Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. I will yield 10 minutes, yes.

Mr. GRASSLEY. I thank the Senator from North Dakota for his support, not only this year but over the long period of time we have been fighting this battle. I send this amendment to the desk, and I would then like to make a unanimous consent request and also a request of some abeyance by my colleagues--if I could have permission in the 5 minutes I have left-- to, first of all, set the amendment I sent up to the side and then to call up another. Amendment No. 464

Mr. GRASSLEY. I ask unanimous consent to set that amendment aside for the consideration of an amendment dealing with the Smithsonian.

Mr. GRASSLEY. Mr. President, this amendment, as I said, focuses on the Federal Government's support for the Smithsonian Institution. The American people, I believe, have been shocked and outraged to read in newspapers and see on their TVs a story about the out-of-control spending at the Smithsonian by the Secretary of the Institution: First- class air travel for the Secretary and his wife, a palace for an office, and hundreds of thousands of dollars spent on the Secretary's own home for things such as chandelier cleaning and pool heaters are impossible to justify. As my colleagues know, the Federal Government provides over 70 percent of the Smithsonian's approximately $1 billion budget. Most of the rest of the budget comes from tax-preferred charitable donations. Directly or indirectly, the Federal taxpayers pay for almost everything in the Smithsonian. My amendment is very straightforward. The budget resolution provides for a $17 million increase for the Smithsonian. I commend the chairman of the Budget Committee for increasing the spending for the Institution, and I support that action. As a report issued today from the Smithsonian Arts External Review Committee made clear, there are very significant problems at the Smithsonian in terms of maintaining and protecting the Smithsonian infrastructure and exhibits. The Smithsonian is the keeper of America's treasures, and we want a museum we can all be proud of. So I support the additional $17 million. But similar to many Americans, my reaction to the Secretary's spending is I want to make sure we are not having new money used to order another round of champagne. My amendment basically fences the $17 million increase but allows the chairman of the Senate Budget Committee to revise the allocations--effectively to release the $17 million in new spending--once and only after the General Accounting Office has certified the following: No. 1, that no one at the Smithsonian is getting paid more than the President of the United States, as was proposed by the House Appropriations Committee last year; no more paying for French doors at the Secretary's home, in other words. There are many fine museums and charities that receive the same amount of charitable donations as the Smithsonian that are able to hire very able directors for what we pay the President of the United States. No. 2, the Smithsonian must follow the travel expenditure guidelines of the Federal Government. No more first-class flights with wife and Secretary to Hawaii to enjoy Thanksgiving. No. 3, the Smithsonian must have ethics rules similar to the ethics rules of Federal Government employees. No more sitting on corporate boards, making big, big money--corporations that have contractual relations with the Smithsonian and possible conflicts of interest. The amendment also makes clear that the actions of the Secretary are not in keeping with the public trust of the office. Finally, the amendment states that a priority should be given to funding for repairing and maintaining the Smithsonian and to fully fund the Office of Inspector General at the Smithsonian so the American people and the Congress can have renewed confidence that the $700 million-plus in Federal funds the Smithsonian has is used properly and appropriately. I am still working with the chairman and with Senator Gregg to make certain this amendment is drafted in a manner that meets their concerns. I am confident we can do that. I yield the floor.

Mr. GRASSLEY. We do not need a rollcall vote.

Mr. GRASSLEY. We do not need a rollcall vote.

Mr. GRASSLEY

Mr. GRASSLEY. The legislation that contains these provisions spans years so they don't correspond on a year-by- year basis. The point here is to look at what Congress was able to accomplish over a 6-year period as evidence of what it might be able to accomplish over the 5-year window of the budget resolution. Some might say it is comparing apples and oranges, because the House was under Republican control during that period. But as we are seeing, Democratic control does not seem to have changed the allergic reaction of the House of Representatives to revenue raisers. Because during the markup, while the chairman of the Budget Committee was holding up his chart, as he did today, with a picture of a German sewer system that U.S. companies are claiming phony depreciation deductions on through abusive leasing transactions, the chairman of the Ways and Means Committee in the other body was holding a hearing and somehow sympathizing with lobbyists about how it is bad tax policy to shut off these tax benefits. The most significant package of revenue raisers over this period was in the American Jobs Creation Act of 2004. I took a lot of heat on those revenue raisers, as shown in the Congressional Daily article entitled ``Balance of Payments, A Closer Look at Tax Bill Losers.'' This article refers to the revenue raisers in the Senate passed JOBS bill as ``the most significant rollback of tax loopholes since 1986.'' I ask unanimous consent that that article be printed in the Record.

Mr. GRASSLEY. Yes.

Mr. GRASSLEY. Well, I could imagine so because they are a party that enjoys increasing taxes. So I can understand that.

