Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the text of this bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I am pleased to have bipartisan sponsorship of two very important bills with Senator Dodd of Connecticut that are being introduced today, the Food and Drug Administration Safety Act of 2007 and the Fair Access to Clinical Trials Act of 2007. These bills are part of a sustained effort to restore public confidence in the Federal Government's food and drug safety program and to make sure the agency does all it can to protect the public. Enactment of those two bills would provide doctors and patients with more information about the risks and benefits of their medicines and bring about greater transparency and accountability of the Food and Drug Administration. I am sure my colleagues realize I have been involved in oversight of the Food and Drug Administration for now at least 3 years, and it has been in response to concerns about the reluctance of the Food and Drug Administration to provide information to the public about the increased suicide risks for young people taking antidepressants. In November 2004, I chaired a groundbreaking hearing on drug safety involving the Food and Drug Administration and the drug Vioxx. That hearing and other critical drug safety concerns that have come to light since then highlight the need for comprehensive and systematic reforms as well as more stringent oversight of the Food and Drug Administration. Over the past 3 years, it has become increasingly apparent that the Food and Drug Administration has repeatedly failed to protect the public from an industry that focuses all too often on profits, even when those profits come at the expense of ``John Q. Public.'' In 2005, then, and because of this, Senator Dodd and I introduced almost identical companion bills to advance serious reforms at the Food and Drug Administration. In the 2 years following the introduction of those bills, however, the Food and Drug Administration failed to take comprehensive and systematic steps toward restoring public confidence in that agency, as well as the necessity of strengthening public safety. Yesterday, the Food and Drug Administration released its response to the Institute of Medicine's 2006 report on drug safety. The two safety bills introduced today are not intended to supplant the plans articulated in the Food and Drug Administration's response but, rather, to augment those plans and to provide the FDA with additional enforcement tools, something they now lack. In fact, one of our bills is intended to specifically address a serious problem that was also identified by the Institute of Medicine. Dr. Alta Charo, a member of the Institute of Medicine committee that wrote the report on drug safety, stated in the newspaper USA Today: I have to confess I'm disappointed that they-- Meaning the FDA-- ignored one of our most critical recommendations. According to the USA Today article, she was referring to the Institute of Medicine's recommendation that the Food and Drug Administration give more clout to the office that monitors drugs after they go to market. I want you to know I agree with Dr. Charo. The Food and Drug Administration Safety Act of 2007 would then establish an independent center within the Food and Drug Administration. The name of the center would be the Center for Postmarket Evaluation and Research for Drugs and Biologics. The director of this center would report directly to the Food and Drug Administration Commissioner and would be responsible for conducting risk assessments for approved drugs and biological products. The new center would also be responsible for ensuring the safety and effectiveness of drugs once they are on the market. Unfortunately, the problem we are trying to solve is that now at the FDA, the office that reviews drug safety postmarketing is a mere consultant and under the thumb of the office that puts the drugs on the market in the first place. Even more troubling is the fact that those who speak out of line are targeted. Whistleblowers, as we call them, are targeted. They are very helpful to Congress in ferreting out wrongdoing, that laws are not being faithfully executed, that money is not being spent according to congressional intent. So they speak out at the FDA and point out a lot of things that are wrong. And what do they get for it? They are treated like a skunk at a picnic. They are targeted. So this legislation we put before us would provide the new center with the independence and authority to promptly identify serious safety risks and take necessary actions to protect the public, and I hope eliminate some of the intimidation against whistleblowers. At the same time, the intra-agency communication is essential in addressing drug safety. So this legislation would encourage communication between the center and other centers and offices, or let's say subagencies at the Food and Drug Administration that handle drugs and biological products, to do what is best for the consumer and not have big PhRMA having undue influence. The second bill we are introducing would expand an existing Web site, www.clinicaltrials.gov, to create a publicly accessible national databank of clinical trial information. The databank would be comprised of a clinical trial registry and a clinical trial results database of all publicly and privately funded clinical trials so that everything is out there for the public to consider, not letting somebody choose: Well, if this is a little negative toward our drug, we will not make that public. All the positive stuff, of course, we will make public. So I think this legislation is going to foster transparency. But it is going to bring about a great deal of accountability in health research and development and ensure that the scientific community and, most importantly, the general public whom we are trying to protect have access to basic information about clinical trials, about new drugs going out on the market. The legislation would also create an environment that would encourage companies from withholding clinically important information about their products from the Food and Drug Administration and from the public. By the way, the information that is coming out now about Vioxx in the newspapers today will even tell you that a long time before Vioxx went on the market there were scientists within the company who were raising questions about whether it was going to cause harm to the heart. All of this information should be out there. The public ought to know it. Your doctor ought to know it. Transparency and accountability should not hurt anybody in an open society such as we have in America. Oh, there might be some legitimate reasons for intellectual property privacy, but nothing beyond that. If we have learned anything over the last few years, it is that the Food and Drug Administration is a troubled agency that lost sight of its fundamental function. That fundamental function is to protect the safety and the efficacy of new prescription drugs. Two very important things for them to answer: Are the drugs safe for you? Are they effective? Unfortunately, the public has good reason to doubt the Food and Drug Administration's ability to do its job. And experts from all over the country have expressed concern. These two bills, then, that Senator Dodd and I are introducing--and let me parenthetically say for the public, people are always thinking that Democrats are hitting on Republicans and Republicans are hitting on Democrats. There is a lot going on around here you never see on evening television that is bipartisan because there is not controversy about it, or at least there is no controversy between Republicans and Democrats. But what they want to put in the news media every night is when some Republican is fighting some Democrat. So our constituents get a view about this Congress that is very distorted. I would like to have people read on a regular basis about how Senator Baucus and I meet on a regular basis to determine the agenda for the Finance Committee. I would like to have them read about how he and I have put out bipartisan bills for the last 6 years--whether he was chairman or I was chairman--and that every one of them got to the President to be signed. But you do not hear those things. So I want to emphasize, this is a Dodd--and Senator Dodd is a Democrat from Connecticut--and a Grassley bill--and Grassley is a Republican Senator from Iowa. So this bill is being introduced to ensure the safety and efficacy of new prescription drugs, not to do something new for the FDA, just to give them the tools to do what they have had a responsibility to do for several decades. So the public has doubts about the FDA's ability to do it. These two bills will help put the FDA back on the path to fulfilling its mission and, most importantly, put the American consumer first. So, Madam President, in closing, I ask unanimous consent that my statement in the Record that I give today be coupled with the statement of Senator Dodd, which will be given later today, regarding the introduction of these important bills. By giving me this unanimous consent, it will assure the public, when they read about these bills, knows that Dodd is a Democrat, Grassley is a Republican, and they are bipartisan bills.

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the text of this bill be printed in the Record.

Mr. GRASSLEY

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

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise to speak on the U.S. trade agenda. There are a number of important items on this year's trade agenda, including reauthorization of Trade Promotion Authority for the President and reauthorizing our trade adjustment assistance programs for workers who are displaced by trade. I will speak on those priorities another day. Today I want to focus on our trade relations with our neighbors in Central and South America. During my chairmanship of the Finance Committee, Congress passed implementing bills for trade agreements covering 12 countries. Out of these 12 countries, over half--7--are located in Latin America. I am pleased that Congress acted to strengthen our economic relations with Chile, the Dominican Republic, Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica, by implementing our trade agreements with these neighbors to the south. And I think we should all be pleased that these seven countries made it a priority to develop closer economic ties with us and to further commit themselves to transparency and the rule of law. I hope that the current Congress will continue working to strengthen economic relations between the United States and Latin America. Fortunately, we already have a roadmap for doing so. We have concluded free trade agreements with Peru and Colombia, and we are about to sign an agreement with Panama. It is up to this Congress to pass implementing legislation for these agreements. Failure to do so would only damage our relations with these important allies and embolden other southern neighbors who are increasingly hostile to the United States. Moreover, by implementing our trade agreements with Peru, Colombia, and Panama, we would provide an important boost for U.S. exporters. During my time in the Senate, I have heard many of my colleagues complain that the global trade situation reflects an uneven playing field. To some extent, I agree. In too many cases, the duties imposed on U.S. exports by our trading partners are much higher than our duties. That is certainly the situation with Peru, Colombia, and Panama. Right now, almost all imports from those three countries enter the United States duty free. Ninety percent of the value of our imports from Colombia enter duty-free. With respect to Panama, it is over 95 percent, and with respect to Peru it is 97 percent. On the other hand, our exports to these countries face significant duties. Colombia's tariffs generally range from 10 to 20 percent, while those of Peru range from 12 to 25 percent. After Panama acceded to the World Trade Organization in 1997 its tariffs averaged 8 percent, but since then Panama has raised tariffs on certain agricultural products. For example, Panama's tariff on pork--a major Iowa product--is currently 74 percent, while its tariff on chicken imports is 273 percent. Now that is what I call a one-way street. This imbalance is largely the result of unilateral trade benefits that we extend to these nations. Panama gets duty-free access to our markets under the Caribbean Basin Initiative, while Peru and Colombia are eligible under the Andean Trade Preference Act. And all three are eligible under our Generalized System of Preferences. The nonpartisan U.S. International Trade Commission, ITC, analyzed our trade agreements with Peru and Colombia. The ITC concluded that these agreements will help to level the playing field that is currently tilted against U.S. exporters. Here is what the ITC has to say about our trade promotion agreement with Peru: Given the substantially larger tariffs faced by U.S. exporters to Peru than Peruvian exporters to the United States, the TPA is likely to result in a much larger increase in U.S. exports than in U.S. imports. The ITC goes on to state that the agreement will likely increase U.S. exports to Peru by 25 percent, while Peruvian exports to the United States will grow by 8 percent. The ITC's analysis of our trade promotion agreement with Colombia draws similar conclusions. The ITC report states that: Colombian exporters generally face substantially lower tariffs in the U.S. market than do U.S. exporters in the Colombian market. . . . The TPA is likely to result in a much larger increase in U.S. exports to Colombia than in U.S. imports from Colombia. The ITC predicts that after implementing the agreement, U.S. exports to Colombia will be $1.1 billion higher than today, and U.S. imports from Colombia will be $487 million higher. The ITC has not yet completed its analysis of our trade agreement with Panama. But given the disparity in tariff levels between the United States and Panama, I think it is safe to assume that the ITC will reach similar conclusions regarding the likely economic impact of that agreement as well. And the benefits of these three trade agreements will be spread across all major sectors of our economy. U.S. agricultural producers, manufacturers, and service providers all stand to gain. According to the American Farm Bureau Federation, our trade agreement with Peru could increase U.S. agricultural exports by over $705 million annually. With respect to Colombia, the Farm Bureau predicts that full implementation of our trade agreement will have an annual net benefit of over $660 million for the U.S. agricultural sector. The Farm Bureau hasn't finished its analysis of the impact of our trade agreement with Panama, but I am confident that it will find major benefits for U.S. farmers. Our manufacturers stand to gain as well. According to the International Trade Commission, U.S. producers of machinery, chemicals, rubber, and plastic products will be among the biggest beneficiaries of these agreements. And Panama will eliminate tariffs on manufactured products within 10 years of implementing our trade agreement. U.S. service providers will also gain from increased trade with Peru, Colombia, and Panama. Under their respective agreements, each of those countries agree to exceed the commitments they made on services in the World Trade Organization. In addition, Panama is scheduled to initiate a $5.25 billion expansion project for the Panama Canal in 2008. Our trade agreement with Panama will help ensure market access for U.S. service providers for this major project. So to those of my colleagues who complain that the current world trading situation is unfair, here is a chance to help fix the problem. By implementing trade agreements with Peru, Colombia, and Panama, Congress will level the playing field for U.S. farmers, manufacturers, and service providers in these important markets. These agreements will boost U.S. exports and help create jobs. I think it is ironic that some of my colleagues oppose these free trade agreements and yet at the same time complain the loudest about the trade deficit and how the deck is stacked against U.S. exporters. These agreements level the playing field. It is beyond me as to how someone could oppose that. Now, I understand that there is rising protectionism in Congress. But let's look at the facts. Take as an example the Dominican Republic-Central America Free Trade Agreement, otherwise known as CAFTA. According to the U.S. Department of Commerce, our exports to the CAFTA countries were up 17 percent in the period January through November 2006, while our imports from the CAFTA countries were up 3 percent. As a result, our trade balance swung from a $1.2 billion deficit 2 years ago to an annualized surplus of $1 billion last year. That is what happens when you level the playing field. And we are not the only ones who stand to benefit. Peru, Colombia, and Panama will also benefit from implementing our trade agreements. The leaders of these countries are to be commended. By pursuing trade agreements with the United States, they have demonstrated a commitment to locking in economic reforms, increasing economic freedoms, and enhancing transparency and respect for the rule of law. That leadership and foresight will be rewarded once our trade agreements are implemented. I read recently in the Wall Street Journal of a joint study conducted by the Journal and the Heritage Foundation. According to the article, their study found that ``economically free countries enjoy significantly greater prosperity than those burdened by heavy government intervention.'' We certainly see examples of heavy-handed government intervention in some other Latin American countries. Instead of fostering individual and economic liberty, these governments are embracing the failed policy of statism. Chief among them is the Government of Venezuela. President Chavez has announced plans to turn Venezuela into a ``socialist republic.'' To that end, he announced this month that he plans to nationalize Venezuela's telecommunications and electricity industries. That decision will directly impact U.S. companies with investments in those sectors of the Venezuelan economy. President Chavez also might nationalize Venezuela's mining sector, and he intends to increase state control over the oil industry as well. Significantly, President Chavez is demonstrating that those who withdraw economic rights often seek to withdraw political rights, and that those who centralize economic power tend to centralize political power. For example, he has stated that he plans to pull the broadcasting license of one of Venezuela's oldest television broadcasters, which also happens to be one of his major critics. President Chavez is also proposing changes in Venezuelan laws that will enable him to rule by decree for 18 months, permit his indefinite reelection as President, and reduce the power of state governors and mayors. Unfortunately, President Chavez is not alone. Two other countries in the region are moving toward increased state control of their economies. Bolivia and Ecuador each currently enjoy duty-free access to the U.S. market under the Andean Trade Preference Act. Yet last year Bolivia undertook a de facto nationalization of its natural gas industries, forcing companies to renegotiate their contracts with the state. Bolivian President Morales is also considering nationalizing the country's mining, electricity, and telecommunications sectors. In the case of Ecuador, last year the government revoked the operating license of a U.S. oil company and seized $1 billion of the company's assets. So Latin America is clearly divided. Some countries, led by Venezuela, are consolidating economic power in the state. President Chavez is also clearly seeking to centralize political power, and has demonstrated an active hostility to the United States. That stands in stark contrast to our allies and trading partners, Peru, Colombia, and Panama. The governments of these three countries have gone out on a limb. They have demonstrated they want closer economic ties with the United States. They appreciate that, by working with us, by building more links between businesses in their countries and ours, they can better improve the lives of their citizens. We need to reward that leadership. We should do so by implementing our respective trade agreements as soon as possible. If we don't, we will be turning our backs on allies in the region. We will be sending a signal to Latin America that we don't really care about opening markets and enhancing the rule of law. Instead, we'd help build the clout of Chavez and other leaders in the region who see the failed policy of statism as Latin America's future. And we would be shooting ourselves in the foot by giving up a chance to level the playing field. Why would we want to do that? Before concluding, I would like to address two other sets of issues that have arisen with respect to our trade agreements with Peru, Colombia, and Panama. First are the labor and environment chapters of the agreements, and second is the Andean Trade Preference Act. I understand that some in Congress would like to see the labor and environment chapters of these agreements renegotiated. I disagree. I believe that the provisions on labor and the environment are strong. And I note that renegotiation would effectively preclude implementation of these agreements under the current Trade Promotion Authority, which is set to expire on July 1. I question whether those who would insist on renegotiation aren't really trying to kill the agreements outright. In my view, the best thing we can do to advance labor rights and environmental protections in these countries is to implement our trade agreements with them. Implementation will increase the rate of economic growth and prosperity in these countries. It will increase business activity and awareness of labor rights. It will create new bodies for more active oversight of labor and the environment. As important as labor and the environment are to some of my colleagues, I don't see how they can justify holding back these trade agreements that are so good for the United States. They should be embarrassed for holding them up. The sooner we implement these agreements, the sooner our farmers, manufacturers, and service providers will benefit from them. That being said, I understand that U.S. Trade Representative Susan Schwab is in discussions with some of my colleagues to explore ways to address their concerns regarding labor and the environment. I am willing to listen to any constructive proposals that are put forward. Separately, I note that the Andean Trade Preference Act has been extended until June 30. That leaves Congress sufficient time to implement our trade agreements with Peru and Colombia, so that their preferential access to the U.S. market does not terminate. But with respect to Bolivia and Ecuador, their preferential access to the U.S. market will terminate after June 30 because we don't have comprehensive trade agreements lined up with those two countries. Some of my colleagues are already talking about extending the Andean Trade Preference Act beyond June 30. I see no reason to do so. If Congress acts responsibly and implements our trade agreements with Peru and Colombia by June 30, neither of those countries will need unilateral preferential trade benefits. As far as Bolivia and Ecuador go, I see no reason to extend preferential trade benefits to them. Not only are they withholding market access from U.S. exporters, they are actively engaged in nationalizing industries and expropriating foreign assets. It wouldn't be right to treat imports from Bolivia and Ecuador the same as products from Peru and Colombia. Why should Congress be in the business of rewarding bad behavior? So I disagree with my colleagues who favor extending the Andean Trade Preference Act past June 30. In sum, Mr. President, I hope that the administration will soon be in a position to send implementing legislation for the U.S-Peru Trade Promotion Agreement to Congress. And I urge my colleagues to work with me to implement not only that agreement, but also our agreements with Colombia and Peru as soon as possible. Our agricultural producers, manufacturers, and service providers are counting on us. Our allies are counting on us. It is in our economic interest, and it is in our national interest. Now it is up to Congress. We have to execute our responsibilities without delay. We cannot let the opportunities embodied in these trade agreements slip us by. Mr. President, I yield the floor and suggest the absence of a quorum.

