Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am surprised that there are so many wise Members of this Senate who know exactly how the prescription drug bill is going to work when it doesn't even start until January 1, 2006. We took language in Democratic proposals on this subject and put them in a bipartisan bill so that there was a consensus of what ought to be done. Now they want to strike them out. The chief actuary and OMB says this will not save money. It will not increase competition because we have competition written into this by the plans competing against each other. Don't strike that out.

Mr. GRASSLEY

Mr. GRASSLEY. I probably will not use the full 10 minutes. Mr. President, I have the utmost respect for the Senator from Oregon and the Senator from New Mexico. They are both members of the committee I chair. They are contributing members, very serious members of the Committee on Finance. They are people who care deeply about providing health care coverage for our most vulnerable citizens. I have listened with interest as my friend from Oregon talked with great passion about providing mental health services for these fragile individuals receiving public health services. I share the commitment of the Senator from Oregon and the Senator from New Mexico to providing the necessary care to individuals with disabilities, our senior citizens, and mothers and their children. And yet, knowing all this, I also have a concern that if their amendment passes, we will fail to enact meaningful improvements to the Medicaid system. If we fail to do that, we could ultimately end up hurting the very same individuals for whom we show so much concern. I understand that the key feature of the Smith-Bingaman amendment would create a bipartisan Medicaid commission. I have said for a while there needs to be a common language associated with Medicaid reform. Republicans and Democrats alike do not agree even on what the word ``reform'' means when it is applied to Medicaid. Some believe it means curtailing costs. Others believe it means expanding coverage. A Medicaid commission could help bring us together in developing common themes and ideas of needed reforms. However, the need to make some critical changes to Medicaid that would capture savings over the next few years and the creation of this commission are not mutually exclusive. We could have both. If we simply let the program function in the way that it has been over the next few years, States will continue to be squeezed and will have no choice but to begin curtailing services for the elderly and the disabled. To some extent that has been happening in some States. Everyone needs to realize when a State makes a decision to not serve Medicaid people and to save State dollars, that saves money at the Federal level, but that is not the wisest way to do this. The Federal Government should not be saving money because the States cannot do the things they need to do. What we need to do is give the States more leeway on serving their people in that particular State without assuming that we here in Washington have all the answers. Quite frankly, we would be better off working together to see what could be saved, and save State dollars in an intelligent, rational way, and, at the same time, save Federal dollars in an intelligent, rational way, rather than making States do it in a crisis environment, which ends up saving us money at the Federal level. That is why it is necessary that we work together with the States to save this money. But you can also set up a commission that would make long-term suggestions on the change. Now, I know that curtailing services for this class of people helped by Medicaid is not a scenario that Senators Smith and Bingaman want to see unfold. First, the Medicaid drug payment system is in significant need of reform. The average wholesale price system clearly overpays for drugs. Just as we took the average wholesale price out of Medicare in the Medicare bill 2 years ago, it seems to me we can and must change this payment system in Medicaid. AWP, average wholesale price, is a flawed system, and we all know it. AWP is more known today as ``Ain't What's Paid,'' instead of what it really meant to say, ``Average Wholesale Price.'' Capturing savings by making this commonsense improvement is not inconsistent with a commission. While there is much that we can learn from a commission, we do not need a commission to tell us that the average wholesale price system of paying for drugs is flawed. A recent General Accounting Office study showed that the best price system is also significantly flawed. If States are not getting the best price, it costs both the Federal Government and the State governments. There is another Medicaid problem that we know about, and that is a proposal to crack down on the schemes that are currently legal whereby seniors divest themselves of their assets in order to qualify for Medicaid. Mr. President, there is a virtual cottage industry that instructs seniors on how to give away their homes, properties, cars, and other assets in order for them to qualify for Medicaid. Surely, no one would agree this is in the best interest of the Medicaid Program, and surely you don't need a commission to tell us this. The President has rightly put on the table new regulations that will govern asset transfers that allow a senior to go on Medicaid for long- term care. This commonsense proposal, as well, is