Mr. GRASSLEY. Of course not. It is on the real Web site. Well, I referred to this 2004 JOBS bill before in my remarks, shutting down the tax benefits for companies that enter into corporate inversion transactions and abusive domestic and cross-border leasing transactions. The JOBS bill also contains a package of 21 antitax shelter provisions. That has been law since 2004. As ranking member of the Finance Committee, I saw to it that the minimum wage and small business tax relief package also contained antitax loophole provisions--and that stuff is still before the Senate--including shutting off tax benefits for corporations that inverted after Senator Baucus and I issued a public warning that legislation would stop these deals, shutting off tax benefits from abusive foreign leasing transactions that were not caught by the JOBS bill, and doubling penalties and interest for offshore financial arrangements. But again, I refer to the Democratic chairman of the tax-writing committee in the other body, the Ways and Means Committee, who does not appear to be supportive of these provisions based upon a hearing he had last week, even though--even though--the same Member of the other body voted for many of them in the public JOBS conference in 2004. So having studied these issues and having legislated in this area, I consider my views on tax policy directed at tax shelters and tax havens to be credible. From what I can tell, the distinguished chairman of the Budget Committee in the Senate views the problem of offshore tax havens in two categories: One, the ability of U.S. multinationals to shift income to these tax havens; and, two, tax evasion by U.S. individuals who hide assets and income in tax havens. We have seen Democratic Senators, including the chairman of the Budget Committee, hold up a picture of the Ugland House, a law firm's office building in the Cayman Islands, as home to 12,748 corporations. I would like to give Senators some background on where that picture comes from and at what issue it is aimed. That picture comes from an article published in Bloomberg Markets in August 2004, and it is titled ``The $150 Billion Shell Game.'' The article focused on the ability of U.S. multinationals to shift income to low-tax jurisdictions through transfer pricing. Transfer pricing is a term for how affiliated corporations set the prices for transactions between them. Transfer pricing is important because it determines how much profit is subject to tax in different jurisdictions involved in related party transactions. The $150 billion figure is an academic estimate of the annual amount of profit that corporations shift outside the United States with improper transfer pricing. That is what the $150 billion figure is. Let me make that clear. It is an estimate of the annual amount of profit that corporations shift outside the United States with improper transfer pricing. So this article is aimed at U.S. corporations that artificially shift their income to low-tax jurisdictions through improper transfer pricing practices. To illustrate this point, I have produced a few quotes from that article. The first one says: Under U.S. law, U.S. companies can use Cayman subsidiaries and transfer pricing rules to shift sales and profits from other countries, thus reducing their overall tax burden. Another quote: A practice called transfer pricing may be the key to how U.S. corporations avoid taxes in the U.S. and other countries. That last quote is from my colleague, the Senator from North Dakota, Mr. Dorgan. One of the Democrats' revenue raisers, then, that is still on the shelf purports to target this transfer pricing problem. But you would not know it by looking at the language of the proposal because it does not make any changes to our transfer pricing rules. Instead, the proposal would eliminate deferral for income of any U.S. multinational's foreign subsidiaries incorporated in certain black- listed jurisdictions. It is called the tax haven controlled foreign corporate proposal. I am going to call it CFC for short. Part of our Tax Code since 1918, ``deferral'' means that U.S. multinationals do not pay tax on active income of their foreign subsidiaries until that income is repatriated to the United States. Passive income is subject to tax on a current basis. Deferral only applies to active income. I agree with the premise of this proposal that U.S. multinationals should pay their fair share of U.S. taxes. U.S. multinationals that use improper transfer pricing do so to obtain the benefits of deferral on profits that, economically, should be subject to tax in the United States on a current basis. Here is my quote from the Bloomberg article: We have to get on top of corporate accounting and manipulation of corporate books for the sole purpose of reducing taxes. Nobody is going to disagree with that. So my view is that stronger transfer pricing rules and stronger enforcement of those rules is the right way to target this problem in our current international tax system. The Internal Revenue Service is taking steps to tighten our transfer pricing rules. In 2005, that agency proposed regulations that would overhaul the rules for so-called cost-sharing arrangements. These are arrangements by which U.S. multinationals are able to transfer intangible property to subsidiaries in low-tax jurisdictions. Based on the volume of complaining I have seen lobbyists level at the Treasury and the IRS, the proposed IRS regulations would go a long way to prevent artificial income shifting. I hope to see these regulations finalized very soon. Others have different views. They would eliminate deferrals altogether. So another quote in the Bloomberg article succinctly states this view. This is a quote from Jason Furman, a former aide to Senator Kerry of Massachusetts. It says: American companies should pay taxes on their profits in the same way whether they earn them in Bangalore or Buffalo. Now, that might sound simple enough, but that is where these proposals to eliminate or curtail deferrals on a piecemeal basis are headed--headed in a way that is going to be harmful, to completely eliminate deferral for U.S. multinationals. Without a significant corporate tax rate reduction--and I would be in favor of doing that-- eliminating deferrals would have the effect of exporting our high tax rates and putting U.S. multinationals at a competitive disadvantage in the global marketplace. When I said I would be in favor of reducing our corporate tax rates, that is because other countries are doing it and if we don't soon do something along that line, we are going to lose a lot of business and particularly a lot of manufacturing here in the United States. The Senate is on record as wanting to protect the competitiveness of U.S. businesses in the global marketplace. That is what the American Jobs Creation Act of 2004--an act I referred to several times today which contains several international simplification provisions, and with a vote of 69 Senators, including 24 Democrats, we passed that bill. The Senate version of the JOBS bill passed with a more bipartisan majority--92 Senators, including 44 Democrats. There has been a longstanding debate about whether our international tax system should be fundamentally changed. Some advocate taxing all foreign income on a current basis; others argue for completely exempting active foreign income under a territorial system, as many of our trading partners do. If we want to have that debate, that is a very fair debate to have, but piecemeal cutbacks on deferral for active foreign income would do nothing but complicate the Tax Code and create opportunities for tax planning around those cutbacks. The other offshore issue identified by the chairman of the Budget Committee is U.S. tax evasion by individual taxpayers who hide their assets and income in foreign bank accounts and foreign corporations. Since 1913, our Tax Code has subjected U.S. citizens to taxes on their worldwide income. No matter what the Internet purveyors of tax evasion say, this principle cannot be avoided by putting passive assets and income into a foreign corporation. The Tax Code has rules to prevent this. Taxpayers who do that willingly violate these rules and, of course, are guilty of tax fraud and, in some instances, may even be guilty of criminal fraud. So the problem of offshore tax evasion isn't that our laws permit it; the problem is there are some taxpayers who are intent on cheating, intent on hiding their income from the Internal Revenue Service. The Service has been successful in catching many of these, but more can be done, and I will help do it. The Service has difficulty detecting tax evasion and obtaining the information necessary to enforce our laws. One important tool for the IRS is information exchange with other jurisdictions. Our double tax treaties contain an article on information exchange designed to help the IRS obtain quality information to enforce our tax laws. In addition, administrations past and present have entered into over 20 tax information exchange agreements with jurisdictions that are often referred to as tax havens. Sensible solutions to this problem should aim to improve on our tax information exchange network and not put it at risk. Underreported income is the largest piece of the tax gap. We should keep in mind that hiding assets and income from the IRS isn't just an offshore tax haven problem; it may also be an onshore problem. A recent article in USA Today noted that there is: A thriving mini-industry that has capitalized on real or perceived gaps in domestic incorporation laws and virtually nonexistent government oversight to promote some U.S. States as secrecy rivals of offshore havens. The picture of the Ugland House in the Cayman Islands makes for good grandstanding, yes, but there are also office buildings in some States that are listed as addresses for thousands of companies which are incorporated in those States for similar reasons as corporations may be incorporated in the Cayman Islands; that is, secrecy of ownership and a permissive regulatory environment. Whatever additional solutions the Finance Committee comes up with to shine sunlight on tax evaders will need to consider both offshore as well as onshore evasion. To conclude, I wish to emphasize that I am all for shutting off inappropriate tax benefits from offshore arenas. The chairman has said he thinks we could get $100 billion a year from this source. I haven't seen any proposals scored by the Joint Committee on Taxation that come even close to bringing in that kind of money. The last score I have seen for the tax havens CFC proposal is $7.7 billion over 5 years. Senators Levin, Coleman, and Obama have recently introduced a bill which contains several proposals aimed at offshore tax havens, but I haven't seen a Joint Committee on Taxation score on it yet. So once again, it will be the Finance Committee's responsibility to come up with real, sensible, effective proposals to combat offshore and onshore tax havens, and I am glad to do it, as I have over the last several years. But the likelihood that they will be scored by the Joint Committee on Taxation to bring in the kind of money assumed in this budget resolution is remote at best, and it borders on, I believe, blue smoke. I yield the floor.