Mr. GRASSLEY

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

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to honor SMA Marilyn Gabbard of the Iowa Army National Guard. The first woman ever promoted to the rank of Command Sargent Major in the Iowa Army National Guard, Sergeant Major Gabbard was deployed to Iraq on December 16, 2006, and died in a UH-60 Blackhawk helicopter crash on January 20, 2007, at 2:45 pm local Iraq time. Her colleagues said of her that she was a role model for other women in the Iowa National Guard, and her rise through the enlisted ranks was inspirational. She is remembered as a respected soldier and caring leader who always put her soldiers first. Her military decorations include three awards of the Meritorious Service Medal. My prayers go out to Marilyn's husband Edward and her seven children and stepchildren, her mother Mary Van Cannon, as well as her grandchildren and all her family and friends. SMA Marilyn Gabbard will be greatly missed. She leaves behind her a legacy of military achievement, immense compassion, and patriotic service. I hope that those who have been touched by her loss will find some comfort in the knowledge that her memory will live on like those countless other heroes throughout American history who have given their lives for our country. Sergeant Tommy Rieman

Mr. GRASSLEY

Mr. GRASSLEY. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. GRASSLEY. Mr. President, I am committed to the core package that we have a bipartisan agreement for, but within the committee we have had an understanding that if there is an add-on and if it is revenue neutral, they would be considered. So we are improving this package, the small business portions of it that nobody has any dispute ought to be done. There is some dispute over the offset. I wish to concentrate on that offset. It is fully offset. It comes from a proposal that comes from the Joint Committee on Taxation, not from the Republican side or the Democratic side but a nonpartisan side, that there is an inequity in provisions for payment. For instance, if you work for Principal Financial in Des Moines and they pay for your college, it is going to be taxed, but if you work for a university and you send your kids to college, it is tax free. So Joint Tax sees that as an inequity. We use that as a good offset. It is a good offset. I believe Senator Kyl has worked hard to develop an amendment that will make the small business depreciation much better and more meaningful. I hope Members will support Senator Kyl.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I want to address two aspects of this legislation because they are necessarily connected. One is, obviously, the increase in the minimum wage. The other one is the small business tax provisions that have come out of the committee Senator Baucus chairs and on which I am the ranking member, the Finance Committee. I want to deal with the minimum wage part of this issue first. Popular support for raising the minimum wage is based on a number of widely held beliefs: First, that no one can support a family at $5.15 an hour; second, minimum wage earners will not get a pay raise unless Congress gives them one; and third, raising the minimum wage helps millions of poor workers and hurts no one. Unfortunately, these popular beliefs are in some cases misleading and in some cases outright wrong. First, minimum wage earners are not trying to support a family--or you might argue a small percentage of them are trying to support a family, but I want to say why most are not. Those who are, of course, can get additional benefits through Government programs to supplement family income; thus, no one has to rely solely on the minimum wage to support a family. Second, minimum wage jobs are generally entry level jobs. Most workers who start at the minimum wage quickly earn more. Few workers remain stuck at the minimum wage for very long and, unfortunately, those who do are most at risk of losing their jobs from a minimum wage increase. Third, the benefits of a minimum wage increase do not go exclusively to poor families. Only 15 percent of the proposed minimum wage increase would go to those living below the poverty level, as an example. Increasing the minimum wage would result in higher prices for consumers of minimum wage products, higher unemployment among the least skilled minimum wage workers--and that particularly affects minority groups within our country--increased poverty among minimum wage families, and in some cases it could be a combination of these three things I mentioned. Much of the popular support for the minimum wage is based on a fallacy, that the Government can help the poor without hurting anyone else. But if the Government can increase wages with no ill effects, then why stop at $7.25, as is currently proposed? Why not make it $10.25? Why not make it $20.25, or even more? The fact is, this does have limited impact and it does have some negative consequences, so that is why these occasional increases are justified. Popular support for increasing the minimum wage is tempered by the fact that virtually everyone agrees that there is some level at which the minimum wage would produce obvious negative effects. In the past, policymakers have attempted to mitigate any negative effects by limiting the size of the minimum wage increase, providing tax credits to employers who hire at-risk workers, and providing tax or regulatory relief to business generally, particularly small businesses. However, additional research in recent years has cast some doubt on the effectiveness of these previous efforts. First, research suggests raising the minimum wage does not reduce poverty among minimum wage earners. Instead, it most likely increases poverty. Second, legislative action by various States to adopt their own higher minimum wage has led to significant differences within our 50 States. Third, research shows that the earned income tax credit could provide a cost-effective way to help poorest workers and be more effective than even increasing the minimum wage. I am pleased that over the last few years we have enhanced the earned income credit for many families by making the child tax credit refundable. That is through the work of the Senate Finance Committee. Before I go on to my next point I would say parenthetically there are studies that have been updated quite frequently over the last 20 or 25 years, where economists have followed people in quintiles: the lowest, the second, you know, for five quintiles from the lowest income up to the highest income. Following people over a period of years, they have been able to study the mobility of the American worker. In other words, once you are in the workforce, most people work themselves up the economic ladder--some way up, some part way up. But we find that only about 2 percent of our population seems to be stuck in the lowest quintile of income for long periods of time--a very small percentage. But other people go from the second quintile--from the first to the second to the third, and we also find that there is a larger percentage of our population that moves up from the lower two quintiles into the third or the fourth quintiles--a lot more rapidly and with a lot more mobility than we find people moving from the fourth to the top. While there are some people moving down from the highest to a lower quintile, history proves the mobility of the workforce in America is very much upward. Despite some serious policy concerns, public support for increasing the minimum wage remains strong. That is why the Senate is taking up a minimum wage increase. The political reality is a majority of Senators support a minimum wage increase. So a lot of economists would make an argument that you should not have any increase in the minimum wage at all and that the mistakes, going back to the 1930s, were mistakes; that you should not interfere with the marketplace. But Congress has decided for 70 years to do that. We are in the process for doing it. Regardless of the economic arguments, as long as this is a political issue, without a doubt, from time to time it is going to be raised and I suppose you could make an argument that, as long as it is political it ought to be raised, or else you should not even have a minimum wage. Now I would go to the tax incentive portions we hope stay in this bill when it goes to the other body. Tax incentives targeted to small business and other businesses impacted by a minimum wage increase have been linked to the minimum wage legislation. We have done this in the past decade. Democrats have at times joined Republicans supporting this language. I would quote from two former chairmen on this committee in their opening remarks on the conference agreement on the last piece of legislation that went through this body to raise the minimum wage. Senator Roth, then the chairman of the committee, described taxes as the sand that grinds the gears of small business. So he saw merit in small business tax relief as a separate matter. Senator Roth went on to say: [We will] proceed to the legislation on the minimum wage and small business taxes. We're anxious to move ahead on the small business tax legislation. Senator Moynihan, who at times was chairman of the committee and at times the ranking Democrat, said, at the same time Senator Roth was speaking: My distinguished chairman, as always, has so stated the facts. But there is a small semantic issue here. Some call this a small business relief act; others on this side call it the minimum wage bill. But we will not resolve that tonight, nor need we. Now, the next time the Senate deals with this, about 8 or 9 years since we last dealt with it, it is still the same issue. Senators Roth and Moynihan were right then, and if they were still living today, I would tell them they are right now. To different groups of Senators, these topics carry their own benefits or burdens. Many on my side don't like the idea of second- guessing the labor market with a federally mandated minimum wage. I pointed out some of the related issues that should give us pause, arguments put forth by economists when considering this legislation, that it is not all positive. Many on the Democratic side want a straight minimum wage hike and refuse to consider the burden that policy puts on employers and workers. Those Members do not want any linkage between the minimum wage policy and small business tax relief. As Senator Moynihan said, however, we don't have to agree now whether the upcoming legislation will be a minimum wage or a small business tax relief bill. Some, mostly Democrats, will call it a minimum wage bill. Some, mostly Republicans, will call it a small business tax relief bill. Still others will call it both a minimum wage and small business tax relief bill. President Bush, like President Clinton, the last President who signed an increase in the minimum wage bill years ago, will recognize both parts of the package. If my friends on the other side review the statement made by President Clinton, they will see that he saw merit in small business tax relief. Our Committee on Finance chairman, Senator Baucus, recognizes the linkage. I told him Republicans will insist on a small business tax relief package. He, in his cooperative way, as I hope I have been cooperative with him in the past, has heard us. Some in his caucus, their labor union friends and sympathetic ears of the east coast media, attacked Senator Baucus--which I don't understand--for recognizing a basic reality, as Senator Moynihan and Senator Roth worked together a decade ago to do, to see that there is some negative impact on small business from an increase in the minimum wage so you ought to offset that with some benefit to small business through the tax portions of the legislation. Those folks who are criticizing Senator Baucus don't have the responsibility to find the middle ground and evidently think we can get a bill through the Senate that can get the votes without finding the middle ground. It can't be done. Now, if I were chairman--and I am not chairman, and I am not crying about that--I would have tilted this package a little bit more toward the depreciation incentive and less toward the work opportunity tax credits. The reality is, Republicans don't have a majority on the Committee on Finance or in the full Senate, so chairman Baucus has struck a balance between majority Democrats and minority Republicans. I will assist Senator Baucus in defending the tax relief package that goes for the offsets and the revenue-losing provisions. We should not disturb the core structure of this package. I am hopeful, however, that we will improve the package by enhancing the package on the depreciation side, as Senator Kyl has suggested. It is important these incentives coincide with the time when the minimum wage increase will take effect. In seeking this objective we will need to find appropriate offsets, obviously. There may be other improvements. The bottom line is the Committee on Finance package is a well-known set of small business tax relief measures, things we have done before-- extending, mostly. These proposals have merit by themselves, but a minimum wage increase is not likely to pass the Senate without them. I hope everyone understands that. As many know, I am a working family farmer. For farmers, fields look familiar because we work our fields every year. This linkage, then, to put a commonsense touch on it, is that the linkage between minimum wage and small business relief is a familiar feel. I can quote Roth and Moynihan ad infinitum to prove it. It is not something new that is coming up with Baucus and Grassley. We have plowed this ground before. This is well-known common ground. I referred to President Clinton in a signing ceremony about 10 years ago. That legislation was founded on a small business tax relief package twice this size. I emphasize it was twice the size of what people are complaining about now that we are presenting to the Senate. It was supported at that time by many seeking cloture on the bill that is before the Senate. President Clinton singled out the work opportunity tax credit and the depreciation proposals in his remarks. My friend, Senator Kennedy, attended the signing ceremony and was recognized by President Clinton for the great product they brought to President Clinton. And John Sweeney was recognized, the head of the AFL-CIO. I ask unanimous consent the remarks be printed in the Record.