not one that we need a commission to make and could ultimately save dollars so States can continue to spend the money on those who cannot afford care, as opposed to spending money on people who can afford care. This would be serving the elderly and the persons with disabilities who are very low income. While the change the President is suggesting is simple, we must, in addition, continue to discuss the proper role of Medicaid and long-term care. The commission Senators Smith and Bingaman are proposing would be very useful in that context. However, we should not let the perfect be the enemy of the good. There are things we can do this year to make improvements in the Medicaid Program, and we should do that. We should eliminate wasteful practices and we should help States get the flexibility they need to better manage their programs, saving both Federal and State dollars. We know Medicaid's share of State budgets is growing at an unsustainable rate. Medicaid spending is growing so fast that it is beginning to rival education as a cost in some States. If we take no action this year, we will continue to put States in the position of having to choose between supporting education and providing services to vulnerable populations. I am going to continue to work with Secretary Leavitt. He has been working with a bipartisan group of Governors to identify areas of agreement for making changes in Medicaid. I will commit the Finance Committee to a bipartisan process, where we keep in mind principles that guide us in producing better Medicaid. The Finance Committee will look at proposals that produce shared savings for the Federal Government and our State funding partners. The Finance Committee will look at proposals that emphasize State flexibility through voluntary options for States. The Finance Committee will do this while making a commitment not to eliminate coverage for Medicaid beneficiaries. But I cannot be more adamant that doing nothing has negative consequences. If we don't eliminate wasteful practices, if we don't provide States the necessary flexibility--and that is something the Governors are asking for--and if we don't provide States relief, they are simply going to do what they have to do: cut people off the rolls in order to balance their budgets. Doing nothing is far worse for Medicaid beneficiaries than a rational, reasoned approach to protecting and strengthening the program. While I appreciate the intent of my colleagues, I must oppose the Smith-Bingaman amendment, and I urge my colleagues to oppose it as well.

Mr. GRASSLEY. Ten minutes, please.

Mr. GRASSLEY. Thank you. Mr. President, we have a savers credit, an incentive for low-income savers. It is covered in the budget number. Deduction for college tuition: It is covered in the budget number. Extension of research and development tax credit--it is important to lots of States--it is covered in the budget number. Extension of wind and alternative energy tax credit: It is covered in the budget. I know that is important to a lot of people, a lot of people who are critics of this budget. So you cannot have it both ways. If you exclude room in the budget for tax relief, you cannot say you support that same tax relief. The two positions are not in sync. The budget resolution provides room for tax relief. So a vote for the Feingold amendment is a vote against expiring tax relief. You cannot have it both ways. Either you are for a budget that has a realistic plan to maintain current tax relief--and this budget has that realistic plan--or you are for the Feingold amendment, which means you are not serious--not serious--about maintaining current tax relief levels. Now, the Feingold amendment is also a stealth tax increase. The premise of the Feingold amendment is that tax relief should be treated less favorably--less favorably--than spending. How can that be, you might ask? Well, here is the answer. Entitlement spending such as Social Security and Medicare and discretionary spending can grow under the Feingold notion of pay-go. Contrariwise, much of the current law of tax relief expires, and in some cases tax relief, such as the AMT hold harmless, runs out after year's end. That is 9 million tax filers, mostly middle-income families, who are hit by the Feingold regime. There is no comparable hit on the spending side. See the bias for tax increases automatically, and no bias against spending increases. Entitlement spending would continue to grow without limit under the Feingold amendment. So the Feingold amendment backstops runaway entitlement spending. Taxpayers are left out. Taxpayers are out in the cold under the Feingold regime. A vote for the Feingold amendment is a vote against status quo tax relief and a vote for status quo spending. That does not sound like evenhanded fiscal discipline to me. So I urge a vote against the Feingold amendment because it is defective on these several points. And most importantly for me, as the chairman of the Senate Finance Committee, it ignores the Finance Committee's prudence under both Democratic chairmanship and Republican chairmanship. It ignores the reality of current tax relief which is expiring. It contains a stealth tax increase on at least 9 million taxpayers who are going to be caught up in the alternative minimum tax. It creates a double standard by treating a dollar of out-of-control spending more favorably than a dollar of current tax relief. I yield the floor.