Mr. GRASSLEY. Those are 10-year figures.

Mr. GRASSLEY. I am glad to answer that question because I think, if you look at what this budget assumes, raising this much money--

Mr. GRASSLEY. I think it is about like this, maybe $30 billion, $35 billion at best.

Mr. GRASSLEY. Five-year number, yes. Let me say, if I could raise the amount of money which is assumed to be raised here, I would have done away with the alternative minimum tax a long time ago because you need that kind of offset to get that job done over the long haul.

Mr. GRASSLEY. I agree, yes. I emphasize that we are told by the chairman of the Budget Committee time after time that there is no tax increase in this budget. But if you do nothing--and doing nothing is not an excuse to have the biggest tax increase in the history of this country go in without even a vote of Congress. If you are going to raise taxes, you ought to at least vote them up, it seems to me, so you can be held responsible. It seems to me to be very irresponsible to say that you can have the biggest tax increase in the history of the country and not think you can do economic harm and strike a blow against economic freedom for individuals.

Mr. GRASSLEY. Madam President, a few minutes before the last speaker, you heard the chairman of the Senate Budget Committee say there is no tax increase in the budget that is before us. Well, technically that is correct, if you consider allowing existing tax law to sunset on December 31, 2010. If you do that, we are going to have the biggest tax increase in the history of the country without a vote of Congress, without a vote of any of us, the biggest tax increase in the history of the country, January 1, 2011. This budget covers that period of time. I don't know how you can say there is no tax increase in this budget, if we are going to have the biggest tax increase in the history of the Congress without a vote of the people, if you have an opportunity to do something about it and keep taxes where they presently are. That is what is in this budget. There is not going to be an attempt to keep taxes where they are so the existing tax laws sunset and we have the biggest tax increase in the history of the country, January 1, 2011. We have a budget by the majority party, the Democratic Party, before us because the people spoke in November. For the first time in 12 years, the Democrats are in the majority and, consequently, control the congressional budget process. As ranking Republican on the tax-writing Finance Committee, I was not consulted, nor did I expect to be, by the chairman of this year's budget resolution. Unfortunately, after reviewing this resolution, which was presented 5 days ago, it is abundantly clear it does not realistically address the possibilities of the Finance Committee carrying out what are its supposed responsibilities under this budget resolution. Despite claims to the contrary, this budget does not provide for even 1 year of alternative minimum tax relief, let alone 2 years, or even a 1-year extension of provisions of various tax laws that expire from time to time and that we normally reinstitute. It does not provide for that as well. So this budget puts the burden on the Finance Committee to come up with the offsets to pay for the alternative minimum tax relief and for what we refer to as extenders, things that are normally extended by the Congress because they are things the economy demands be extended. Press reports have largely echoed the defenders of this resolution on the needs of the Finance Committee. I strongly suggest the media folks take a very careful look at the claims of the Democratic leadership and see how they stack up against the cold, hard fiscal numbers and the operating history of the Finance Committee in these policy areas. They would find it does not square with the reality of what is possible for the Finance Committee. I back up that statement with these numbers. Over the 5-year budget window going out to the year 2012, keeping existing policies in place will have a revenue effect of about $916 billion. This includes alternative minimum tax relief, extension of bipartisan 2001 and 2003 tax relief, and extending other broadly supported expiring provisions. In the aggregate, this budget provides no resources for extending these policies over the 5-year window. In so doing, we end up with the biggest tax increase in the history of the country without Congress voting for it. Yet somehow the chairman of the Senate Budget Committee can say there are no tax increases in this budget. I go back to the grassroots. As a family farmer, which I am, I like to think we country folk can teach city folk a lesson or two by referring to the country's sayings and metaphors. Although I am going to be using numbers, you will recognize some rural touchstones in the chart I am using, which is this chart of a well where you get water. The first chart involves the method a lot of us farmers use to get our water, through the well on our family farm. You will see the well in this chart. Here is the top of the well. My colleagues can see it is a long well and a very deep well. There is some water way down at the very bottom, but most of this well in between is very dry. At the top of the well we see the number that represents the rough--and it is probably a bit on the low side--amount of the revenue raisers in this budget, and it assumes we on the Finance Committee will be able to find $916 billion. That is revenue we would have to find offsets for over a 5-year period to pay for extending existing tax policies that expire during this period. If we don't do it, that is where I continue to make the point we are going to have the biggest tax increase in the history of the country. Of course, this is talking about existing tax policy. It doesn't even include any new starters such as tax relief to encourage renewable energy which most Members of this body are talking about, or tax relief to help education which a lot of Members of this body, including this Senator, have talked about, and a lot of new starters such as providing tax benefits to help the health care problem. A lot of us in this body talk about that. It doesn't include renewable energy, education, and health care. So this budget assumes the well of revenue raisers is full to the brim. We can see it is not. As a farmer, I know something about the predictability of wells. You hope you will get a lot of rain and it will give you a decent level of water. As former chairman and now, because we Republicans are in the minority, ranking member of the Finance Committee, I think I know something about revenue raisers and how difficult or how easy it might be to raise a certain amount of revenue. I have been there. I have done that. When I was chairman of the Finance Committee, I aggressively led efforts to identify and enact sensible revenue raisers and at closing the tax gap and shutting down tax shelters. As ranking member, I continue to look for ways to shut off unintended tax benefits. I consider myself to be a credible authority on what is realistic when it comes to revenue raisers. This budget is not realistic. From 2001 through 2006, Congress enacted over 100 offsets with combined revenue scores of $1.7 billion over 1 year, $51.5 billion over 5 years, and $157.9 billion over 10 years. That figure is reflected on this chart. That would be the figure of $51 billion enacted over a 5-year timeframe. To show I am not making this up, I ask unanimous consent to print in the Record a table that shows the track record on enacted offsets. These numbers are conservatively high because they include repeal of the FSC/ETI to comply with the ruling of the World Trade Organization which could not have been done without also providing tax relief with the manufacturing deduction.