Mr. GRASSLEY. President Clinton said in the signing ceremony: I want to thank all the Members of Congress who are here, especially Senator Kennedy who, himself, probably broke the wage in hour laws by working so hard to pass this bill. And then in another place: There are a lot of people who worked hard on this bill who aren't here--Senator Daschle, Congressman Gephardt-- He went on to name other Members-- led by truly tireless John Sweeney. And there was applause. Now, some of the same people are objecting to what we are doing now. Another quote: I would also like a very special word of thanks to the business owners, especially the small business owners who supported this bill. Many of the minimum wage employers I talked to wanted to pay their employees more than $4.25 an hour and would be happy to do so as long as they can do it without hurting their businesses, and that means their competitors have to do the same thing. This bill will allow them to compete and win, to have happier, more productive employees, and to know they are doing the right thing. For all those small businesses, I am very, very appreciative. Continuing: I would also say that this bill does a remarkable number of things for small businesses. . . .[a]nd we know that most of the new jobs in America are being created by small- and medium-sized businesses. In 1993 I-- Meaning President Clinton-- proposed a $15,000 increase in the amount of capital a small business can expense, to spark the kind of investment that they need to create jobs. As the Vice President said-- Meaning at that time Mr. Gore-- this bill also includes a Work Opportunity Tax Credit to provide jobs for the most economically disadvantaged working Americans, including people who want to move from welfare to work. Now, there will be a tightly drawn economic incentive for people to hire those folks and give them a chance to enter the workforce, as well. Well, if Senators who were on the stage at that time thought that the work opportunity tax credit was a good thing to have, why isn't it a good thing to have it here, to extend it? Why not? This is a win-win situation. There is a win for the workers, a win for small business. Why should we chortle over a little thing such as increasing the minimum wage or having a tax provision in it?