Mr. GRASSLEY. I rise in opposition to the Feingold amendment. I do that with a realization that there is a great need for deficit reduction. Who can find fault with the objectives of Senator Feingold's amendment? Those objectives are good. I am going to demonstrate that his proposal is not realistic. It also ignores the reality of the tax relief of the current law. It unwisely ignores a bipartisan will to maintain current tax relief for millions of taxpayers. Without maintaining existing tax policy, if we would just let that expire, we would have the biggest tax increase in the history of the country without Congress acting. It seems to me if we are going to have the biggest tax increase in the history of the country, Congress ought to make the decision to do it. I will talk about how the Senate Finance Committee approaches tax policy. We have used pay-go on taxes, but we do it outside of the budget. Two kinds of tax relief bills have come out of the Finance Committee in the last 4 years. One set of bills contained widely applicable tax relief. Those bills, if you take them together, and they were done under reconciliation, were bipartisan. I emphasize that because everyone around the country thinks everything around here is partisan. But these tax cuts were bipartisan and they were net tax cuts for virtually every American taxpayer. Those bills enacted in 2001 and 2003 did not contain offsets. The secondary category of bills our committee works on would cover all other bills coming as part of our committee business. Those bills dealt with specific categories of tax relief. I will give some examples: A charitable giving tax bill, the bill to deal with exports in manufacturing, a bill to deal with the Armed Forces tax relief for our folks in Iraq putting their lives on the line--there are many other examples of tax relief fully offset by our committee. In a few rare cases, such as the energy tax relief, for example, bills were partially offset. Now, this pattern is applicable during my chairmanship of this committee, and it is fair for me to say there was a similar pattern occurring when my Democratic colleague and counterpart, Senator Baucus, was chairman of the Senate Finance Committee. By and large, then, the Senate Finance Committee, when dealing with tax policy, has produced revenue-neutral bills. The exceptions occurred when there was bipartisan support for widely applicable tax relief. And I emphasize the word ``bipartisan.'' By the way, had we not responded with that bipartisan tax relief, there would have been no widespread economic stimulus that resulted. In other words, the economic depression that set in with the NASDAQ losing half of its value in the year 2000, and then with the September 11 attack on New York City and the resulting downturn in the economy, we would not have had in place an economic stimulus to bring back economic growth to where we are now. Chairman Greenspan said tax relief was responsible for the economic turnaround. Also, we had the most recent Nobel economic prize winner tell us that our tax relief in 2001 and 2003 was not as big as it should have been to get the maximum economic stimulus. But we have had an economic turnaround justifying, without question, those tax relief packages. So let me be clear. With tax policy outside the budget, the Finance Committee has, in effect, operated on a pay-go basis. The exceptions were built into the budget, and those exceptions had bipartisan support. I would like to challenge any of the critics of this budget to show the same record on the spending side. No, it seems like others want to spend. And all of these amendments that are being offered are adding up to positive proof that the same people who are against tax relief do not want to reduce the deficit. What they want to do is spend more money. If I could ever find from the other side how high taxes had to be, how high they had to be to satisfy their appetite to spend money, I might go that high, if I knew I never had to go any higher. But I cannot ever get any consensus about that. So the only conclusion you come to: taxes can never be high enough. The other point is, I might be willing to vote for some increase in taxes if every dollar increase in taxes resulted in a lower deficit, went to the bottom line to lower the deficit. But, no, every time we raise $1 of taxes around here, it is a license to spend $1.10, $1.20, and sometimes more. So we need out of the other side the same concerns about spending. The Feingold amendment is not realistic about current tax relief. Senator Feingold's amendment would undo the tax policy resources in the budget. Let me explain why. The budget's tax cut number covers expiring tax relief. It extends all widely applicable tax relief. It includes it all. The number covers dividends and capital gains. It also covers, through the year 2010, provisions the critics say they support: tuition deduction, low-income savers credit, small business expensing. The number also covers for 1-year provisions critics say they support: business extenders such as R&D, sales tax deductions, the alternative minimum tax hold harmless. The number includes offsets that will get us $20 to $30 billion. So we are talking about $70 billion net. I repeat, that is $70 billion net. It covers a gross tax cut of $90 to $100 billion. That number covers all of the items that folks, particularly on the other side of the aisle, say they are for. Now, critics cannot say they are for these items and not provide room in this budget for those tax cuts. You cannot have it both ways. So a vote for the Feingold amendment is a vote against expiring tax relief that a lot of these folks say we ought to pass. Realistically, there is probably around $30 billion in offsets. Realistically, there is about $100 billion in costs. That is a realistic position. For instance, we have heard a lot about the alternative minimum tax. ``When are you going to do something about it?'' is a question from the other side. The cost of a 1-year hold harmless on the alternative minimum tax is $30 billion. That is $30 billion for AMT for 1 year alone. So don't tell people back home you are for AMT relief if you vote for the Feingold amendment. Let's go through some of these other expiring tax relief provisions. Deduction for State and local sales tax: It is covered in the number in the budget. It is important for States such as Nevada, Washington, Florida, and South Dakota. Mr. President, could I have more time?