Mr. GRASSLEY. Looking then at the 5-year numbers, Congress has enacted $51 billion of revenue raisers since 2001. That happens to be only about 6 percent of the amount that is needed to make the budget we are debating now work, without regard to any new relief which will also have to be paid for. What other revenue raisers have been identified and scored? Because we are always looking for them, because we are always getting scores for them, there is always going to be some need for them. The President's budget, for instance, contained a package of 16 tax gap measures that the Joint Committee on Taxation scores as raising $5.7 billion over 5 years. We can see that figure reflected on this chart. The Democrats have identified raisers that amount to $35.6 billion. So we have $42 billion of identified and scored revenue raisers. Let's look at how that figure compares to the budget before us. That is only about 5 percent of the amount that is needed to make this budget work. Based on these facts, the likelihood that the Finance Committee, the tax-writing committee of the Senate, will be able to come up with revenue raisers of this magnitude is remote at best. If that is the case, what will then happen? The revenue side of the budget will be ignored, but the spending side will be followed. The net effect will be a massive tax increase, a bigger deficit, or both. I am letting my colleagues know the revenue-raising well is about 5 to 6 percent full, not 100 percent full, as it would take to do it. If we look at the Finance Committee tax staff's aggressive record on revenue raising as a guide, we might be able to fill the revenue of this well a little bit more, but there is no way we can get to where this budget purports to go. In conclusion, this budget represents a dramatic step backward for the American taxpayer. For the first time in 6 years, this budget is a barrier, not a path, for bipartisan tax relief for virtually every American taxpayer. I have another chart that uses a farm analogy. We farmers are frequently visited by Canadian geese as they fly south down the Mississippi ``fly-away'' for the winter, and as they come north for the spring. Geese are not like chickens in that they do not hang around to lay eggs. Here is a chart with a goose on it. This chart shows that the budget guarantees a goose egg for tax relief. City folks know the term ``goose egg'' means zero. For the first time in 6 years, that is what the American public is getting in guaranteed tax relief--a goose egg. That is what they are getting--zero, zip, nothing. So take a look at our track record. Take a look at the revenue offsets Senate Democrats have identified and scored. What you will see is a minimal amount, as the well chart showed. This budget, then, puts an unrealistic demand on the revenue offsets that are possible. The well of offsets cannot be filled to the level the budget assumes. It is so unrealistic as, in my judgment, to be fictitious. It means virtually every taxpayer gets a goose egg. Now, for 6 years, we have heard the primary reason for partisan opposition to popular bipartisan tax relief is fiscal responsibility. Where is the fiscal responsibility on the spending side of the ledger in this budget? If you take a look, you will see that goose egg again. So after 6 years of fiscal responsibility arguments, you would think if the American taxpayer was going to get a goose egg in tax relief, the party in power would show us more than a goose egg on the spending restraint side. Not so. As a matter of fact, spending goes up several hundred billion dollars. As ranking member of the Finance Committee, I am sorry to say this budget does not even attempt to mesh the demands of the Finance Committee with the numbers in this budget. From my Finance Committee perspective, we might as well demand we have 60-vote bills. That is the only way you can ignore the budget resolution. There is no way for offsets of the size that is demanded here that are possible. I hope deficit hawks on both sides of the aisle pay close attention. The only thing certain is new spending is going to occur. That is the only thing that is going to happen. The deficit impact of not realistically dealing with the tax, trade, and health policy priorities of the Finance Committee disguises the deficit built into this budget. I am going to have more to say on this disconnect between the Finance Committee policies and this budget as we continue this debate in coming days. Today, I merely wished to show the Senate how the numbers on the revenue side do not work. As we take up amendments, I am hopeful we can make this budget mesh with what is possible for the Finance Committee to do and the policy demands before that committee. I also wish to discuss another thing that is going to be heavily discussed, in fact to some extent has already been discussed with this budget; that is, the sources of revenue the chairman of the Budget Committee claims will help offset the 5-year $916 billion cost of extending existing tax policy. That happens to be something I like to talk about because I like to do things in this area--shutting down offshore tax havens. I have been aggressive in combating abusive tax shelters offshore and otherwise. As chairman of the Finance Committee, I worked hard to shut down offshore tax evaders. I already referred in my remarks today to the 2004 JOBS bill, shutting down the tax benefits for companies that enter into corporate inversion transactions and abusive domestic and cross-border leasing transactions.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, every year hundreds of thousands of Americans come to our Nation's Capital for what will be for many a once-in-a-lifetime vacation. A highlight of that visit for most families is seeing the Smithsonian museums. The Smithsonian, as everybody knows, is home to many of our Nation's treasures, from Lincoln's top hat to the Hope Diamond. I have a picture of the Hope Diamond here. The Smithsonian receives over 70 percent of its support from the Federal taxpayers, over $700 million a year of taxpayers' money just in the last year. In addition, the Smithsonian receives over $200 million in donations each year. These donations are tax deductible, so the taxpayers also subsidize these charitable gifts as well. Thus, Federal taxpayers either pay for or subsidize almost the entire Smithsonian budget. Given that money is fungible, when taxpayers' dollars are paying for one thing at the Smithsonian, that frees up other money for the Smithsonian to spend elsewhere. Despite the strong support the Smithsonian receives, the Government Accountability Office recently found in a record that there was significant damage to Smithsonian buildings and some exhibits because of water leakage. In fact, one of the Smithsonian buildings on the Mall, the Arts and Industry Building, has been closed to the public because of damage to the roof. The Smithsonian seems, on one hand, to have recognized the need to tell their employees they need to pinch pennies. The Washington Post, in a story in this morning's paper, cites a Smithsonian memo sent to employees urging them to save energy by turning off decorative and accent lighting. Unfortunately, while the rank-and-file at the Smithsonian and the strength of this great institution were told to count the pennies and turn off the lights, the Secretary of the Smithsonian, Mr. Lawrence Small, was throwing hundreds of thousands of dollars out the window. Money was thrown at his house, his office, and first-class travel for Mr. Small and his wife. One of the great treasures in the Smithsonian is Dorothy's ruby slippers from ``The Wizard of Oz,'' as shown in this picture. What Dorothy learned in that classic movie