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to reintroduce the Sunshine in the Courtroom Act, a bipartisan bill which will allow judges at all Federal court levels to open their courtrooms to television cameras and radio broadcasts. Openness in our courts improves the public's understanding of what goes on there. Our judicial system is a secret to many people across the country. Letting the sun shine in on Federal courtrooms will give Americans an opportunity to better understand the judicial process. It is the best way to maintain confidence and accountability in the system and help judges do a better job. For decades, States such as my home State of Iowa have allowed cameras in their courtrooms, with great results. As a matter of fact, only the District of Columbia prohibits trial and appellate court coverage entirely. Nineteen States allow news coverage in most courts; fifteen allow coverage with slight restrictions; and the remaining sixteen allow coverage with stricter rules. The bill I'm introducing today, along with Senator Schumer and eight other cosponsors from both sides of the aisle, including Judiciary Chairman Leahy and Ranking Member Specter, will greatly improve public access to Federal courts. It lets Federal judges open their courtrooms to television cameras and other electronic media. The Sunshine in the Courtroom Act is full of provisions that ensure that the introduction of cameras and other broadcasting devices into the courtrooms goes as smoothly as it has at the State level. First, the presence of the cameras in Federal trial and appellate courts is at the sole discretion of the judges--it is not mandatory. The bill also provides a mechanism for Congress to study the effects of this legislation on our judiciary before making this change permanent through a three-year sunset provision. The bill also protects the privacy and safety of non-party witnesses by giving them the right to have their faces and voices obscured. Finally, it includes a provision to protect the due process rights of any party, and prohibits the televising of jurors. We need to bring the Federal judiciary into the 21st Century. This bill improves public access to and therefore understanding of our Federal courts. It has safety provisions to ensure that the cameras won't interfere with the proceedings or with the safety or due process of anyone involved in the cases. Our States have allowed news coverage of their courtrooms for decades. It is time we join them. I ask unanimous consent that the text of this bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to reintroduce the Sunshine in the Courtroom Act, a bipartisan bill which will allow judges at all Federal court levels to open their courtrooms to television cameras and radio broadcasts. Openness in our courts improves the public's understanding of what goes on there. Our judicial system is a secret to many people across the country. Letting the sun shine in on Federal courtrooms will give Americans an opportunity to better understand the judicial process. It is the best way to maintain confidence and accountability in the system and help judges do a better job. For decades, States such as my home State of Iowa have allowed cameras in their courtrooms, with great results. As a matter of fact, only the District of Columbia prohibits trial and appellate court coverage entirely. Nineteen States allow news coverage in most courts; fifteen allow coverage with slight restrictions; and the remaining sixteen allow coverage with stricter rules. The bill I'm introducing today, along with Senator Schumer and eight other cosponsors from both sides of the aisle, including Judiciary Chairman Leahy and Ranking Member Specter, will greatly improve public access to Federal courts. It lets Federal judges open their courtrooms to television cameras and other electronic media. The Sunshine in the Courtroom Act is full of provisions that ensure that the introduction of cameras and other broadcasting devices into the courtrooms goes as smoothly as it has at the State level. First, the presence of the cameras in Federal trial and appellate courts is at the sole discretion of the judges--it is not mandatory. The bill also provides a mechanism for Congress to study the effects of this legislation on our judiciary before making this change permanent through a three-year sunset provision. The bill also protects the privacy and safety of non-party witnesses by giving them the right to have their faces and voices obscured. Finally, it includes a provision to protect the due process rights of any party, and prohibits the televising of jurors. We need to bring the Federal judiciary into the 21st Century. This bill improves public access to and therefore understanding of our Federal courts. It has safety provisions to ensure that the cameras won't interfere with the proceedings or with the safety or due process of anyone involved in the cases. Our States have allowed news coverage of their courtrooms for decades. It is time we join them. I ask unanimous consent that the text of this bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise to talk about energy, and I start by reminding people, as well as my fellow Senators, that in August 2005, the President signed an energy bill that was very comprehensive-- probably tilted toward renewable fuels, such as ethanol, and toward conservation, such as fuel cell cars, but also a small part of it was some incentives for domestic fuel, petroleum production, for refining and for distribution and for things of that nature. It was a very comprehensive bill because we were concerned about the price of gasoline. We were concerned about what working men and women of America were having to pay. We were concerned about national security. There were a lot of reasons for passing that bill. But then you get into an election year, 2006, and the impression you get from the election rhetoric is that we never had an energy policy, never passed a bill, or what we did pass was only for the big oil companies, and that there was no concern whatsoever about national security, there was no concern on the part of the Senate, when we passed that Energy Policy Act in 2005, about what many working men and women were paying for gasoline and things of that nature. And all of this rhetoric against it--or what was said about it, if anybody wanted to admit we had an energy policy passed by Congress--was that it was all for big oil. I wish to remind people that bill was overwhelmingly bipartisan. But yet during the last campaign, one political party talked all about giveaways to big oil, never talked about ethanol, never talked about conservation, that it was an energy bill that was just for big oil and for big corporations, making the other political party out to be nothing but for big corporations, as opposed to what our incentive was: to drive down the price of gasoline and to have an adequate supply of gasoline and not be dependent so much upon foreign sources of oil, which was our motivation. So I am here, now that the House of Representatives is working on a bill that deals with energy policy, and particularly to repeal what was referred to in the last election as ``sweetheart tax deals for big oil'' that were included in that Energy Policy Act of 2005, to say this bill that we passed was very well balanced for ethanol, alternative energy, conservation, with a small part of it for domestic oil production, and how intellectually dishonest it is to refer to this bill as a giveaway to big oil. I will use some statistics to back up what I am referring to. At the time we considered the Energy Policy Act of 2005, I was chairman of the Senate Finance Committee because my party was in the majority. So I played a central role in developing the tax title, along with my colleague, Senator Baucus. So, in fact, it was a very bipartisan bill. In fact, Senator Baucus and I produced, on a bipartisan basis, this comprehensive tax package that included provisions to increase domestic energy production, increase energy efficiency, and increase the development of alternative and renewable energies. On the whole, I think the effort was a success. All you have to do to know it was a success is to look at the explosion in the building of ethanol plants throughout the country--most of them in the Midwest but throughout the country--as people are going to alternative energies, renewable fuels now because ethanol is made from crops that are growing from year to year. So I think the effort was very much a success, and that is one small part of it being a success. The Senate tax title was supported unanimously--I wish to emphasize unanimously--because there, at that time, were 11 Republicans and 9 Democrats on the committee. It came out of our committee unanimously. This bill, which during the last election was talked about as a giveaway to big oil, came out of our committee unanimously and eventually passed the Senate 85 to 15. And the conference agreement, ironing out the differences between the House and the Senate, passed by a margin of 74 to 26. So throughout the whole process it was bipartisan, that this was the answer to the energy problems facing the Nation--not that it was the end-all and be-all, but it was a very comprehensive effort and a successful effort to solve the energy problems of our Nation. The entire tax package that was in this bill, the Energy Policy Act of 2005, had a budget score of $11.1 billion over 10 years. According to the nonpartisan Congressional Research Service, $2.6 billion or 18 percent of the package was for oil and gas production, refining, and distribution. Distribution isn't always by the big oil companies. So 18 percent--that is why I said our bill, passed in 2005, signed by the President, was overwhelmingly tilted toward renewable fuels and toward conservation, not toward domestic petroleum production. According to the Joint Committee on Taxation, the tax title of the Energy Policy Act actually raised taxes on oil and gas companies by at least $224 million. Understand, this was described in the last election as a giveaway to big oil. Yet nonpartisan staff said that oil and gas companies ended up paying $224 million in new taxes. In the last election, the tax title was characterized as tax giveaways to big oil, anywhere from $9 billion to $14 billion. How do you get $14 billion, if you want to say it was 100 percent for big oil instead of 18 percent? How can you say a bill that was scored at $11.1 billion could end up being a giveaway of $14 billion? It doesn't add up. And figures don't lie. At a time of record high gas prices last year, the other side accused the Republican majority of failure of leadership. They said it was time to rewrite the Energy bill and stop the billion dollar tax giveaways for big oil, the same kind of misleading insinuations I have been referring to on another issue they had in the last campaign, about the fact that we ought to negotiate with drug companies to get prescription drug prices down, when we are already doing that, as I pointed out in some speeches last week. For the 24 most-used drugs by seniors, the plans that are negotiating with the drug companies have negotiated prices down an average of 35 percent. Getting back to energy, during the same campaign cycle, Members on the other side sold the taxpayers a bill of goods. They committed to repealing all the tax giveaways to big oil that the Republican Congress included in the Energy Policy Act of 2005, which ended up with $224 million more coming in from oil and gas. With the results of the November election, I presume they believe they were given a mandate from the voters to take away all of those ``tax giveaways''--the words they used--in that bill. We heard the arguments over and over, both here on the Senate floor and across the country on the campaign trail. But now that the debt has come due, it is time for the new Democratic majority to deliver on their promises to the American people. So what have they come up with to repeal? How much money are they going to take back from big oil to alleviate consumer pain at the pump? Just one provision--that is right, one provision. After all the demagoguery against our party and the Energy bill that passed by an overwhelming bipartisan majority, supposedly because of ties to big oil, are they accusing the Democrats who voted for it of ties to big oil as well? And they are going to repeal what? One single tax provision enacted in the Energy Policy Act signed by the President in August of 2005. Of course, that is only half the story. It turns out this outrageous ``tax giveaway'' to big oil is scored by the Congressional Budget Office to save the U.S. Treasury $104 million over 10 years, not the $14 billion that was the outside figure used during the campaign, not $1.4 billion but $104 million. I am a family farmer from New Hartford, IA. I know $104 million is still a lot of money. But it turns out to be less than 1 percent of the entire package of the energy tax incentives included in that Energy Policy Act that came out of my committee on a unanimous vote, all Republicans and all Democrats, and passed the Senate in an overwhelmingly bipartisan manner. So in a desperate attempt to increase the size of the tax penalty on domestic oil and gas producers, they have also included the repeal of the oil and gas industry's eligibility for the manufacturing income tax deduction. That is not just for oil and gas; that is for all manufacturing in America. This was another bill, in 2004, that passed overwhelmingly with a bipartisan majority. The American JOBS Creation Act of 2004 was a new law supported by 69 Senators--that is bipartisan--that contained far-reaching measures to revive the manufacturing base in America because of outsourcing. We did that by cutting taxes so that the cost of capital is competitive with the cost of capital overseas, so we don't lose jobs overseas. We also created incentives for people to invest in the United States instead of investing overseas. It devoted tax benefits to American manufacturers in the form of a 3-percentage-point rate cut subject to the payment of wages to their employees. If they didn't hire more people, they didn't get the benefit. Remember, it was called the Americans JOBS Creation Act. This manufacturing tax cut goes to large and small corporations, family-held S corporations, partnerships, sole proprietors, family farmers, and cooperatives. If you manufacture here, you get the tax cut here. If you manufacture overseas, you don't get the tax cut. It was only for manufacturing in the United States, and it was only for U.S. manufacturers that paid employees' wages. It was not for manufacturing offshore and it was not for folks who only manufacture and hire overseas. In defining U.S. domestic manufacturing, Congress included in the definition all things that are extracted or grown, including what the family farmers grow. That means that all domestic minerals and the people who produce domestic minerals receive benefits. And that would include extraction of domestic--meaning here in America--oil and gas and the production of products made out of our own oil and gas. It seems very strange to me that if you want to become less dependent upon foreign oil, the first thing you would do, in your first 100 days being in the majority for the first time in 12 years, is to increase the taxes by 3 percentage points on domestic production of oil and gas, which was part of the American JOBS Creation Act of 2004, which passed in a bipartisan majority in the Senate. In addition, the House proposal also increases the taxes on all refinery products. That means your home heating oil and your farmer's diesel used to run the machines that harvest the crops. In addition, fertilizer is a primary product of natural gas, so midwestern family farmers are going to be hurt and not helped by any of this proposal. That is what is coming out of the other body to this body to consider. Maybe because it is represented by so many people from the big cities of America, they don't realize food grows on farms. It doesn't grow in a supermarket. Maybe they don't realize what they are doing to the American farmer. But we don't need the cost of our anhydrous ammonia, which last summer was $550 a ton compared to about $250 a ton 2 years ago--so we have fertilizer to grow our crops--to be driven up still more. In the 100 days of the new majority, this is what they are doing to the American consumer, the American farmer. All of this in the new House majority so they can rewrite and adopt a campaign promise to cut tax benefits to big oil. It is an example of a problem they made up that now they have to deliver on. In the process, they are going to hurt the family farmers, hurt the consumers, and cut out one of the things this body adopted in the JOBS Creation Act of 2004, to create manufacturing jobs in America, incentives to invest in America so that we don't have outsourcing. If they wanted to get back at Exxon--that is big oil, if there ever was big oil--they missed the mark. The people who produce here in the United States are the same people you go to church with and your kids see in school. If you want to become more dependent upon foreign oil, then you should be happy with this proposal coming out of the first 100 days of the new majority in the new House of Representatives. If you want to create incentives for the production of U.S. lower 48 domestic oil and gas, then this quite obviously is the wrong policy, all for a campaign gimmick, all for campaign pandering. That is not right, to teach the family farmers and the consumers of America, who are already paying enough for their prices and are suffering from high energy costs, to do more by taking away this 3-percent point tax incentive we gave for investment in America to create jobs in America. If it is made in America, you get the benefit of it. If it is made overseas, you don't get the benefit. Granted, there were also three provisions relating to royalty relief that were included in their bill. Two were included in the bipartisan Energy Policy Act, and one seeks to remedy an error caused by the Clinton administration bureaucrats in the Interior Department of 10 years ago. I will leave those discussions to the people who are best prepared to answer those, my colleagues on the Energy and Natural Resources Committee, who have jurisdiction and expertise in this area. I also point out to my colleagues and constituents that I am not beholden to big oil or the energy industry. In the years I have been in the Senate, I have battled big oil, because they hate renewable fuels that we call ethanol. They don't want you burning anything in your gas tank that doesn't come out of their oil wells. They don't want you burning in your gas tank those things that come off the farmers' fields in the way of corn from which we make ethanol, also for all of the sorts of things that they don't like, what we call energy conservation and forcing electric utilities to use renewable portfolio standards within the industry. I have supported biodiesel. I have supported ethanol. I have supported renewable portfolio standards--all things that big corporations in America don't like. But we have been successful in doing it. I have relentlessly chased the bad players in the petroleum industry at all levels, both legal and illegal. As chairman of the Senate Finance Committee, we closed over $10 billion in tax provisions that the President signed into law, shutting down fuel fraud and folks stealing fuel excise taxes from the Highway Trust Fund. These are real provisions, collecting $10 billion of taxes that were evaded that will no longer be evaded. So what are the facts concerning the track record of the previous Congress and the President of the United States on energy policy and promoting renewable and alternative energy, and what is wrong with the rhetoric of the last campaign that led people to believe it was something different than we ended up passing? We extended and expanded the production tax credit for electricity produced from renewable sources such as wind, biomass, geothermal, and landfill gas. We enacted tax credits for the purchase of hybrid fuel cells and advanced lean burn diesel vehicles. We enacted incentives for the production and use of ethanol and biodiesel and the infrastructure to dispense that fuel. The distinguished Presiding Officer contributed the idea behind doing that, so we would set up more biodiesel pumps at stations through the 30-percent tax credit that the Senator from Illinois thought of. I thank him for that idea. I was very happy to work with him on that. That is the distinguished Presiding Officer. We enacted the first ever renewable fuel standard for ethanol and biodiesel that has led to fantastic growth in the industry. With regard to energy efficiency, we enacted incentives for efficiency improvement for new and existing homes and commercial buildings and for energy-efficient home appliances. According to the clock in the other body, we are still somewhere within the first 100 days of the new Democratic majority, and again we see another example of legislative action not living up to campaign rhetoric. A word of caution to voters across America: Beware of the goods that you might be sold during an election. That applies to both Republicans and Democrats as far as I am concerned. In the case of repealing the ``big oil tax giveaways''--those are words used in the last election--from the Energy Policy Act, it turns out in fact to be a pig in a poke. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I rise to pay tribute to a staff person, Ted Totman, who will retire this week after 23 years of public service as a professional staff member in the U.S. Senate. I didn't know it back then, but when Ted took a job for me in 1983 on the Subcommittee on Aging of the Committee on Labor and Human Resources, I had hired someone who would be one of my closest, most trusted, and longest serving advisers. Ted was a professional staff member for the Subcommittee on Aging from May 1983 to February 1985. He was staff director during my chairmanship of that subcommittee from April 1985 to January 1987. Ted played a major role in developing and passing the 1984 Older Americans Act amendments and was a forward-looking, successful advocate for more attention to Alzheimer's disease, including expanding the number of Alzheimer's disease research centers, increasing funding for Alzheimer's disease research, and increasing funding for the care of people with Alzheimer's disease. Ted also worked to help obtain funding for two statistical centers on aging in the Census Bureau. For the next 10 years, from January 1987 to January 1997, Ted served as a legislative assistant in my office, where he was responsible for Medicare, Medicaid, Social Security retirement and disability policy, private pensions, and veterans issues. He was the leading staff member in the Congress for rural health initiatives. He worked to call attention to regional disparities in Medicare provider reimbursement which disadvantage rural providers, requested and achieved a major Office of Technology Assessment study on the problems of delivering health care in rural areas, and supported the Medicare Dependent Hospital Program and the EACH/RPCH hospital program. Ted's staff leadership helped to secure landmark amendments in the 1995 Finance Committee reconciliation bill to ensure geographic equity in Medicare managed care and to reform Medicare's reimbursement for nonphysician primary care providers. In addition, Ted spent countless hours helping Iowans navigate the Federal health care programs. In January 1997, I became, because of seniority, chairman of the Senate Special Committee on Aging. I asked Ted to be staff director. For the next 3 years, Ted led the committee's work that focused on preparing for the retirement of the baby boom generation and rural health issues. The committee staff developed legislation on aging policy issues, including Medicare, Social Security retirement, and private pensions, most of which was referred to the Committee on Finance, where I was also a member. Legislative initiatives included bills on Medicare dependent hospitals, consumer protections for participants in Medicare managed-care plans, and the program of all- inclusive care for the elderly, and that comes under the acronym we all recognize as the PACE Program. Staff developed and helped enact the Balanced Budget Act in 1997, provisions that provided greater reimbursement equity to managed-care plans that operated in rural communities. As staff director, Ted also led the pursuit of an active oversight and investigative agenda, including a pivotal review of the quality of care in nursing homes and the management of the oversight of quality of care in the nursing homes by the Health Care Financing Administration. Let me say for the distinguished Presiding Officer, the previous administration helped us very much get that through so that we now are adequately enforcing overview of nursing homes, as one example. Ted helped to raise the profile of many issues of importance not only to older Americans but to our society as a whole. In January of 2001, I became chairman of the Senate Committee on Finance, and Ted was there again to provide valuable leadership. When I asked him to stay on, at a time he was thinking of retiring, as deputy staff director, he was an integral part of the success of the committee's work during the next 6 years and oversaw staff work on major initiatives, including the Medicare Modernization Act of 2003, the health provisions of the Deficit Reduction Act, the PRIDE Act, and the authorization of the Safe and Stable Families legislation. Once again, Ted helped to ensure an active oversight program that focused on fraud and abuse in the health care system, problems in the process by which the Food and Drug Administration approves medications and devices, the quality of care in nursing homes, and the management by the Centers for Medicare and Medicaid Services of the survey and certification system for nursing homes. That was an ongoing issue back, as I referred to, when I was chairman of the Committee on Aging. Ted's work on the staff of the Finance Committee is so highly respected that the members signed a resolution expressing gratitude and respect for Ted's service and dedication. In addition to his 23 years of service in the U.S. Senate, Ted worked for 5 years for the U.S. Department of Health and Human Services and served 2 years in the military. In the Senate, Ted's policy acumen and understanding of the complexities of the legislative process, insight into the executive branch of Government, political wit, as well as his strong work ethic and intellectual honesty and his evenhandedness and personal generosity have made him remarkably effective and universally regarded. Ted is a true public servant who was committed in his work to the people of Iowa and of this great country. I am grateful for his loyalty and applaud his legacy of accomplishment. Ted has made a positive difference in the lives of so many Grassley staff members, and his daily presence will be greatly missed by all of us. We wish Ted well and look forward to continuing our friendship with him. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to join Senator Salazar in introducing a concurrent resolution which expresses the goal of the United States to provide 25 percent of the Nation's energy needs from renewable resources by 2025. The goal of this 25 by 25 resolution is quite simple: to replace 25 percent of our total energy needs with renewable resources like wind, hydropower, solar, geothermal, biomass and biofuels by 2025. This is a bold goal, but given our current energy situation in the U.S., it is a necessary goal. The impact of increased energy prices is being felt around the country by working families, farmers, businesses and industries. The increased cost for energy at the pump, in home heating and for industrial uses has the potential to jeopardize our economic security and vitality. Our effort with this concurrent resolution is to signal to America's farmers, ranchers and forestry industry, that we believe they have the ability and resources to generate 25 percent of our energy needs. And, that it's in our economic and national security interest to do so. There are many inherent virtues in producing our own domestic energy from renewable resources. It is good for our environment. It is good for our national and economic security. It will provide an economic boost for our rural economies. And perhaps most importantly, it will ensure a stable, secure, domestic supply of affordable energy. Already, our farmers and ranchers are working hard to use their resources to produce electricity from wind, biomass and other agricultural wastes. In addition, corn, soybeans and other crops are being used to produce transportation fuels like ethanol and biodiesel. It is evident that rural America has the drive to achieve this goal. While this concurrent resolution states our renewable energy goal, it does not prescribe a way to achieve the goal. Rather, it recognizes the benefit of implementing supportive policies and incentives to stimulate the development and use of renewable energy. It also identifies the benefits of technological improvements to the cost and market appeal of renewable energy. The supporters of this goal commit to support sensible policies and proper incentives to work toward the goal. I am hopeful that my colleagues will recognize the importance of this effort, and will consider supporting us in this goal to produce 25 percent of our energy needs from renewable resources by 2025.

Mr. GRASSLEY

Mr. GRASSLEY. I suggest the absence of a quorum.

