Senate to protect, the only way they are going to be protected is the extent to which we do away with this tax. Suppose we are able to continue enacting 1- or 2-year temporary patches, as we have done. First, this strategy assumes Congress will have the time and the inclination to spend time dealing with the alternative minimum tax every year or two. This means whatever the issue of the day might be--Iraq, unemployment, natural disasters-- Congress will have to stop dealing with those other problems and return to a problem we should never have had to deal with in the first place. Is the alternative minimum tax an issue that we as a legislative body want to revisit every year? Wouldn't it be better to solve it once and for all, particularly since it is phantom revenue, taxing middle-class Americans who were never supposed to pay it in the first place? Remember, only 155 taxpayers were targeted with this tax in 1969. Second, every time Congress attempts to enact or extend a temporary fix, the same revenue issues are going to come up. Budget projections create the illusion of forgone revenues given up because of an alternative minimum tax hold harmless. Every time a patch is considered, there is another chance for taxpayers to be subject to this stealth tax increase. Clearly, there is only one way to fix the AMT so no taxpayer is subjected to what has become a complete policy failure. We must completely repeal the individual AMT. There is a bipartisan consensus that only complete repeal is an adequate solution to this problem. Chairman Baucus, along with this Senator, Senator Crapo, Senator Kyl, Senator Roberts, Senator Schumer of New York, and Senator Smith last month introduced the Individual Alternative Minimum Tax Repeal Act. We must repeal the AMT and we must do it without offsetting any revenue the AMT is expected to collect in the future. I have made this point before, but it is important. The alternative minimum tax was never intended to be a significant source of revenue. It was only meant to hit a few people who could legally avoid paying the tax with the idea that everybody living in America ought to pay a little bit of income tax for the privilege of benefiting from this great economy we have. Despite this, the alternative minimum tax will balloon revenues to historically high levels if something isn't done, as my colleagues can see right there on the chart. If we consider the AMT to be a fundamentally unfair tax, any tax that would replace it would be equally unfair. Anyone who wants equity to be a fundamental value represented in our Tax Code and who wants fair treatment for this country's middle-class taxpayers must support my amendment for complete repeal of the individual income tax. I filed an amendment that repeals the AMT. I am going to push this body to speak on this proposal for these reasons: We need to get Members who say they support AMT repeal to show their support for the record; second, to eliminate the mythical budgeting that results from assuming current levels of AMT revenues; third, to show the American people we will walk the walk on the AMT repeal and not just talk the talk. I know some who oppose my amendment will argue two points: that there is $180 billion in the budget for tax relief; and secondly, we can't afford the repeal of AMT. As to the first point, the purpose of the Baucus amendment, which I supported yesterday, was to deal with less than half of the tax relief that expires in the year 2010. In a sense, Members have indicated where they want that money to go, and that revenue loss is built into the post-2010 period. As to the second point, we can afford to repeal the AMT because revenues remain at or above record levels in the outyears with the AMT gone. Honest budgeting would recognize it as fictional in any event. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. I am sure we will be able to work that out.