is that ``there is no place like home.'' Just like for Dorothy, for Mr. Small, there is no place like home. The Secretary of the Smithsonian has taken that sentiment to heart, spending hundreds of thousands of dollars on paintings, repairs, house cleaning, lawn service, even his cable, and presenting the bill to the Smithsonian for payment. The Smithsonian Board of Regents wants to justify the million-dollar- plus in expenses paid for at Mr. Small's house, which he owns, because the Board of Regents claims he does official Smithsonian entertainment at his home. What are some of the expenditures at Mr. Small's house? Perhaps most incredible is that the Smithsonian has paid for roof repairs for the Small's house at a time when the Smithsonian can't find the money to fix the roof at the Smithsonian museum. But along with the roof, let me list some other items we are paying for: a chandelier cleaning for $2,535; a pool heater for $4,225.77; three new French doors for $14,525. Having the taxpayers and the Smithsonian donors pay for what I describe as a champagne lifestyle? Priceless. Let me turn now to Mr. Small's office at the Smithsonian castle because he has turned that castle into a palace. Again, the Smithsonian tells its hard-working employees that they need to save every cent possible by turning down the lights but wasted every dollar possible on Mr. Small's office suite. We have just one example here. These chairs reported in the Washington Post this morning are ``probably some of the best quality chairs you can buy.'' Those are the words of the Washington Post. These chairs are $2,000 each. There is a conference table for $13,000, thousands of dollars on carpeting and upholstery, and even finding the money to spend $1,502 on a wall sconce. I don't know if they turn that off, as he has told the employees to turn off lights. In addition, Mr. Small has decorated his office suite with enough paintings and artifacts from the Smithsonian collection that it would be the envy of many museums. Making one's personal office a museum annex goes against the best practices of museum directors. The Smithsonian's collection is for the people's enjoyment, not for private enjoyment. It is a sad statement of the Secretary and the board's priorities when one of the newest rooms at the Smithsonian is the Secretary's office--this at a time when the Smithsonian is struggling to keep the buildings open. In addition to spending on his house and office, what hasn't been reported yet are the enormous amounts of funds spent on top-of-the-line travel by both Mr. and Mrs. Small. The accountant hired by the inspector general found example after example of Mr. Small and his wife traveling with expenses that far exceeded what Federal employees are allowed to spend. I will highlight just two trips for my colleagues, but I want you to know there are many more about which I could speak. Mr. Small and his wife decided to take a trip to Las Vegas in 2002. The reason ostensibly was to attend the opening of a portrait and a press conference. That, of course, meant a $3,464.50 first-class airline ticket for each. They then stayed at one of the best hotels in Las Vegas, the Venetian, at nearly $500 a night, and enjoyed a $170.79 dinner for two at the Belaggio. They say what happens in Vegas stays in Vegas, but I am going to make an exception. I posted on the Finance Committee Web site these travel vouchers. While the Vegas getaway is bad enough, I think the trip to California in 2001 shows a real window into the problems at the Smithsonian. Mr. Small spent over $2,800 in chauffeured limousine service in 4 days, including a whopping $1,319 in 1 day. I want everybody to know I have a car I would be glad to sell to the Smithsonian for what they paid for that car service. What is even worse, if that is possible, is the excuse given for this out-of-control spending. In a memo justifying the car service in California, the claim is made that there would be ``a safety risk for [Small] to carry as much cash as would have been needed to pay for a taxi. . . .'' Even children who claim dogs ate the homework are embarrassed by that excuse. These are very serious problems, and I would say the more we look, the worse it gets in regard to the leadership at the Smithsonian. I am pleased that the Smithsonian Board of Regents is announcing today the creation of two boards: one a group of outsiders to review the work of the board, and a second group, comprised I understand mostly of Board of Regents members to look at board governance at the Smithsonian. I am pleased that the Board of Regents is taking these needed steps. I may not agree with the members of the board and how they have handled things, but let me say that I have looked at the governance setup, established over 100 years ago for the Board of Regents, and I feel that architecture is one of the biggest dinosaurs in the Smithsonian. We have to look at that architecture of that governance. The board structures and duties have clearly not kept up with the times in terms of the best governance practices in the nonprofit sector. In addition, the board's actions of blessing, after the fact, of Mr. Small's expenditures and actions is extremely troubling. In my State of Iowa, we call this the legislature passing a ``legalization act,'' and it raises very real concerns in my mind of whether the board is running the Smithsonian and its secretary or whether the Secretary is running the board. The actions of the Smithsonian Board of Regents calls to mind my work with some problems with the American Red Cross. This is another organization on which I have conducted oversight. I am pleased that the Senate recently passed legislation that I sponsored that reforms the governance of the American Red Cross. The Red Cross is a great American institution that also needed to modernize its governance, and I worked closely and successfully with the Red Cross leadership and was pleased that they recognized the need for fundamental change. I hope the Smithsonian Institution will look at the Red Cross's experience for guidance. While the board has much to account for, that does not excuse where the responsibility lies--with the Secretary of the Smithsonian, Mr. Small. While the board should have been more vigilant in its work and overseeing its public trust, make no mistake, it is Mr. Small who ordered the champagne and handed the bill to the Smithsonian. So let's put to rest this argument that I have heard from some that Mr. Small should not be held accountable for his actions because the board allowed it to happen. I think that excuse is way beyond the pale. We have a right to expect the Secretary of the Smithsonian to have the common sense to know if he wants Dom Perignon, he needs to pay for it out of his own pocket. The other argument I hear is that Mr. Small should be excused of his taxpayer-supported lifestyle because he has raised money. First, let's remember that 70 percent of the dollars come from the Federal Government. Secondly, I think it is insulting that Mr. Small's supporters are trying to give him credit for every dollar raised at the Smithsonian. There are dozens of people being paid top dollar at the Smithsonian, including the museum directors, to help raise money as well. They are all helping to pull that very big weight. Finally, Mr. Small's supporters act as if no one raised a dime before he showed up. The Smithsonian is our Nation's great museum. Many patriotic Americans want to show their support and give to this institution regardless of who is in charge, if they have the confidence that the money is going to be spent wisely. For example, the Smithsonian received $123 million in donations in 1999, and that was more than double the