Mr. GRASSLEY. Mr. President, I am going to proceed in morning business, but I want to welcome the new Senator from Virginia to the Senate. I look forward to serving with him. I am sorry that maybe the Senator's first time being in the chair he has to listen to my speech, but I am very glad to have the opportunity to speak to you and Members of the body and the people of the United States about a very important issue that is going to be coming before us. This is an issue that I have been speaking about for the last several days on the floor. In fact, I think 4 days last week I did. I talked about the Medicare prescription drug benefit and the so-called prohibition on Government negotiation with drugmakers for low prices. I spent time doing that because people need to understand that some proposals could have drastic consequences, not only for Medicare and the beneficiaries of Medicare but also for anyone else who buys prescription medicine. I want to make this very clear because when you are talking about seniors and the disabled on Medicare, and on prescription drugs, you might get the impression that we make a decision here, and the only people it is going to affect are those on Medicare. But I hope I made it very clear last week, and I am going to go over this again today. In other words, if we change Medicare in this instance dealing with the prices of prescription drugs, it will increase prices of prescription drugs for everybody. It is not going to impact just those on Medicare, the decisions we make. I have said it before, and I say it again: Having the Government negotiate drug prices for Medicare might be a good sound bite, but it is not sound policy if it is going to increase the price of prescription drugs for everybody regardless of age in the United States. I think the House bill, which is numbered H.R. 4 and passed the House last week, very definitely falls into that category. It may be a good sound bite. It may be very politically beneficial. But a good sound bite is not good policy. It will be bad for Medicare beneficiaries and other consumers of prescription drugs. That outcome was voiced by witnesses just last week when they appeared before the Senate Finance Committee, chaired by the Senator from Montana, Senator Baucus. At that hearing, one of the witnesses, Dr. Fiona Scott Morton, a professor of economics at Yale University, made a key point about the size of the Medicare market and when you deal with the price that Medicare recipients pay for drugs, the fact that it has negative consequences for everybody else in America. She pointed out that of course we all want to obtain discounts for drugs for seniors. But she said: With close to half of all spending being generated by those seniors, whatever price they pay will tend to be the average price in the market. Her point is, if you are half of the market, the math makes it virtually impossible for your prices to be below average. Dr. Scott Morton said that because Medicare is so large, if drugmakers had to give it the lowest price they give any customer, they would have a strong incentive to increase their prices for everybody else. Professor Scott Morton also stated: This approach to controlling prices harms all other consumers of pharmaceuticals in the United States and is bad policy. I pointed out how Part D has already given seniors, on the 25 drugs most used by seniors, 35-percent lower prices than we anticipated when we wrote the bill. While it is great to be doing things for seniors, there is no free lunch. Everybody, regardless of age, will pay more for prescription drugs. Do you want that to happen? Do you want those unintended consequences to happen? Then we had another witness at the hearing held by Senator Baucus before the Senate Finance Committee last week. It was a representative of the Government Accountability Office who talked about its Year 2000 report on this very issue, and echoed Professor Scott Morton's view. Remember, in 2000 the General Accounting Office concluded: Mandating that federal prices for outpatient prescription drugs be extended to a large group of purchasers such as Medicare beneficiaries could lower the prices they pay, but raise prices for others. That is from a nonpartisan Government agency working for the Congress of the United States called the Government Accountability Office. One thing we keep hearing is that Medicare should not pay more than the Veterans' Administration pays. We had another witness, Professor Richard Frank of Harvard University, who said that if Medicare got the same prices the Veterans' Administration gets for drug prices--if that happened--it would likely raise Veterans' Administration prices for our veterans for all drugs. Do you want to hurt veterans with these unintended consequences of some of these ideas that are floating around this new Congress? Then we had other panelists. As they listened to Dr. Frank's response, other panelists nodded in agreement. Talk about unintended consequences, do you know who else agrees with these professors who have been testifying before our committee? I point to the Military Order of the Purple Heart. In a letter to Members of Congress, the Military Order of the Purple Heart expressed its concern about the impact that extending Veterans' Administration prices to Medicare could have on veterans. In fact, they stated that several veterans organizations passed formal resolutions opposing legislation to extend the Veterans' Administration prices to Medicare because it would threaten Veterans' Administration's current discounts. What is the end result? Higher drug prices for those who get their drugs from the Veterans' Administration. Another key point made at last week's hearing before the Senate Finance Committee was that it is not simply about the number of people for whom you are buying drugs. In response to a question I asked Professor Scott Morton, the professor said it doesn't matter whether you negotiate on behalf of 1 million people or 43 million people--which is the number of senior citizens in this country. What matters is what leverage you have and how you use that leverage. And if you don't have a fundamental tool, and that would be the formulary, you have no leverage over drugmakers. A formulary is a list of drugs that a plan will cover. Here is what Professor Scott Morton said would happen if someone negotiating drug prices couldn't have a formulary: Each manufacturer would know that, fundamentally, Medicare must purchase all products. The Medicare ``negotiator'' would have no bargaining leverage, and therefore, simply allowing bargaining on its own would not lead to substantially lower prices. That is the end of the quote from Professor Scott Morton. Then we had a Mr. Edmund Haislmaier, a fellow at the Heritage Foundation, talk about the limits of bulk purchasing power alone. In his written testimony he said: . . . volume purchasing encourages manufacturer discounting, it is not, in and of itself, sufficient to extract large discounts. Manufacturers will only offer substantial discounts if the buyer combines the ``carrot'' of volume with the ``stick'' of being able to substitute one supplier's goods with those of another. In drug negotiation, that stick he is talking about--Mr. Haislmaier is talking about--is the formulary. Here is what is wrong with the House bill that just passed. It prohibits the Secretary of Health and Human Services from using a formulary. Thus the stick that is necessary, that the Veterans' Administration uses to drive down the price of drugs, is not even in the bill that passed the House that is supposed to guarantee senior citizens lower drug prices. For all of their talk about getting savings from Government negotiations, the House Democrats took away a key tool to get lower prices. That was a key lesson we also learned from last week's Finance Committee hearing that Senator Baucus chaired. Here is what the Congressional Budget Office said about H.R. 4. Here I have a chart. The bottom line of it is that it would have negligible effect on Federal spending. To emphasize that, I want to read it all. For the benefit of new Members, I point out we will soon find out that when you refer to the Congressional Budget Office, it is like God on Capitol Hill. When the Congressional Budget Office says something costs something--and you might have intellectually honest, good reasons for disagreeing with it--the Congressional Budget Office is always right. If there is a point of order against it, then you get 60 votes. The 60- vote requirement around here almost makes anything or anybody or any agency a god, because it is difficult to get 60 votes. So CBO generally stands. Sometimes they are overridden but not very often. So this god of CBO: CBO estimates that H.R. 4-- I want to emphasize, that is the bill that just passed the House last week, a Democratic bill-- would have negligible effect on Federal spending because we anticipate that the Secretary-- meaning the Secretary of HHS-- would be unable to negotiate prices across a broad range of covered Part D drugs that are more effective than those obtained by PDPs under current law. You heard it during the campaign. You heard it a long time before the campaign. If we do away with this noninterference clause, we are going to get drugs cheaper for the citizens. This is supposedly on top of the 35 percent of the average reduction in the price of the 25 drugs most often used by senior citizens, and the god of Capitol Hill says there is not going to be the savings. That is not only for the people who pay out of their pockets some portion for drugs, but also saving the taxpayers money. I am going to quote another thing from the Congressional Budget Office that gets back to this carrot and stick, the stick being the formulary that is used by the Veterans' Administration to get the low prices they get--the same pattern that proponents of doing away with the noninterference clause want to follow, to get lower prices for senior citizens, and that is the formulary. The Veterans' Administration has a formulary, but the House bill passed last week does not have a national formulary, so you do not have a stick to accomplish the goals. Without the authority to establish a formulary, we believe the Secretary would not be able to encourage the use of particular drugs by Part D beneficiaries, and as a result would lack the leverage to obtain significant discounts in his negotiations with drug manufacturers. It is pretty clear that what we are being told you are going to get as a result of the House-passed bill is not happening. So I would quote another independent actuary--maybe not quite the god that CBO is, but the actuaries at the Center for Medicare Services, the agency that oversees the Medicare drug benefit. They said about the same thing about H.R. 4 not having a formulary. Although the bill would require the Secretary to negotiate with drug manufacturers regarding drug prices, the inability to drive market share via the establishment of a formulary or development of a preferred tier significantly undermines the effectiveness of negotiations. Whether you are CBO, responsible to the Congress of the United States, working for the Congress of the United States, or whether you are the actuaries downtown at the Center for Medicare Services working for the President of the United States--and maybe actuaries are fairly independent--but the point being they came to the same conclusion, that the tool that is necessary to accomplish what Democrats say they want to accomplish by doing away with the noninterference clause to negotiate prices with drug companies isn't going to be effective because the tool to be effective is not in their legislation. Let me point out the key downside of having the Secretary establish a national formulary in my next chart. Fewer drugs would be covered. I have made a point about keeping the Government bureaucrat out of the medicine cabinet, not to be the person between the doctor and the patient. We set up, as a principle in the Medicare bill, to do it differently than the Veterans' Administration because the Veterans' Administration did not allow every therapy to be available to a veteran. A bureaucrat makes a decision that a veteran can have this, but a veteran cannot have that, the Government will not buy this. We did not want the senior citizens to be treated that way, so every therapy has to be available. This chart shows only 30 percent of the drugs covered by Medicare will be available to seniors if done the way the Veterans' Administration does it. Do you want to get the complaints from the seniors of America, as I sometimes get from veterans? They come to my town meetings saying: My doctor says I should not take this pill because there are side effects, I should take this one. Why won't the Veterans' Administration let me buy this pill? The doctor said I ought to have it. I can go to the Veterans' Administration and advocate for this veteran, but it is not a sure thing. We do not have to worry about that with seniors. Let me sum up two important points from the Senate Committee on Finance hearing we had last week and from the experts from the Congressional Budget Office and the chief actuary of Medicare. First, giving Medicare the lowest price a drugmaker gives any purchaser, whether that is a private plan or the Veterans' Administration, will increase prices of prescription drugs for everyone else in America. That means higher prices for working Americans and for small businesses. Second, in summary, the ability to use a formulary to negotiate means you have to be able to tell a drugmaker: If you do not give me a good price, I will pick another drug to put in my formulary. If you do not believe all the experts, if you do not believe all of the people that have studied this over a long period of time, whom are you going to believe? I remind everyone from where the prohibition on negotiations came. We have 10 new Members of the Senate, and a lot of them will not be familiar with the genesis of the noninterference clause. The opponents of the drug benefits seem to conveniently forget their own bills had the same language and that they supported a benefit run by private plans. My next chart demonstrates this better. The prohibition of Government negotiation--what is referred to as a noninterference clause--first appeared in Democratic bills; in total, seven bills introduced and supported by 34 Senate Democrats and more than 100 House Democrats had the prohibition in these legislation. On top of that, many of the Members who are now twisting that language cosponsored that very legislation. I will not emphasize every Democratic Congressman or Senator who introduced these seven bills, but I will emphasize President Clinton, in 1999, when he proposed from the White House a plan for prescription drugs for seniors. The plan proposed by President Clinton took the same approach. President Clinton said so many good things that I didn't have to think up new things, just repeat what President Clinton said about saving money and the ability of plans to negotiate and save money, and to make sure there was a wide range of drugs available for our seniors. We have a good basis for including in our bipartisan bill that passed in 2003 things that Democrats had in their bills before we passed our bill. I don't see any of them embarrassed about that fact even while they go on talking about how bad the provision is now that it's in a bipartisan bill. Plans are negotiating for seniors, and those negotiations are reducing the cost of the 25 most often used drugs by seniors on an average of 35 percent. President Clinton said so many good things that I don't have to say them. I wish Members would read some of the things President Clinton said about this. Continuing to summarize, the Secretary does not need the authority to negotiate and a national formulary is a bad idea. Competition among these plans that seniors are now joining--91 percent of the seniors have prescription drug coverage; the Medicare prescription drug benefit is a voluntary program; they do not have to get in it if they don't want to--had led to lower drug prices for beneficiaries and, more importantly, lower costs for taxpayers and the States. This is saving taxpayers $189 billion. I will cover that in a minute. Premiums are lower than they were estimated to be. I talked of lower drug prices, but now I am talking about the premiums to join the plans. Before 2006, the Medicare chief actuary estimated the average monthly premium would be $37. In fact, we struggled to make sure, when we wrote the Medicare bill, that the premium would be between $35 and $40 a month because we felt above that there would be resistance to joining, and we would not have 91 percent of the people in. We planned on $35 to $40. The chief actuary said $37. But because of competition, it ended up being only $23 in 2006. In the year 2007, premiums are going to average $22. Competition is working. The net cost to the Federal Government is also lower than expected. This is that $189 billion. Last week, the official Medicare actuary announced the net 10-year cost has dropped by $189 over the original budget window used when the Medicare Modernization Act was enacted. That is a 30-percent drop in the actual costs compared to what was projected. Competition is working. I ask any Member how often a Federal program comes in under cost. We always speak of overruns. Every Federal program is costing more than we anticipate when we pass it. Overruns do not seem to be the sin they ought to be. We have a program $189 billion under what we thought it would cost, so we have an underrun. We never hear of that. We could not get the lower prices and lower costs unless the prescription drug plans are, in fact, what we anticipate they would be--strong negotiators with the drugmakers. Competition is working. I know the opponents of the drug benefit will likely keep up their attacks on the program. They have pandered through the last election and they have to deliver. What are they delivering? They are delivering a pig in a poke. They may be delivering something very negative for the seniors of America. I have been working hard this week to give people important facts that have been left out of the debate on negotiation of drug prices. The plain and simple fact is that competition among the plans is working. The Medicare plans are delivering the benefits to Medicare beneficiaries. These private sector plans have the experience in negotiating better drug prices. As I pointed out last week, for 50 years, Federal employees, under the Federal Employee Health Benefit Program, have been doing it this way. It has successfully worked. That is why we adopted it for seniors. These Medicare negotiators have proven their ability to get lower drug prices. The Medicare plans are negotiating with drug companies using drug formularies within the rules set by law. These plans have to be approved by the Centers for Medicare & Medicaid Services. Medicare beneficiaries have access to the drugs they need and 70 percent of the drugs that are out there under the Medicare prescription drug benefit are not offered by the Veterans' Administration to veterans. I have an example from the ALS Association, better known as the association dealing with Lou Gehrig's disease. Here is what they said about repealing the noninterference clause in a January 4 letter to Members of Congress: The elimination of the noninterference provision will have particularly cruel consequences for people with ALS. It means that even if a new drug is developed to treat ALS, many patients likely will not have access to it. That's because price controls can limit access to the latest technologies. The letter continues to say that individuals with ALS: . . . will either be forced to forego treatment, or only have access to less effective treatment options--ones that may add a few months to their lives but not ones that will add years to their lives. Just for the record, drugs to treat ALS are covered under the Medicare drug benefit right now. I end with a statement I have so often used in the last week: If it ain't broke, don't fix it. I ask unanimous consent to have these letters printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, Congress will be working on a rewrite of the current farm bill during the 110th Congress and I will be looking for ways to improve the economic condition of America's farmers. However, one of the many shortcomings of the 2002 farm bill is that it failed to protect family farmers and independent livestock producers from vertical integration in the livestock industry. This is one reason why I voted against the final conference report. Over the years, family farmers from across Iowa have contacted me to express their fears about the threat they feel from concentration in the livestock industry. They fear that if the trend toward increased concentration continues, they may be unable to compete effectively and will not be able to get a fair price for their livestock in the marketplace. The bill I am introducing would prevent meat packers from assuming complete control of the meat supply by preventing packers from owning livestock. This bill would make it unlawful for a packer to own or feed livestock intended for slaughter. Single pack entities and packs too small to participate in the Mandatory Price Reporting program would be excluded from the limitation. In addition, farmer cooperatives in which the members own, feed, or control the livestock themselves would be exempt under this new bill. This is a similar version I successfully offered on the floor during the debate on the 2002 farm bill. It's important for our colleagues to remember that family farmers ultimately derive their income from the agricultural marketplace, not the farm bill. Family farmers have unfortunately been in a position of weakness in selling their product to large processors and in buying their inputs from large suppliers. Today, the position of the family farmer has become weaker as consolidation in agribusiness has reached all time highs. Farmers have fewer buyers and suppliers than ever before. The result is an increasing loss of family farms and the smallest farm share of the consumer dollar in history. One hundred years ago, this Nation reacted appropriately to citizen concerns about large, powerful companies by establishing rules constraining such businesses when they achieved a level of market power that harmed, or risked harming, the public interest, trade and commerce. The United States Congress enacted the first competition laws in the world to make commerce more free and fair. These competition laws include the Sherman Act, Clayton Act, Federal Trade Commission Act and Packers & Stockyards Act. Since that time, many countries in the world have followed this U.S. example to constrain undue market power in their domestic economies. Unfortunately, competition policy has been severely weakened in this country, especially in agriculture, due to Federal case law, underfunded enforcement, and unfounded reliance on efficiency claims. The result has been a significant degradation of the domestic agricultural market infrastructure. The current situation reflects a tremendous mis-allocation of resources across the food chain. Congress must strengthen competition policy within the farm sector to reclaim a properly operating marketplace. While this legislation does not accomplish all that we need to do in this area, it's an important first step toward remedying the biggest problem facing farmers today, the problem of concentration. Thank you Mr. President; I ask unanimous consent the text of the bill be printed in the Record.