Mr. GRASSLEY. Madam President, I appreciate very much that the Senator from Texas has offered his amendment. I support it. I supported it during the Budget Committee's markup of the legislation that is before us right now, and I am happy to support it on the floor. This amendment adds a new reserve fund which identifies some very important priorities that complement the reserve fund in the legislation that has come out of the Budget Committee. The reserve fund in the budget stipulates the legislation reported out of the Finance Committee must ``maintain coverage for those currently enrolled in [the State Children's Health Insurance Program].'' As my colleagues in the Senate know, this current population includes children, pregnant women, parents, and childless adults. The cost of extending coverage to these populations has been roughly estimated by the Congressional Budget Office to require a net increase of budget authority of approximately $8 billion. The Cornyn amendment would put kids first--after all, wouldn't you think that is what the State Children's Health Insurance Program ought to do, put children first--prioritizing lower income children and limiting the use of State Children's Health Insurance Program funds for nonpregnant adults unless States are covering those children. We will have to make some very difficult choices when it comes to the limited funds available for the SCHIP. The cost of covering children who are uninsured but eligible for SCHIP continues to rise. According to the Center on Budget and Policy Priorities and their analysis--and this was in a recent memo from the Congressional Budget Office--it will take $47.5 billion to cover the estimated 6 million children who are uninsured but eligible for either SCHIP or the Medicaid Program. To quote the center, even this figure is ``too low''--those are their words: ``too low''--because it does not include the cost of the policies necessary to increase enrollment in Medicaid and SCHIP. Given the priorities placed on pay-as-you-go and the limited offsets available to pay for increased SCHIP spending, it appears some priorities have to be set. We are faced with that every day--setting priorities, that everybody cannot have everything they want. Republicans have taken the position--and I emphasize that position-- we want to prioritize putting kids first. So I support Senator Cornyn's emphasis upon this key principle. I also agree with the language in the budget that would support States in their efforts to move forward in covering more children. However, this language can be improved by emphasizing that reauthorization should make State flexibility a priority. With State flexibility, we can get more bang with the State's money, we can get more bang for the Federal dollars going into the program. We found that in Medicaid last year when a bipartisan group of Governors came to me, when I was chairman of the Finance Committee, and sat down and said: If you can give us more flexibility in Medicaid, we can save State tax dollars, we can save Federal tax dollars, and we can serve more kids who have need--because States know what their local situation is, they know better than we do in Washington to get the most bang for the taxpayers' dollars. So we can do the same thing for the SCHIP program by giving the States greater flexibility. Much of the success we have seen relative to the SCHIP program is because the Congress gave States the authority to manage the SCHIP caseloads, to control costs, and to experiment with innovative strategies to increase access to health care. This country is so geographically vast, our population is so heterogeneous that if you try to make all policy by pouring policy in the same mold in Washington, DC, it is not going to fit New York City the same way it might fit Des Moines, IA. But we ought to give those States in the case of New York, Albany, and in the case of Iowa, Des Moines, give those leaders, Governors and State legislatures, some leeway so we get more bang for our buck. Reauthorization then should build on the State flexibility that was already there and should be a key feature of the priorities set in the budget. Finally, given my zeal for oversight, meaning congressional oversight of what our bureaucracy does and how the taxpayers' money is spent, I must also commend the Senator from Texas for including, as a priority for the SCHIP reauthorization, improving and strengthening the oversight of Medicaid and SCHIP to prevent waste, fraud, and abuse. We have made improvements to preventing waste, fraud, and abuse, but we can certainly do more. We can always do more. I commend the Senator for his amendment. It builds on the language already in the bill, and I urge my colleagues to vote in favor of it. I reserve the balance of the time on our side.

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

Mr. GRASSLEY. Mr. President, I rise to offer an amendment on the agricultural portion of the bill to provide payment limitations on payment to farmers. The American people recognize the importance of family farmers in our Nation and the need to provide an adequate safety net for family farmers. That is what a farm program is all about. In recent years, however, assistance to farmers has come under increased scrutiny, and it should. Take a look at some of the headlines that ran last year on the front page of the Washington Post. The first headline reads: Farm program pays $1.3 billion to people who don't farm. That is going to make any taxpayer, rural or urban, mad because the general assumption is that farm programs support family farmers and do not go to people who don't farm. A second headline reads: Federal subsidies turn farms into big business. In