amount the year before in 1998. This included, by the way, $60 million from Steven Udvar-Hazy to build the new Air and Space Museum near the Dulles Airport, as well as $10 million from Ralph Lauren to preserve the Star- Spangled Banner. All of this fundraising was done before Mr. Small's arrival. Thanks to the growing economy and new tax laws that I have helped champion that encourage greater charitable giving, it should be expected that charitable giving will be up at the Smithsonian. In fact, charitable giving is up across the country. The supporters of Mr. Small who want to point to fundraising to wash away the thousands of dollars spent painting Mr. Small's own house reminds me of the rooster who crows and thinks he caused the Sun to rise. The Smithsonian is the people's museum, and it contains America's treasures. The American people have a right to have someone as a Secretary of the Smithsonian who enjoys their confidence. I believe the Secretary of the Smithsonian has lost the confidence of the American people with his actions, actions that have been contrary to the public trust that he has been given. It is proper and needed for the Board of Regents to take a hard look at itself and the actions from the board. More immediately, however, I would suggest the Board of Regents needs to consider whether the Secretary of the Smithsonian should continue in his position, a position that he should continue in only if he has the trust and confidence of the American people and their representatives. I think the board itself has learned a lot recently, and if the Board of Regents looks closely at the facts and listens to what the people are saying, it will have to consider very hard whether the time has come to turn off the lights in the Office of the Secretary of the Smithsonian. Mr. President, I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to join in cosponsoring the Alzheimer's Family Assistance Act of 2007 introduced by my colleague, Senator Mikulski. As much as we all would like to think that we will remain healthy and strong throughout our lifetimes, many of us will need long-term care. The cost of that care, whether provided in a nursing home, assisted living facility, or in one's own home with the assistance of health aides, can quickly add up. That is why we should do everything we can to make people aware of long-term care insurance and to ensure that policies are affordable. We need to encourage people to include long-term care insurance in their planning, especially when people are younger and premiums would be lower. The Deficit Reduction Act of 2005, DRA, made good progress in that regard by expanding State long-term care partnership programs. In addition, the DRA established an information clearinghouse to help individuals learn about long-term care insurance options in their states. We also need to encourage older individuals to purchase long-term care insurance. By establishing a deduction for long-term care insurance premiums, this legislation will help accomplish that goal. In order to qualify for the deduction, the policy must include several important consumer protections recommended by the National Association of Insurance Commissioners, NAIC. The DRA incorporated the same protections plus some additional NAIC consumer protections into the State long-term care partnership policies. As this bill moves forward, I look forward to working with Senator Mikulski to ensure consistency in the application of these consumer protections to long-term care policies. Specifically, I hope we can expand the consumer protections in this bill so they are in line with those included in the DRA. Finally, this legislation recognizes that individuals and their caregivers may need assistance in paying for medical supplies, nursing care, and other long-term care expenses. The tax credit called for in the bill, which increases from $1,000 to $3,000 in 2011 and beyond, will help defray these costs. Mr. President, I have long supported the policies included in this legislation and commend my colleague for her work on this important issue.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to join in cosponsoring the Alzheimer's Family Assistance Act of 2007 introduced by my colleague, Senator Mikulski. As much as we all would like to think that we will remain healthy and strong throughout our lifetimes, many of us will need long-term care. The cost of that care, whether provided in a nursing home, assisted living facility, or in one's own home with the assistance of health aides, can quickly add up. That is why we should do everything we can to make people aware of long-term care insurance and to ensure that policies are affordable. We need to encourage people to include long-term care insurance in their planning, especially when people are younger and premiums would be lower. The Deficit Reduction Act of 2005, DRA, made good progress in that regard by expanding State long-term care partnership programs. In addition, the DRA established an information clearinghouse to help individuals learn about long-term care insurance options in their states. We also need to encourage older individuals to purchase long-term care insurance. By establishing a deduction for long-term care insurance premiums, this legislation will help accomplish that goal. In order to qualify for the deduction, the policy must include several important consumer protections recommended by the National Association of Insurance Commissioners, NAIC. The DRA incorporated the same protections plus some additional NAIC consumer protections into the State long-term care partnership policies. As this bill moves forward, I look forward to working with Senator Mikulski to ensure consistency in the application of these consumer protections to long-term care policies. Specifically, I hope we can expand the consumer protections in this bill so they are in line with those included in the DRA. Finally, this legislation recognizes that individuals and their caregivers may need assistance in paying for medical supplies, nursing care, and other long-term care expenses. The tax credit called for in the bill, which increases from $1,000 to $3,000 in 2011 and beyond, will help defray these costs. Mr. President, I have long supported the policies included in this legislation and commend my colleague for her work on this important issue.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, the subject today is the tax gap. The tax gap is the difference between what is paid voluntarily in taxes by 85 percent of the American people and what is actually owed by people who do not pay all of the taxes that are legally owed. The tax gap does not include things that are in the underground economy, nor does it include illegal earnings. The tax gap is certainly not a new issue. We have discussed it on the floor of the Senate many times. It has been an issue for previous administrations as well as this administration. In fact, I suspect the tax gap has been an issue for as long as there has been taxes. However, I would say in recent years the Finance Committee, on which I serve, has certainly brought a new focus to the issue of the tax gap. This has been very much a bipartisan effort. I believe the level of attention given to the tax gap certainly reflects the energy and focus of the new chairman of the committee, Senator Max Baucus from Montana. Chairman Baucus should be commended for his work in this area. I also want to praise the chairman of the Budget Committee, Senator Conrad of North Dakota, for putting an additional spotlight on the tax gap topic. The Finance Committee has been doing the hard work in this area, encouraging greater research by the Internal Revenue Service, asking for detailed