Mr. GRASSLEY

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

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, Congress will be working on a rewrite of the current farm bill during the 110th Congress and I will be looking for ways to improve the economic condition of America's farmers. However, one of the many shortcomings of the 2002 farm bill is that it failed to protect family farmers and independent livestock producers from vertical integration in the livestock industry. This is one reason why I voted against the final conference report. Over the years, family farmers from across Iowa have contacted me to express their fears about the threat they feel from concentration in the livestock industry. They fear that if the trend toward increased concentration continues, they may be unable to compete effectively and will not be able to get a fair price for their livestock in the marketplace. The bill I am introducing would prevent meat packers from assuming complete control of the meat supply by preventing packers from owning livestock. This bill would make it unlawful for a packer to own or feed livestock intended for slaughter. Single pack entities and packs too small to participate in the Mandatory Price Reporting program would be excluded from the limitation. In addition, farmer cooperatives in which the members own, feed, or control the livestock themselves would be exempt under this new bill. This is a similar version I successfully offered on the floor during the debate on the 2002 farm bill. It's important for our colleagues to remember that family farmers ultimately derive their income from the agricultural marketplace, not the farm bill. Family farmers have unfortunately been in a position of weakness in selling their product to large processors and in buying their inputs from large suppliers. Today, the position of the family farmer has become weaker as consolidation in agribusiness has reached all time highs. Farmers have fewer buyers and suppliers than ever before. The result is an increasing loss of family farms and the smallest farm share of the consumer dollar in history. One hundred years ago, this Nation reacted appropriately to citizen concerns about large, powerful companies by establishing rules constraining such businesses when they achieved a level of market power that harmed, or risked harming, the public interest, trade and commerce. The United States Congress enacted the first competition laws in the world to make commerce more free and fair. These competition laws include the Sherman Act, Clayton Act, Federal Trade Commission Act and Packers & Stockyards Act. Since that time, many countries in the world have followed this U.S. example to constrain undue market power in their domestic economies. Unfortunately, competition policy has been severely weakened in this country, especially in agriculture, due to Federal case law, underfunded enforcement, and unfounded reliance on efficiency claims. The result has been a significant degradation of the domestic agricultural market infrastructure. The current situation reflects a tremendous mis-allocation of resources across the food chain. Congress must strengthen competition policy within the farm sector to reclaim a properly operating marketplace. While this legislation does not accomplish all that we need to do in this area, it's an important first step toward remedying the biggest problem facing farmers today, the problem of concentration. Thank you Mr. President; I ask unanimous consent the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I did not come to the floor to talk about Iraq. I am not on too many of the committees that deal with foreign relations and military issues. I am on the Finance Committee, serving as a team player with the capable chairman of that committee, Senator Baucus, to deal with health issues, tax issues, and trade issues. One of the health issues I have been speaking on for the last several days is the issue of Medicare and prescription drugs. For 3 days you have heard this Senator say why Democratic efforts to ruin the Medicare prescription drug program by doing away with the nonintervention clause is bad for senior citizens. I will take this fourth day of speaking to quote from other experts because I don't presume that any of the other 99 Senators care what I say. I have said it anyway. But I want to back up what I have said over the last 3 days by quoting from other people whom other Senators may be listening to in the period of time between now and a couple of weeks from now when this issue of prescription drugs is going to come up. On Monday I spoke about how the benefit uses prescription drug plans and competition to keep costs down and how well that is working. I backed that up statistically. I said it then, and I say it again: If it ain't broke, don't fix it. I presented findings from the chief actuary at the Center for Medicare Services. And for the benefit of a new Senator chairing, this chief actuary is the one people on his side of the aisle were quoting so extensively, that there was a much higher figure coming out of the administration than what the CBO had, and there was an effort to keep that hidden--what the chief actuary said it would cost--from the Congress so that we would pass a bill that was more expensive than we said it was. And if he could be quoted then, I want people to listen to him now. I also quoted experts from the Congressional Budget Office, explicitly rejecting opponents' claims that giving the Secretary of Health and Human Services the authority to negotiate with drug companies would produce savings. Today I will let the words of others from across the political spectrum and from the news media do the talking. I will begin with Secretary Michael Leavitt, head of the Department of Health and Human Services, who said: Government negotiation of prices does not work unless you have a program completely run by the government. Federal price negotiations would unravel the whole structure of the Medicare drug benefit, which relies on competing private plans. Just today, the Secretary wrote an op-ed in the Washington Post that if the Government was required to negotiate--I am quoting the Secretary--``one government official would set more than 4,400 prices for different drugs, making decisions that would be better made by millions of individual consumers.'' The Secretary went on to say: There are many ways the administration and Congress can work together to make health care more affordable and accessible. But undermining the Medicare prescription drug benefit, which has improved the lives and health of millions of seniors and people with disabilities, is not one of them. The next person I would like to quote is Dan Mendelson, a former Clinton administration official, who now is president of a health care consulting firm that tracks Medicare prescription drug programs. Mr. Mendelson, a former Clinton administration official, said: From a rhetorical perspective, Democrats may feel like they gain a lot with this issue, but there are many substantive hurdles that the government faces in trying to negotiate prices. If you look historically at the government's experience in trying to regulate prices, it's poor. That was an official from the Clinton administration. As supporting evidence, a Chicago Tribune editorial said the following: Richard S. Foster, the chief actuary for the Centers for Medicare and Medicaid Services, studied whether direct government negotiation would yield bigger discounts. His answer: Not likely. One reason, he said, was Medicare's unreassuring record on price negotiations, even before this new benefit was passed. I made the point the other day that over the last 40 years, we have seen CMS, HHS, price health care, wasting a lot of taxpayers' dollars, because the Government has overpriced things, overreimbursed things. Mobile wheelchairs is just the most recent example I have used in some of my hearings in my committee while I was chairing it. Medicare has a history, following on what I said, of paying for some drugs ``at rates that, in many instances, were substantially greater than the prevailing price levels. Translation: The feds got fleeced.'' That is the chief actuary that people on the other side of the aisle were quoting so liberally 3 years ago. I hope they will take his analysis of what is going on now in Medicare, working well for seniors, into consideration before they screw everything up with an amendment to do away with the noninterference clause. Now I want to show you a chart. I guess this will be the first chart. I want to start with the Washington Post in November, when they printed a quote from Marilyn Moon, director of the health program at the American Institutes for Research. She is a former trustee of the Social Security and Medicare trust funds, a former senior analyst of the Congressional Budget Office, and the new Senator presiding will find out that the Congressional Budget Office is God here. If they say something is going to cost something, it costs something. If we think it costs less, we go by what they say. If you want to overrule them, it takes a 60-vote supermajority. Marilyn Moon is currently president of the board of the Medicare Rights Center. She says: This is going to be much more of a morass than people think. Negotiating drug prices is a feel good kind of answer, but it's not one that is easy to imagine how you put it into practice. Dr. Alan Enthoven, professor at Stanford University, now emeritus--we often read his writings because he is such an expert in health care financing--wrote in the Wall Street Journal an opinion piece: When the government negotiates its hands are tied because there are few drugs it can exclude without facing political backlash from doctors and the Medicare population, a very influential group. Quoting further from Dr. Enthoven: Congressional Democrats need to be careful in making the logical leap from market share to bargaining power. Empowering the government to negotiate with pharmaceutical companies is not necessarily equivalent to achieving lower drug prices. In fact, neither economic theory nor historical experience suggests that will be the outcome. An editorial in the Dallas Morning News echoed my statement from Monday that beneficiaries do not want the Government in their medicine cabinet. A quote from the Dallas editorial: Giving the feds the power to negotiate drug prices for seniors would effectively cede control of the pharmaceutical industry to Washington. When congressional Democrats press for this change, remember they're pushing for much more than lower prices. They're seeking to move the line where government should stop and the marketplace should start. But let's talk about who really matters in this case. Who really matters are the beneficiaries, the senior citizens, the disabled people on Social Security, and, of course, the taxpayers ought to be given equal or more consideration. Once again, to emphasize, if it ain't broke, don't fix it. In 2006, premiums were 38 percent lower than originally anticipated. By ``originally anticipated,'' I mean the work that was done by CMS and the Congressional Budget Office to give us information when we wrote this bill in 2003. We also find out that the net cost to the Federal Government is lower than expected. The 10-year cost of Part D has dropped $189 billion, representing a 30-percent drop in the actual cost compared to the original projections. I ask: How many times do Government programs come in under cost? Every day we are reading about cost overruns of Government programs, and here is one that is coming in 30 percent under cost, and somebody wants to screw it up by offering amendments to change what has worked, the one lever that has brought about 35-percent lower prices for the 25 drugs most used by senior citizens, and that is on top of the 38- percent lower price for premiums to which I have already referred. A poll of the Medicare beneficiaries by J. D. Power & Associates, which takes consumer temperatures of all sorts of products, found that 45 percent of the beneficiaries surveyed were ``delighted'' with the Medicare drug benefit. They gave their own drug plan a 10 on a 10-point scale, and another 35 percent of those surveyed gave their prescription drug plan an 8 or 9 rating on a 10-point scale. And other polls are consistent. So that is 80 percent satisfied. All of the program's successes have been challenged at various times by this program's opponents, and each time these challenges have been proven wrong. As the plan continues to return positive results, skeptics are beginning to change their opinion as well. I want to quote Dr. Reischauer, who is former Director of the Congressional Budget Office, and has great respect on the Democratic and Republican sides. He is a nationally known expert on Medicare. Currently, he is president of the Urban Institute and serves as vice chair of the Medicare Payment Advisory Commission. This is a very candid statement by somebody who had their doubts about this program when it was put in place. He says: Initially, people were worried no private plans would participate. In other words, we were patterning it, as I said, after the Federal Employees Health Benefits Program of 50 years. We wanted to transplant that for the benefit of senior citizens in Medicare. We didn't know if our program would work, even though it worked for Federal employees. As he said, there were doubts. Continuing to quote: Then too many plans came forward. Parenthetically, a heck of a lot more plans than we anticipated. We even thought at one time there were going to be so few plans, and because we wanted people to have some choice, that we were going to have to have the Federal Government subsidize an extra plan just for people to have choice. But then the complaint was too many plans. He goes on to another point: Then people said it's going to cost a fortune. And the price came in lower than anybody thought. Then people like me-- Meaning Dr. Reischauer-- said they're low-balling the prices the first year and they'll jack up the rates down the line. That is what he thought. And, lo and behold, the prices fell again. At some point you have to ask: What are we looking for here? Let me tell you what the press is saying. First, a Washington Post editorial represented an insightful view, saying: A switch to government purchasing of Medicare drugs would choke off this experiment before it had a chance to play out, and it would usher in its own problems. For the moment, the Democrats would do better to invest their health care energy elsewhere. A USA Today editorial took it a step further, saying: A deeper look, however, suggests that the Democrats' proposal was more of a campaign pander than a fully baked plan . . . governing is different than campaigning. The public would be best served if the new Congress conducts indepth oversight to gather the facts, rather than rushing through legislation within 100 hours to fix something that isn't necessarily broken. In other words, this Senator says, for a third time, if it ain't broke, don't fix it. Finally, put simply by the National Review, Government negotiation ``is a solution in search of a problem and could unnecessarily disrupt a benefit that is working well for seniors.'' I am sure the Presiding Officer doesn't want to disappoint people in Montana. What compounds the problem is the fact that neither I nor anyone else has heard Democrats explain how Government negotiation would work. I spoke a great deal about this yesterday. I am not going to go into the details of it, but I want my colleagues to hear what the New York Times says. How many times do I quote the New York Times? But when it is very useful, I like to do it. They raise these questions about the Democrats' proposal, H.R. 4, as seen by ``many economists and health policy experts . . . as a paradox.'' On the one hand, Democrats want the Government to negotiate lower drug prices for Medicare beneficiaries, but, on the other hand, they insist that the Government should not decide which drugs are covered. I made clear yesterday, if you don't have a formulary, as the House bill does not have, you have no lever for the Government to negotiate. That is why the Veterans' Administration put in a formulary. People say they want to do it like the Veterans' Administration does. Then why does the first bill in the House of Representatives take out the only tool by which the Veterans' Administration leverages lower prices? Continuing the paradox issue brought up, and I am quoting from the New York Times: The bill says the Secretary ``shall negotiate'' lower prices. On the other hand, the drug benefit would still be delivered by private insurers. Each plan would establish its own list of covered drugs, known as a formulary, and the Secretary could not ``establish or require a particular formulary.'' In the same New York Times article, James R. Lang, former president of Anthem Prescription Management--a drug benefit manager is what he is--said this: For this proposal to work, the Government would have to take over price negotiations. It would have to take over formularies. You can't do one without the other. But the House bill just introduced says you can. That is a parenthetical on my part. Continuing to quote: Drug manufacturers won't give up something for nothing. They will want a preferred position on the Medicare formulary--some way to increase the market share of their products. The only comparison I know of is, of course, the Veterans' Administration. I have already referred to that point. So when people come up to me and ask why the Government negotiates for veterans and not for seniors, I tell them what the Medicare system, modeled after the VA, would look like. Yesterday I spent some time explaining what Government negotiations looked like for the VA and other Federal programs. Again, instead of listening to my words, I want my colleagues to hear what other people have said. As explained in the Washington Post: The veterans program keeps prices down partly by maintaining a sparse network of pharmacies and delivering three-quarters of its prescription by mail . . . Moreover, the program for veterans is in a position to negotiate hard with drugmakers because it can credibly threaten not to buy from them. Its plan excludes new medicines. Why would any person on the other side of the aisle, or even a Republican who might want to consider doing this, want to deny any drug to a senior citizen? But the VA program excludes 70 percent of the drugs that senior citizens can get under Part D. And why would anybody backing these plans want to follow the Veterans' Administration and deliver three-quarters of the prescription drugs by mail? Do they want to ruin their community pharmacist? I don't think anybody does. The Los Angeles Times continues the discussion, stating: Applying the VA approach to Medicare may prove difficult. For one thing, Medicare is much larger and more diverse. VA officials can negotiate major price discounts because they restrict the number of drugs on their coverage list. Instead of seven or eight drugs for a given medical problem, the VA list may contain three or four. If a drug company fails to offer a hefty discount, its product may not make the cut. Mr. President, the final thoughts I will leave with you today come from a letter sent by the nonpartisan Congressional Budget Office. I want to make clear to the new Senators that the Congressional Budget Office is ``god'' around here because when ``god'' speaks up and says something costs something and you disagree with them, your disagreement doesn't mean anything unless you have 60 votes to override them, a supermajority. The Congressional Budget Office, after reviewing the Democratic bill in the House of Representatives at the request of Chairman Dingell, the chairman of the Committee on Energy and Commerce, concluded the following, and here I am quoting again and I have a chart on this quote:

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, following the other two speakers in regard to Iraq, I want to say a couple things. No. 1, anybody who criticizes what the President is proposing or anybody else is proposing or what has been done cannot get away with criticizing. There has to be another plan. I want to hear plans from people who think that what the President is doing is wrong. What would they do? The second thing is that even the Iraq Study Group, which is very bipartisan, said there should not be a precipitous withdrawal from Iraq. In regard to what my distinguished leader of the Republican caucus had to say, that there has not been any attack on Americans in the 5 years since 9/11, those who are criticizing our efforts on the war against terror would be the first ones, if we had an attack this very day, of criticizing the President of the United States: Why wasn't he on top to prevent some sort of attack? And because America has not been attacked, there tends to be a short memory about the fact that we did lose 3,000 Americans. And we know it can happen again. We know that terrorists came into O'Hare with the idea of a dirty bomb in America. We know there were people who were going to blow up bridges in New York City who were caught and the plans known. We individual Senators have been told by the CIA and by the FBI about many instances of where terrorist attacks against Americans have been stopped, and American lives have not been lost because of that. But they cannot talk about it because we do not want the terrorists to know what we know about them. Too much attention on Iraq detracts from the fact that there are terrorists in 60 different countries around the world waiting to kill Americans. Evidence of that was American military people working with the Filipinos over the weekend to kill two terrorists connected with radical religious groups. We finally were able to get at some of the people who should have been arrested in the previous administration, if a proper relations with Saudi Arabia had brought it about, who thought up the bombing of the embassies in east Africa when 12 Americans were killed and 200 other people were killed. We believe one of those persons was killed in a strike we were making in Somalia over the weekend. So we are involved in more than just Iraq in the war on terror. People who forget what happened to America on 9/11, and if it happened again, some of the people who are criticizing what the President is doing would be there saying, as they were soon after September 11: Why wasn't the President on top of what happened on September 11 so it wouldn't happen again, when there were five instances of Americans being killed: 1993, 1995, 1997, 1999, before 2001, and this body passed the Iraqi Liberation Act unanimously in 1998 because President Clinton was saying what a threat Saddam Hussein was to the United States or to the world as well and that he had to go. When you have that bipartisan support at a time when Americans are being attacked and killed--in 1993, 1995, 1997, and 1999, before 9/11 somewhere around the world--you have to stop to think, it isn't just Iraq. It isn't just Afghanistan. It isn't just 9/11. These religious radicals have been out to kill Americans going way back to 250 marines being killed in Lebanon in 1983. And there are individual instances of terrorism before that. The war on terrorism isn't something new. What is going on in Iraq is not the war on terrorism. What is going on in Afghanistan is not the war on terrorism. The war on terrorism covers many nations, many threats to American people. The life of every one of us in this Chamber right now, if we were to go over to some parts of the world, would be threatened. We expect the President of the United States to protect us because he is Commander in Chief and because the responsibility of the Federal Government under the Constitution, No. 1, is the protection of the American people.