Mr. GRASSLEY. I yield myself such time as I might consume. Mr. President, some on the other side on several different occasions have trotted out several multiple arguments against the tax relief reconciliation instructions to the Finance Committee that I chair. Now, I am not going to get into any debate over whether budget reconciliation can, in fact, be used for tax legislation because there has been plenty of precedent established over the years in the Senate, whether the Senate has been controlled by Republicans or controlled by Democrats. As an aside, though, I find it intriguing to consider the views of some on the other side feeling so strongly, as they have indicated, that partisan tax increases such as the 1993 tax hike legislation should enjoy expedited reconciliation process, and somehow our using that this year is wrong. They care not a whit about raising $1 trillion in taxes as was done in the 1993 tax bill on a party-line vote under the process that is called reconciliation, but talk about bipartisan tax relief in reconciliation and somehow they get very irate. It seems to be a big double standard, so I come to the floor not to debate these points. Rather, I want to tell you why we should have a reconciled tax relief package. Let's look back just to the last Congress as a precedent. In that Congress, late in an election year, we passed a couple of tax relief proposals that were allegedly supported on both sides of the aisle. With an election facing them, many on the other side reluctantly supported extension of the family tax relief proposals. Keep in mind that conference vehicle was opened a year earlier--a year earlier. You would think something that passed just before the election should have been considered over the course of a year, but it was not. You would think it would be simple, by how it finally passed, but there were obstacles put in the path of it all the time. We were not as lucky when we took up the FSC/ETI legislation. That bill was drawn up in a bipartisan way by Senator Baucus and this Senator. The bill came out of the Finance Committee with only two dissenting votes, and those dissenting votes were Republican votes. Despite the bipartisan support, it actually took two cloture votes and the threat of a third cloture vote to break a Democrat filibuster on a tax relief bill Democrats claimed to support. I have a chart behind me that represents goalposts on a football field. Tax relief bills have a way of becoming political footballs. We brought up the FSC/ETI legislation on March 3, 2004, and did not complete it until May 11, more than 2 months later, the same year. That is over 2 months to do a tax relief bill that had unanimous support from Democrats on my committee. Members, sometimes for partisan reasons, sometimes for other reasons, decide to filibuster by amendment or other tactics. Now referring to another bill, referring to the charitable tax relief bill that we call the CARE Act, let me point out that we were unable to go to conference because of Democratic leadership objections over the years 2003 and 2004. Also, do not forget that we were unable to get energy tax relief because of a filibustered conference report. So what happens? Reconciliation creates an opportunity for certainty. Reconciliation, obviously, is not my first choice. Reconciliation prevents must-do tax legislation from becoming political footballs, as you see the goalposts move from time to time. In this case, I had hoped that those who say they want to address issues such as alternative minimum tax hold harmless would not filibuster. If you say you care about expiring provisions that are going to expire this year, such as the college tuition deduction, you should care about reconciliation--if you want to get that done. It will be tough enough to address expiring tax relief provisions. There is demand for revenue of about $90 to $100 billion in this budget, and tax relief numbers of $70 billion. That means I have to find offsets for about a fourth of that, of $20 billion to $30 billion over 5 years, just to keep taxpayers where they are now. Not more tax relief--stopping existing tax policy from ending and having automatic increases in taxes. That will be tough enough without political football tactics of filibusters by amendment or otherwise, as we saw over the course of last year, that I am just using for an example. But it is a lesson to be learned--to have a process in place where people who say they are for tax relief cannot say they are for tax relief and then stall the process forever and ever. Necessarily, I have to have a reconciliation option in this Finance Committee playbook. I appreciate the Budget Committee's efforts of providing that option. I urge my colleagues to retain that option. Otherwise you are not being realistic when you tell the folks back home that you support extending these tax relief provisions. In other words, I would like to have us avoid the environment where people can say they are for something but then stall for 2 months to finally get it done, moving the football goalposts down the field. What reconciliation does is it gives us an opportunity to get done what people say they want done. There are a lot of tax provisions that have to be worked on this year that have almost unanimous support. People can say they are for them but put roadblocks in the way, or move the goalposts to keep them from happening. Reconciliation is going to protect us from that sort of activity. I yield the floor and reserve the remainder of my time.