other words, the Federal taxpayers are paying to help big farmers get yet bigger. The article goes on to say: The shift in subsidies to wealthier farmers is helping to fuel this consolidation of farmland. The largest farm's share of agriculture production has climbed from 32 percent to 45 percent, while the number of small- and medium-size farms has tumbled from 42 percent to 27 percent. These were just a couple of headlines from a series of articles from the Washington Post on waste and abuse in farm program spending. Critics of farm payments have argued that the largest corporate farms reap most of the benefits of these payments. What is more, farm payments that were originally designed to benefit small- and medium- size family farms have contributed to their own demise. Unlimited farm payments have placed upward pressure on land prices and have contributed to overproduction and lower commodity prices driving many family farmers off the farm. The law creates a system that is out of balance. This is pointed out in the chart I have, which shows that we have a system where 10 percent of the farmers--10 percent of the farmers--maybe I should say just 10 percent of the farmers get 72 percent of the benefits, and the top 1 percent of the biggest farmers get almost 30 percent of the benefits. I believe we need to correct our course and modify the farm programs before those programs cause further concentration and consolidation in agriculture and lose the support of urban taxpayers because without their support, we could not have a farm safety net. Today, most commodities are valued off demand. Markets dictate profitability. When farmers overproduce by planning for, according to the farm program, whether its a loan or the LDP Program or whatever it might be, then markets are not functioning. I mentioned earlier that the Federal farm programs are influencing land prices across the country. Iowa land is now selling for between $4,000 and $6,000 an acre in counties near my home of New Hartford, IA. When I was chairman of the Senate Finance Committee, before the last election, I was also a member of the Budget Committee and the Agriculture Committee. I have used those committee positions as opportunities to file amendments that I believe will help revitalize the farm economy for young people across this country. My amendment today will put a hard cap on farm payments at $250,000. The average taxpayer listening to me might say: What planet did you come from--$250,000 is an awful lot of support. But I am saying in comparison to limits that are now in the bill of $360,000 and legal subterfuge to get around the law to allow some farmers to get millions of dollars. So this is a $250,000 hard cap--still too high for some family farmers but a compromise that has gotten through this body in the past and I am counting on getting through this time. No less important, this will close those legal subterfuges or loopholes--whatever you want to call them--that have allowed large operations to evade even the $360,000 limit and, as a result, receive benefits many times larger. To remind everybody, I voted against the conference report of the present farm bill in the year 2002, and this was one of my many reasons, because it did not have this hard cap in there, even though it passed the Senate. I have been fighting to reduce large-scale subsidies for over 30 years. If one looks at the Congressional Record in the 1970s, it will show I was leading in that area. More recently, I worked with the good Senator from North Dakota, Mr. Dorgan, on a similar measure in the 2002 farm bill, and it passed with bipartisan support of 66 to 31. That amendment, as I said, was taken out in conference. So I urge my colleagues to check their past votes on this issue during the last farm bill debate. One section that was added in the farm bill was section 1605, which set up a Commission on the Application of Payment Limitations for Agriculture. The purpose of the Commission, after the failure of our legislation in 2002 in the farm bill because it didn't come out of conference, was to set up this Commission. The purpose of the Commission was to study this issue. The Commission also said that the 2007 farm bill is the time for these reforms to be made as part of the change to permanent law. So that is why it is legitimate to have it as part of this budget debate. Congress enacted the Agricultural Reconciliation Act of 1987, called the Farm Program Integrity Act, to establish eligibility conditions for recipients and to ensure that only entities engaged actively in agriculture receive farm payments. To be considered actively engaged in farming, that act required an individual or entity to provide a significant contribution of inputs--capital, land, equipment--as well as significant contributions of services of personal labor or active management to the farming operation. But people have been able to find loopholes around this act, facilitating huge payments that our hard cap is meant to overcome. I held a hearing through the Finance Committee on a Government Accountability Office report that was released about 3 years ago, April 24, 2004. The GAO report recommended that measurable standards and clarified regulations would better assure that people who receive payments are, in fact, engaged in farming. Of the $17 billion in payments the USDA distributed to recipients in 2001, $5.9 billion went to just 149,000 entities. Corporations and general partnerships represented 39 and 26 percent of these entities respectively. Here is an example from the March 2005 Washington Post article of someone who qualified for payments. I quote from the newspaper: If the purpose of farm subsidies is to make family farms