reports and recommendations from the Treasury Department as well as the Congressional Joint Committee on Taxation, investigating specific aspects of the tax gap, holding hearings to explore the details of the tax gap. Finally, the Finance Committee has been doing the most difficult work of all, actually passing significant legislation that would reduce the money that is not coming in because of the tax gap. This has not been easy. I find the tax gap is one of those issues here in Congress that is a little bit like the weather: Everyone talks about it but no one is doing as much as should be done about it. But the way people talk around here, they view the tax gap as somehow a cure-all for all budget problems. The tax gap can be used to pay for the alternative minimum tax problem; if we want to expand spending on health care, tap into the tax gap; if we want to balance the budget, tap into the tax gap. Given the amount of faith people have put into it, the tax gap has suddenly become one of those magic elixirs the peddlers used to sell in the Old West. You know how they said it will cure all that ails you. That was the slogan used by those slick salesmen 100 years ago. So the tax gap has become the elixir for all fiscal problems. I am surprised folks do not think the tax gap would cure baldness, as an example. So let's get behind the dreams and get to the real story of the tax gap. I want to talk about three issues dealing with the tax gap. First, what is the estimate of the tax gap? Second, what are the elements of the tax gap? Finally, what do we actually do in addition to all of those things we have been doing to reduce the tax gap; in other words, to go after that final dollar we know is legally owed but not collected. First, how is it the tax gap is estimated, and what is it? The Senate Finance Committee's Subcommittee on Taxation and Internal Revenue Service Oversight held a hearing 9 months ago, July 2006. It was chaired by the then-chairman of that subcommittee, Senator Kyl. We heard extensive testimony from senior IRS officials about how the tax gap is estimated. The tax gap has been based on reporting compliance efforts known as the Taxpayer Compliance Measurement Program. As many colleague will recall, these efforts were viewed as too intrusive into the lives of the taxpayers. So the last taxpayer compliance measurement program that was done was back in 1988. Senator Baucus and I recognized the need for the updated research and encouraged the Internal Revenue Service to look at research that could provide useful data, useful information, without unduly burdening the honest taxpayer. The Internal Revenue Service then responded with a national research program. It is important to realize that the national research program only dealt with a portion of the entire tax gap, primarily focusing on individual income taxes and not dealing with corporate tax. There are still significant portions of the tax gap that are then based on that very old material going back to some studies 20 years ago, particularly in the area of passthrough entities. I have a chart here that will make reference to some of these portions, significant portions of the tax gap. This is easily brought to focus on the Internal Revenue chart we have here. Remember, this is for tax year 2001, the latest available information. You can see it is only those items in bold that have been updated from the recent national research program, primarily in the area of individual income taxes and self-employment taxes; these areas right here. It would be nice to have an update on all of this. But in order to get on top of it and get it done quickly, we asked the IRS to focus on these areas. With the colors, you can see it is only the green-- underpayment of taxes--that we have high confidence in. The light blue has been recently updated. We have some better sense of what the costs are. Unfortunately, it is the yellow--the bigger parts of the chart--that is dependent upon the older numbers sometimes going back years and years. That is the yellow portion I have already referred to. In terms many can better understand, think of the yellow estimates as being the broad side of the barn in terms of accuracy. So there we have it. At the end of the day the tax gap, based on many old estimates, is thought to be $345 billion for tax year 2001. That reflects a noncompliance rate of 16 percent. So basically, 84 percent of the tax dollars are coming in as required by law. We have a tax gap then of a remaining 16 percent. Now I will turn to what are the elements of the tax gap. Again the chart from the Internal Revenue Service provides a useful blueprint. Nonfiling is about $27 billion. These are the people who do not even file their taxes. Then there is the underreporting of $285 billion. The Internal Revenue Service divides that into four categories: individual taxes at $197 billion; employment taxes, $54 billion; corporate income taxes at $30 billion; and estate tax and excise taxes of $4 billion. Underpayment of taxes, which is the amount people admit they owe on their tax returns but do not pay on time, happens to be $33 billion. Clearly individuals make up the biggest part, with individuals underreporting nonbusiness income and business income, and overstating adjustments, deductions, and exemptions being the elements of the tax gap for individuals. A good deal of this is concentrated in the areas of self-employment and schedule C of the tax return. Now that we have gone through how we measure the tax gap and what makes up the tax gap, the most important thing people want to know is-- they do not want a definition of the problem--what can be done to close it? That is what my constituents ask me. I believe the real question is one I would state this way: What steps can be taken that are effective and will not unduly burden taxpayers? We have to bear in mind most taxpayers do comply, and a significant amount of noncompliance is unintentional. I think all Members recognize that in the zeal to get at the tax gap, we cannot wreck the lives of the honest taxpayers. Most of the taxpayers, 85 percent, are not a problem. We cannot be like the fellow who tears down his house to get at the mouse. Members on the other side should be particularly sensitive to the mindset of not taking on the honest taxpayer when trying to take care of the problem of the 15 percent, given this was effectively what was being promoted in 1994 with the wholesale reform of health care. Proponents in 1994 wanted to change the health care system for 85 percent of the people for whom the system worked to help the 15 percent of the people who did not have health insurance. The voters were right in telling political leaders at that time in 1994 that this did not make any sense. First we need to recognize that the Internal Revenue Service is already, through enforcement, doing quite a bit to deal with the tax gap. This chart reflects the Internal Revenue Service's testimony before the Budget Committee and estimates the IRS activities will reduce the tax gap, the $345 billion total, by nearly $70 billion by the year 2007. This reflects $17 billion in direct enforcement revenue and the rest in direct compliance effects. So we start with that as the base, the work of the Internal Revenue Service, which is already reducing approximately 20 percent of the tax gap, with Commissioner Everson's statements last year that the Internal Revenue Service could bring in somewhere between $50 billion and $100 billion a year without dramatically changing the relationship between the IRS and taxpayers; in other words, not being more egregious against the honest taxpayer. Well, the IRS is already doing that, according to its Commissioner.