Mr. GRASSLEY

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

Mr. GRASSLEY. Mr. President, I am back here today, as I have been other days this week, to talk about the Medicare drug benefit and the debate about whether the Government would do a better job of negotiating with drug companies than the prescription drug plans that are doing so this very day under law of the last 2\1/2\ years. Over the past 2 days, I have talked about the fundamental structure of the drug benefit. I talked about the heart of it, of the drug benefit plan, as competition. Plans, with vast experience in negotiating with drug manufacturers, compete to get the best drug prices for Medicare. That is what is happening today to benefit our senior citizens. Plans that have been doing this for 50 years are negotiating with drug companies in a competitive way to get the best prices for Medicare senior citizens. To date, the proof is in the pudding. We have lower bids, we have lower beneficiary premiums, lower costs to the Government, and lower costs to our States. Most importantly, we have lower prices on drugs, meaning senior citizens get affordable drugs and low-income people do not have to choose between drugs and food. Remember, that was a goal we had in 2003 we passed this legislation. I will give some examples of how this competition has worked. A draft PricewaterhouseCoopers study found in 2006 prescription drug plans achieved higher savings, 29 percent compared to unmanaged drug benefit expenditures. That is almost 100 percent greater than the 15-percent savings projected by Centers for Medicare and Medicaid Services and almost 50 percent greater than the savings estimated by the Congressional Budget Office way back when, in 2003, when we all thought if this program worked at all there would be some savings on prescription drugs for seniors. However, it has turned out to be much greater savings than we anticipated when we wrote the bill. It isn't often that legislation we write comes back with a better benefit to the taxpayers, better benefit to our seniors or any group or population. Most often there are what we call cost overruns. I believe it is fair to say that competition is working. Yesterday, I talked about how this whole debate is based on nothing more than a distortion of language in what is called the noninterference clause in the existing legislation. This noninterference language was first included in legislation introduced by many of the same people now opposing it, and these people tend to be led by Members of the Democratic Party. To be clear, that language, the noninterference language that people now are questioning, that period of time between 1999 and 2003, bills introduced by Members in the other party included this language and now, somehow, they do not like it. I want to be clear that the impressions left by opponents of this part of the legislation that we do not have competition, we do not have negotiations, this language in the legislation does not prohibit negotiations to get drug prices down. Negotiations occur between private plans and the drug manufacturers regularly. You could not get those percentage decreases in prices I just mentioned--those percentages that are even greater than percentages we thought when we wrote the legislation--you would not get those without negotiation, you would not get those without competition. I, also, pointed out in earlier speeches, so far, proposals to have the Secretary of HHS negotiate drug prices have not been shown to actually save any money. Our beloved Congressional Budget Office tells us that they cannot project savings by having a Government bureaucrat negotiate instead of plans negotiating. Nevertheless, here we are, in the new Congress, discussing this matter once again. What I want to do today is put forward a picture of what Government negotiations might look like. Admittedly, doing this will require some speculation. Why is that necessary? It is necessary because Democrats have not provided many details on how they actually envision their requirement that the Secretary negotiate how that will work. This is despite the fact that some opponents of the noninterference clause have demagoged this issue for nearly 3 years. After 3 years, they are still out there saying the noninterference clause ought to go, but there are no details on how their plan will work. They have given us a few clues as to their thinking on how they want it to work. For the longest time, I heard it said that the Secretary of Health and Human Services should have the power to negotiate drug prices, as the Veterans' Administration does. With the Veterans' Administration as our guide, let's talk about the VA's approach to purchasing drugs and then ask you to consider, after you hear this, do you want to do it that way? This discussion will be somewhat technical, but I urge listeners to bear with me because we need to get beyond the Veteran's Administration sound bite. Everyone needs to have a good understanding of what this would mean for Medicare. It is a fact that the Veterans' Administration uses different purchasing arrangements to get discounts on prescription drugs. But there is a big distinction between these purchasing arrangements. The Veterans' Administration has access to what we call the Federal supply schedule prices. Under the Federal supply schedule prices, the Government guarantees by law that it must get the best price in the marketplace. This means that the Federal supply schedule prices cannot exceed the lowest price that a manufacturer gives in comparable terms and conditions to a non-Federal customer such as the pharmacy benefit manager. Since that is technical, I will go over that once more. Under the Federal supply schedule, the Government guarantees by law that it must get the best price in the marketplace. But what this means is that the Federal supply schedule prices cannot exceed the lowest price that a manufacturer gives under comparable terms and conditions to a non- Federal customer, and that could include health plans, pharmacy benefit managers, and many others. Under Federal law, manufacturers must list their drug on the supply schedule to qualify for reimbursement under Medicaid. Next, the VA can purchase drugs at the Federal ceiling price. Again, the Government passed a law to guarantee itself an automatic discount no one else can get. By law, that price is automatically 24 percent less than the average price paid by basically all non-Federal purchasers. Isn't that a nice negotiating tactic? Pass a law and guarantee yourself a discount. The logical questions are, why not have Medicare access the Federal supply schedule--because people who want to do it such as the VA, that is where it takes you. Why not give Medicare the Federal ceiling price? I will refer to a chart because experts have looked at this question, and we have assigned the Government Accountability Office to look into this. They had a year 2000 report on this. They say: Mandating that federal prices for outpatient prescription drugs be extended to a large group of purchasers, such as Medicare beneficiaries, could lower the prices they pay but raise prices for others. In other words, raising prices for everybody else in America that is purchasing drugs. You heard that right: Raise prices on everybody else. Who would face the higher prices under ``everybody else''? Small businesses, their employees, their families, to name a few. Those higher prices would likely force employers to reduce their prescription drug benefit or stop providing health insurance coverage altogether. Of course, that is an outcome I surely hope people want to avoid, but it may be an outcome that the proponents of doing away with the noninterference clause are not aware of. Or the people that are saying we ought to follow the VA practice may not be aware, that to save the taxpayers some money you are going to raise the price of drugs on everybody else in America, according to the Government Accountability Office. The Government Accountability Office reached its conclusion by examining what happened to drug prices after Congress required drug manufacturers to pay rebates to State Medicaid Programs such as the Federal supply schedule, the Medicaid rebate program guarantees that the Government gets the best price in the marketplace. What happened after the law was enacted? The best prices went up for everyone else. The practical effect was twofold: First, the size of rebates for State Medicare Programs got smaller. What the Federal Government wanted to accomplish to benefit the States did not happen. Second, other purchasers paid higher prices. One might ask why that might happen. Here is why: Drugmakers had to eliminate their best prices to private purchasers or face bigger rebates. That happens because if they gave 1 purchaser a best price, they then had to give the best price to 50 State Medicaid purchasers. One discount to a private purchaser could mean millions that a manufacturer would be forced to pay in rebates to the Government. What do you think the drug companies did to counteract a well- intentioned act of Congress which ended with unintended consequences? The drug companies eliminated all the deep discounts so that they did not have to pay as much in mandatory rebates to Medicaid. A 1996 study by the nonpartisan Congressional Budget Office examined the extent to which the Medicaid laws result in higher drug prices to everyone else. Listen to what our Congressional Budget Office concluded: Best price discounts have fallen from an average of over 36 percent in 1991 to 19 percent in 1994. Hence, although the Medicaid rebate appears on the surface to be attractive, it may have had unintended consequences for private purchasers. The Federal Government passes a law to do good, and we find out we end up not doing so good. Almost a 50-percent reduction in best-price discounts; is that good? A nearly 50-percent reduction in the discounts received by purchasers such as health plans that serve employers and their employees; is that good? Of course, it is not. What this means is when those deep discounts went away, the price that everyone else pays for drugs went up. So those mandates, rebates to Medicaid made drug prices for everyone else higher. Talk about unintended consequences. And we in the Senate who set these things up had the right intentions for doing it, but it has not worked out--unless you want to look at the good it did to the Federal Treasury and not count or not discount the harm it did to everyone else who paid higher prices. To state it more simply, when discounts to a large purchasing group are based on discounts to another, no one gets a good discount. That is what the Government Accountability Office said in its 2000 report: Extending the Federal Supply Schedule . . . could also raise the prices paid by private and federal purchasers, as increases in prices, manufacturers charged their best customers would, in turn, increase Federal Supply Schedule prices. Would opponents of the noninterference clause believe the congressional agencies, such as the CBO and the Government Accountability Office, that striking the noninterference clause would not be good? Ironic, isn't it, when the Government used price controls to mandate discounts to itself, it actually makes prices go up. I will go through that again. When the Government uses price controls to mandate discounts to itself, it actually makes prices go up. No person in their right mind concerned about the Federal Treasury or concerned about the cost of drugs to people in this country would say that meets the commonsensical test. But that is what happens. During a 2001 hearing before the Senate Committee on Veterans' Affairs, my colleague, the senior Senator from Pennsylvania, Mr. Arlen Specter, posed a question on this very matter. He asked whether adding Medicare to the VA and Department of Defense purchasing mix would produce greater bulk discounts. The Veterans' Administration chief consultant for its Pharmacy Benefits Management Strategic Health Group answered that adding Medicare to the Federal Supply Schedule umbrella would result in increased drug prices for both the Veterans' Administration and the Department of Defense. So, now, in addition to the Government Accountability Office and the Congressional Budget Office, the Veterans' Administration weighs in for itself, and the Department of Defense, that doing what repealers of the noninterference clause want to do will actually increase drug prices to the Veterans' Administration and the DOD. And people want to use the Veterans' Administration as a pattern to affect Medicare. So that is saying it for the third time. If I could say it for another time, straight from the Veterans' Administration's mouth, itself: Extending VA prices to Medicare would make the VA's own drug prices increase. And for one last time, the basic point they are making is, if you try to mandate discounts to everyone, then--what I have said a few minutes ago--no one gets a discount. Now, I am no economist, but that is basic economics. And not only that but it is common sense. I think I have pretty much laid out why including Medicare in the Federal Supply Schedule is not as good an idea as its proponents may have made it out to be. So now I want to go back to how the Veterans' Administration uses competitive bidding to get the discounts they say they want to use as a pattern for the Medicare Program. Let me start by giving you an important piece of information. The Veterans' Administration has its own pharmacy benefits manager. More than a decade ago, as part of a major initiative to improve the care delivered, the Veterans' Administration formed a pharmacy benefits manager, better known around here as a PBM. So you will probably wonder why they did that. Because, as stated in the VA news release, they wanted to maximize a strategy used by the private sector. You have people who want to have Medicare do it like the VA does it, but the VA set up a very special program because they wanted to learn something from the private sector. A primary responsibility of the PBM for the Veterans' Administration was to develop a national formulary. The Government learned that from the private sector, the very same people they are finding complaints about now. They wanted to set up a national formulary. A formulary is the list of drugs that a plan will cover. Basically, if your drug is not on the list, it is not covered. A 2005 article in the American Journal of Managed Care, coauthored by the Veterans' Administration's staff and university-based researchers, stated that the Veterans' Administration created the national formulary to achieve two main goals. First, the Veterans' Administration wanted to reduce the variation in access to drugs across its many facilities throughout the United States. In other words, they wanted to put a VA bureaucrat between the doctor and the patient. Doctors could not subscribe to everything that they thought that patient might need because if it was not on the formulary, they could not prescribe it. Second, the VA wanted to use the formulary as leverage to get lower prices for drugs. Let me repeat that because it is important. The Veterans' Administration created a national formulary to create the leverage it needed to get lower prices for drugs. That goes back to the point I made a couple days ago. The ability to get good discounts does not result from the sheer number of people a purchaser buys for. The ability to get good discounts comes from how the purchaser leverages those numbers. That leverage comes from a purchaser threatening to exclude a drug from the formulary. So it eventually comes down to threats. The Veterans' Administration uses its formulary to say: Give me a better price or else--or else we are not going to buy your drugs at all. As I said earlier, the Veterans' Administration was intentionally adopting a private sector strategy when it started using a formulary to get lower drug prices. The Medicare prescription drug plans also use formularies to negotiate lower drug prices. The most important thing about the VA formulary is that it is one big national formulary. The biggest difference between the VA and Medicare is that beneficiaries have choices. Let me make that clear. The biggest difference between how the VA does it and how the plans do it--the plans that are approved by the Secretary of Health and Human Services for the senior citizens of America and Medicare--the biggest difference is the beneficiaries have choices. They can choose their plans with different formularies. So Medicare bureaucrats are not coming between the patient and the doctor like VA bureaucrats are coming between the patient and the doctor. You can run into this in your town meetings because I had people come up to me and complain about the VA: My doctor says I ought to have this drug because the drug that the VA wants me to take has side effects. And they come to me and say: How come the VA won't pay for this drug because it is better for me, according to my doctor? And their answer is: Because the VA wants to save money. So you have a Government bureaucrat deciding what is best for your health instead of your doctor. But the principle behind the prescription drug bill that Senator Baucus and I wrote was that we were not going to have the bureaucrat getting in the medicine cabinet of a person, of senior citizens. We wanted every therapy available. That is the way it is written, and that is the way it is being carried out. So I wonder if people who say you ought to change this and do it the way the VA does it know how you are negatively affecting the senior citizens of America. The way senior citizens can do it is they have choice. They can enroll in a plan that covers their drugs. They can enroll in a plan that allows them to use their neighborhood pharmacy. The VA does not do business with every pharmacist in America. So you are hurting your local pharmacist when you do business that way. Under the Veterans' Administration programs, veterans do not have a choice. They cannot choose a different plan, and they have to use the VA's own pharmacy, not the pharmacy down the street. Using a limited number of VA-controlled pharmacies and mail-order pharmacies also helps keep VA costs down. But one of the things we wanted to accomplish in the prescription drug bill, Part D, was to make sure the Government did not use its leverage to hurt local pharmacists. And we put several things in--a requirement you had to have a brick-and-motor pharmacist in every plan. So we have some requirements to help pharmacies that the VA does not even worry about. And I have to confess to the community pharmacists of America, we still have a lot of work to do to help them so they benefit from this program like we intended. There are some unintended consequences to what we did, even considering the fact we took the community pharmacists into consideration. Under the VA program, then, you do not have a local pharmacist to go to. When they do not use the local pharmacist the way we do, when they use all these mail-order pharmacies, they hurt the local pharmacist, but they are saving some money. Also, there is limited access to drugs, limited access to retail pharmacies. That is how the VA works. So do you want to force that upon the senior citizens of America? I would like to go to another chart now. The Los Angeles Times put it best in an article on November 27 of last year. According to the Los Angeles Times: VA officials can negotiate major price discounts because they restrict the number of drugs on their coverage list. . . .In other words, the VA offers lower drug prices but fewer choices. So do you want to offer fewer choices to our seniors? That is not what we wanted when we wrote the Medicare bill. We wanted to keep CMS bureaucrats out of the Medicare medicine cabinet of every senior citizen. So what would it mean if the Government negotiated lower drug prices for Medicare in a national system like the Veterans' Administration? It would mean having a more limited formulary. And it would mean having the Veterans' Administration bureaucrat between you and your doctor. So I would go to a chart that would make this more picturesque and more clear to you. This chart shows what this would mean. It would mean that instead of having 4,300 drugs available to them, beneficiaries would have about 1,200 drugs available. If Medicare used a national formulary like the VA, it would mean that 70 percent of the prescription drugs could not be covered by Medicare. Only 30 percent of the drugs covered today would be covered. Then let's get into some specific drugs, about major problems we are trying to treat today, such as diabetes or cholesterol. There, too, if the Government negotiated for Medicare like it does for VA, it would mean fewer drugs covered by Medicare. In the case of treatment for depression: 65 percent covered; 35 percent not covered. In the case of treatment for high cholesterol: 54 percent covered, 46 percent not covered. It seems that by looking at these drugs, if the Government used the VA model, our senior citizens would not be as well served. Now, maybe you can make an argument we are not treating our veterans right. We appropriate more money every year for veterans health programs. And we have to because the needs are there and we made a promise. We have to keep the promise to the veterans. But I think veterans watching this could say: Well, why not cover these? Why not cover these? Well, I have given the reason. We want to save taxpayers money. But it is completely opposite what we wanted to accomplish under the Medicare bill to serve our senior citizens: everything being available, and to save the taxpayers money through competitive bidding. This could also mean that beneficiaries could not get their prescriptions filled at the most convenient pharmacy for them. That is not what we wanted when writing the bill. We put seniors first. Those who want to repeal it, it seems to me, they are putting bureaucrats first, or at least they are putting bureaucrats between the doctor and the senior citizen. In many cases, those realities have led Medicare- eligible veterans to enroll in Medicare drug programs so they will have coverage for drugs not covered by the VA. When I held my town meetings as we were rolling out this new drug program, I had veterans say: Well, does this mean I have to get out of the veterans program? I said: If you are satisfied with the veterans program, you can stay in it. You do not have to do anything. If you decide later on you want to get into one of these programs, you can do it without penalty. So they had the best of both worlds. If they were satisfied with the VA, keep it. But we have evidence that some of them are leaving the VA program to join the program of Part D Medicare. Even though many veterans have very good drug coverage, almost 40 percent of the veterans with VA benefits and Medicare coverage are enrolled in Part D. So when you get beyond the easy sound bites, when you get to the facts, applying the VA system to Medicare is neither as easy as it sounds nor will it likely have the effect that the proponents suggest. It now appears that even they have begun to figure this out because now, when the rubber hits the road, when they have to produce something, they introduce a bill--and I am referring now to a bill of the other body--that explicitly prohibits the Secretary from creating a formulary. In fact, the Los Angeles Times reported last week that a House Democratic leadership aide said, ``We felt we couldn't go as far as the Veterans Affairs [Department] does.'' Under the House Democrats bill, Medicare can't have a formulary. As I tried to make clear here today, the drug formulary is the key to negotiating lower drug prices. The House Democrats bill prohibits the Government from having a national formulary. No formulary means no negotiations, no leverage over drug companies. In reality, the Democratic proposal on negotiation actually prohibits the Government from negotiating. Under their plan for Government negotiation, the Government won't be able to say no to a drug company. With no formulary to bargain with, the drug companies could say something like this: No, why should I give you that price if you can't exclude me or charge higher cost sharing? At the same time, the House Democrats bill repeals the prohibition on the Government setting a pricing structure. So if the Government cannot negotiate because it can't have a formulary, if there is no prohibition on Government price structure, where does that leave us? Sounds like price controls to me. Experience shows that when the Government sets prices for itself, when it gives itself mandatory discount, prices go up for everyone, higher prices for everyone else. Why would anyone want that sort of a situation? Everyone always asks, why not have Medicare work like the VA program to get lower drug prices. I think I have laid out why that idea might not be as good as the proponents have made it sound. Having Medicare work like the VA could mean fewer drugs covered, restricted access to community pharmacies, more use of mail-order pharmacies and higher drug prices for everyone else. I can't imagine that is what people want. So where does that leave us? The Medicare plans are working today. I say that based upon several polls that show 80 or so percent of the seniors are satisfied. The plans are also delivering the benefits to Medicare beneficiaries. These private sector plans have the experience of negotiating better prices. These Medicare negotiators have proven their ability to get lower prices. The Medicare plans are negotiating with drug companies using drug formularies within the rules set by law, and the formularies are basic for that negotiation. Last week on the Senate floor, the Senator from Illinois said that the law ``took competition out of the program so that [the drug companies] could charge whatever they want.'' That is not true. We have the 50-year experience of the Federal Employees Health Benefit Program negotiating for every Federal employee to keep costs down to the citizen as well as to the taxpayers. We patterned it something like that. And quite frankly, when we patterned it for the senior citizens under Medicare, I wasn't entirely sure we would get all the plans interested, that we would have the competition we ended up having. It has worked beyond our expectation. And thank God it did, because I am not sure we had that kind of expectation out of it. But it sure worked. Thank God something worked a little bit better than we anticipated it would work. So we had a Senator saying that we took competition out of the program. Competition is what this program is all about, and that competition is working. Costs are lower. Premiums are lower. Let me quantify how premiums are lower, because when we were writing the bill in 2003, we were figuring at what price, somewhere between $35 and $40 a month, could we get seniors to join. Over that, we would have problems. Competition has brought it in at $23 last year and $22 this year on average. So these organizations remain in the best position to get lower prices for Medicare beneficiaries and taxpayers. I yield the floor.