viable, it's hard to see why payments of more than $400,000 a piece should have gone to 54 deceased farmers between 1995 and 2003, or why residents in Chicago should have collected $24 million in farm support over that period. This type of arrangement, and others such as that, raises questions about the interpretation and enforcement of the 1987 act's requirements that each partner be actively engaged in farming. This is why I wrote the Government Accountability Office to conduct that study I referred to on which we held a hearing in the Finance Committee. I encourage Members of this body to take a look at that report as well. During past markups of the Senate Budget Committee, I was able, with the help of the current chairman, Mr. Conrad, to include a sense-of- the-Senate amendment expressing support for stronger farm payment limits. The proposed amendment would cap Farm Commodity Program payments at $250,000 a year per person during any one year. This would encompass direct payments, countercyclical payments, loan deficiency payments, and marketing loan gains. Gains from commodity certificates will be counted toward limitations, closing another very abusive loophole, particularly those farming in cotton and rice. By adopting this amendment, it could save the taxpayers over $500 million in savings over a 5-year period of time and more than $1 billion over 10 years. With these savings, the amendment that is being presented by Senator Grassley and Senator Dorgan would put money toward conservation, nutrition, research, value-added agriculture, and renewable energy programs. The budget resolution before us provides a very much needed reserve fund for the farm bill of $15 billion. Every penny of this fund will be needed if we are to adequately respond to the major needs and opportunities to increase energy independence, restore cuts in conservation, improve farm income through value-added grants, reduce hunger, and invest in the future of food and agriculture through cutting-edge research. However, the reserve fund is conditioned on offsets. The amendment I am offering is part of the solution to this reserve fund dilemma. A vote for this amendment, then, will help us get a better farm bill done, not just to help farmers but to help the entire society as it includes so much that benefits people just beyond agriculture. Not only has the Senate previously agreed to payment limit reform, but the President, in his past budgets--I think at least the last 3 years--has supported a broad set of savings proposals recommending reduction in subsidies for larger, more financially secure farmers and promoting more efficient production decisions, although this year the administration proposed that no one should get farm payments if they have an adjusted gross income of over $200,000 a year. That is just another way, and not a bad way, but another way of getting what I am trying to get through this hard cap. So I don't find fault in what the administration is proposing in that area. I think the administration is proposing a very good bite and another bite at the apple. I have been hearing directly from producers for years exactly what the Secretary of Agriculture heard at his farm bill forums. We are hearing that young producers are unable to carry on the tradition of farming because they are financially unable to do so because of high land values and cash rents. Neil Harl, a distinguished agricultural economist at Iowa State University and one of the contributors to the Payment Limitation Commission, wrote this: The evidence is convincing that a significant portion of the subsidies is being bid into cash rents-- Making the cash rents higher-- and capitalized into land values. All making it very difficult for new, young farmers to get started in farming. If investors were to expect less Federal funding or none at all, land values would likely decline, perhaps by 25 percent. On March 20, 2005, the Atlanta Journal-Constitution printed this: As time has gone by, smaller farmers most in need have received less and less of the government's support and corporate-like farms more and more. By voting in favor of this amendment, we can restore the cuts that were made to conservation, rural and renewable energy programs during the markup of the Ag section of reconciliation. We can allow young people to get into farming and lessen the dependence on Federal subsidies. This will help restore public respectability for Federal farm assistance by targeting this assistance to those who need it, where it has traditionally been over the 70 years of the farm program. Before I close, I wish to remind everyone who voted against a similar amendment during the 2005 reconciliation vote, the argument that we need to wait until the farm bill debate is not going to work anymore-- that was the argument some people who changed their vote used at that particular time--because this is the year of farm bill debate. This is the budget that contains the baseline for the farm bill that we are going to pass this year. Let's stop kicking the can down the road and say we have to wait until the farm bill debate. The here and now is the here and now. How can you say you are for conservation or you are for renewable energy or you are for child nutrition--that you are for all those things and then come to the floor and vote the opposite way? This is an opportunity to show to the people of this country we are not going to subsidize the biggest farmers getting bigger, wasting taxpayers' money, keeping young people off the farms and out of the farming profession and bringing ill-repute to a farm program that it takes city folk, represented in the Congress, to vote for in order to sustain the safety net for farmers.