Mr. GRASSLEY. Mr. President, I have to have 10 more minutes, maybe less than that.

Mr. GRASSLEY. Mr. President, I will complete my statement later, but I wish people would get it straight. If I were told I could come over here and finish my statement, and do it in morning business, I would like to be able to do it; otherwise, I would have waited to do it tonight.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I wish to finish the discussion I started earlier today about the tax gap and efforts to close it. As I said this morning, the tax gap is the difference between what is paid in taxes and what is actually owed. While more reliable and timely data on the tax gap is greatly needed, the tax gap was thought to be $345 billion for the tax year 2001, which seemed to be the year that the IRS had the latest information where they could put together something that was fairly solid for that year. I also pointed out this morning that many of my colleagues in the Senate see the tax gap as a sort of magical tonic that can be used to cure all sorts of ailments. Some people see $345 billion in AMT relief or health care spending or national debt reduction without thinking about what would be involved in actually collecting the money. So I am raising the question: Do people think through whether every dollar will be brought into the Federal Treasury? The IRS is already making some progress in closing the tax gap. This morning I mentioned the Internal Revenue Service told the Budget Committee it could reduce the tax gap by nearly $70 billion, of that $345 billion, in the year 2007. So where does that leave us? Can we do more in enforcement? The administration has proposed an increase in funding for the Internal Revenue Service. That increase looks toward the tax gap with funds directed toward increased data matching, improved research, as well as more auditors--auditors to make sure that more money comes in. I suggest my colleagues might also want to make certain that if we consider adding more Internal Revenue Service employees, we have greater confidence that the Internal Revenue Service is utilizing current resources effectively. In other words, before we hire more people, we ought to make sure the existing employees at the Internal Revenue Service are being used in the most efficient way to bring in the most money possible. That doesn't preclude more money, but that is a necessary first step before we automatically think of more money and more employees. For instance, the IRS has hundreds of employees, according to a Treasury inspector general for tax administration report, that do part- or full-time union work. This is thousands and thousands of work hours that could be spent going after the tax gap. What could we gain if we directed all those union hours to actually working on the tax gap before we appropriate more money to hire more employees? So we have proposals then for increased enforcement. Let me remind my colleagues, though, that the Joint Committee on Taxation--that is a congressional committee that specializes in watching the Tax Code and making estimates and studying all ways to make the Tax Code more efficient and bring in more money--that committee will not give us a score for additional dollars based on increased enforcement. So we can talk all we want about hiring more people to bring in more revenue, but until that revenue is in the bank, the Joint Committee on Taxation isn't going to give us any credit for it. As we are looking at budget debates over this week and next week, keep that in mind. That isn't going to get Senators anywhere in terms of reducing projected deficits or paying for tax cuts or bringing in more money to spend someplace else. It is important to emphasize the Commissioner of the Internal Revenue Service made it clear to the Budget Committee a few days ago at a hearing that we cannot audit our way out of the tax gap. The Commissioner also warned about increasing the IRS budget too quickly if we decide to go the route of hiring more people by giving more money because he said a big increase in staffing would harm taxpayers' rights if the IRS was not able to grow in a managed way to control the outcome. We can look at what we can possibly do legislatively beyond greater enforcement. The Democratic leadership hasn't proposed anything new, but the administration has put forward some proposals in the budget--in its own budget, meaning the budget of the executive branch. Many of the administration's proposals deal with information reporting. Information reporting is an important way to improve tax compliance. This is very clear from all the work that has been done so far on the tax gap. However, information reporting places additional burdens on taxpayers, and it is very frustrating that we often find the Internal Revenue Service is not doing enough to match or review the documents taxpayers are already providing the IRS as a paper trail to make sure all taxes are paid. Needless to say, this greatly limits the benefit information reporting provides. Setting these concerns aside, the administration in their budget has proposed, one, information reporting on payment to corporations; two, basis reporting on securities sales; three, broker reporting; four, reporting of merchant payment card reimbursement; five, increase information return penalties; six, taxpayer identification number verification for independent contractors; and seven, information reporting on certain Government payments. The administration has proposed other proposals, including increased penalties, expanded IRS access to information, and required electronic filing as some of the other new proposals. This is a very comprehensive list of proposals coming from the administration. Is it everything? No, but it seems to me this is a serious start and shows that people within Treasury, within the Office of Management and Budget, and maybe even within the White House, are very concerned about closing the tax gap. If Senators who have attacked the Secretary of Treasury and the Internal Revenue Service believe more can be done, I suggest they should come forward with their own proposals and add to the multitude I read coming from the executive branch of Government. I think Senators will find that while it is easy to complain about what is coming out of the Treasury's kitchen, it is a lot harder to get in there and do it themselves. I think Senators need to be careful-- very careful--at putting out pie-in-the-sky numbers for what can be achieved by reducing the tax gap without at the same time putting forward their own detailed, concrete, Joint Tax Committee-scored proposals that show how it can be done. That brings me to a chart. This chart shows there is a lot of smoke and mirrors when it comes to the tax gap, in other words, all the people who are saying they are going to use the tax gap to reduce the deficit, to fund tax cuts or even to take the money and spend it on some new program or increase spending on existing programs. There are a lot of ideas out there. What I want this chart to demonstrate to us is that there is a lot of smoke and mirrors when it comes to the tax gap. We can't use smoke and mirrors to pay for tax cuts or to decrease the deficit; we have to have proposals that are in detail, black and white, and are scored by the Joint Committee on Taxation, our experts who are on top of the Tax Code and how much money will come in or how much money we lose if we cut taxes. Tax gap proposals shouldn't be used for spending. The tax gap is appropriately viewed as unfairly placing a heavier burden on compliant taxpayers, 85 percent of the people who pay what they owe and file accordingly. If we enact tax-gap closers, they should be used to reduce taxes or reduce the deficit, not to increase spending. Let me conclude my discussion of the tax gap by saying you can have a blue Moon, you can have blue cheese, you can have blue-suede shoes, but when it comes to balancing the budget, you can't do it with blue smoke and mirrors. That, unfortunately, is what so much of the tax gap is right now: blue smoke. I strongly encourage the Budget Committee chairman and other Senators not to use blue smoke during the upcoming budget resolution debates. That is going to happen Wednesday and Thursday in the Budget Committee this week. It is going to happen all next week on the floor of the Senate. Now I will review some of the issues we must consider as the Senate works on its budget resolution. In an earlier visit with my colleagues in the Senate, I discussed the importance of preventing a tax hike on the American people. Anyone who considers themselves a deficit hawk needs to do more than raise taxes. So I challenge the new Democratic majority to also examine the spending side of the ledger; that is, if they are truly serious about deficit reduction. In another visit with my colleagues from the floor of the Senate, I highlighted a study prepared by Goldman Sachs. That study shows that the likely result of letting tax relief expire could lead to a recession. Since tax relief was enacted, Federal revenues have increased, employment has increased, household wealth has increased--in fact, household wealth has increased to the highest level it has ever been in the history of our country--and the S&P 500 index has consistently moved upward. Again, a failure to extend tax relief or make it permanent puts all this at risk, and at risk for nothing. Anyone serious about deficit reduction needs to also look, then, at the spending side of the ledger. In a third visit that I had with my colleagues from the Senate floor, I pointed out that Democratic revenue raisers did not come close to covering new spending contained in Democratic amendments when we had the budget up exactly 12 months ago this month. In many cases, I showed the same offset was used in multiple amendments to pay for multiple projects, just like every dollar coming into the Federal Treasury could be spent two, three, four times, and somehow just multiply and, like blue smoke, solve all of our problems. If the Democratic leadership is serious about pay-go, and that is short for pay as you go, and if they are serious about deficit reduction, they need to be realistic about where the money is going to come from to cover any new spending proposals. The budget plan advocated by the other side last year would have either increased the deficit or gutted tax relief that was passed in 2001 and 2003, including items such as the alternative minimum tax fix that we did, and all of these things the other side of the aisle claims to support and yet have proposals that would gut them or increase the deficit. I want to state my intention to fully cooperate with my colleagues of both parties to produce a budget that preserves our growing economy while addressing the needs of our government. I am particularly looking forward to exploring ways to use the Tax Code to help more Americans acquire health insurance. I am also looking forward to using the budget resolution to ensure, on a revenue-neutral basis, that we continue to pursue tax simplification and tax reform. In order to produce the best possible budget, we must be careful not to endanger our growing economy. We must be willing to examine spending. We must not just focus on revenues, and in the whole process, we have to be intellectually honest about how far we can push revenue raisers and other offsets. In other words, avoid the smoke and mirrors. Mr. President, I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask to speak as in morning business for such time as I might consume, and if there are other Members who are wondering how long that might be, it wouldn't be probably for more than 15 minutes at the most.