Mr. GRASSLEY. Okay. I quoted the Congressional Budget Office. Here is what the Congressional Budget Office said about eliminating the noninterference clause in a letter just last year: The Secretary would not be able to negotiate prices that further reduce Federal spending to a significant degree. The letter went on to say: CBO estimates that substantial savings will be obtained by the private plans. That is the way we wrote this bill and what the Senator is trying to change. Now, we also have an analysis from the Chief Actuary for the Medicare Program. The Chief Actuary is required by law to provide independent actuarial analysis on Medicare issues. The Chief Actuary's report states the view that the Medicare prescription drug plans will achieve average cost reductions of 15 percent initially, and that these cost reductions will rise to 25 percent over 5 years. The Chief Actuary has concluded that he does not ``believe that the current administration or future ones would be willing and able to impose price concessions that significantly exceed those that can be achieved in a competitive market.'' In fact, more astonishing, the Chief Actuary points out that if Medicare establishes drug price levels, it will reduce competition, not increase it. Their report states: Establishment of drug price levels for Medicare by the Federal Government would eliminate the largest factor that prescription drug plans could otherwise use to compete against each other. Further, their report points out that the past experience in the Medicare Program does not give one much, if any, confidence that Medicare will do a good job in setting prices. Far from it. As confirmed by the Actuary's report, prior to the enactment of the prescription drug bill, drugs in Part B ``were reimbursed at rates that, in many instances, were substantially greater than prevailing price levels.'' So Medicare does not have a very good track record when it comes to price negotiations. So let me be clear: Direct Government negotiations is not the answer. The Government does not negotiate drug prices. The Government sets prices, and it does not do a very good job at that. The bill's entire approach is to give seniors the best deal through vigorous market competition, not price controls. Again, a quote from Senator Daschle when he outlined the principles of his Medicare prescription drug benefit: Fifth, we should take a lesson from the best private insurance companies: Cost-savings should be achieved through competition, not regulation or price controls. Even The Washington Post editorial page wrote on February 17, 2004: Governments are notoriously bad at setting prices, and the U.S. Government is notoriously bad at setting prices in the medical realm. The Congressional Budget Office said that such a proposal ``could generate no savings or even increase Federal costs.'' So we did not rely on Government price-fixing but instead created a new drug benefit that relies on strong market competition, an approach relied upon by the MEND Act as introduced by Senator Daschle and cosponsored by 33 Democrats. The new Medicare drug benefit creates consumer choices among competing, at-risk private plans. The Medicare plans will leverage the buying power of millions of beneficiaries to lower drug prices. I urge my colleagues to oppose efforts to repeal the noninterference clause and oppose efforts to get the Government involved in setting drug prices. It is a prescription for higher costs and undermining the competitive market in the Medicare bill that will result in lower drug costs. Let us not interfere with that with some sort of attempt to strike the so-called noninterference clause. I yield the floor.

Mr. GRASSLEY. Mr. President, the amendment by the Senator from Maine and the Senator from Oregon about the noninterference clause will not result in savings, and it is going to undermine a drug benefit that is not even up and running yet. I don't know how you can propose changes in legislation that effectively doesn't get started until January 1, 2006. How do you know things are not going to work until you have had some experience with it? I have urged everybody to hold off on changing anything in the prescription drug bill until you actually see it functioning. It seems to me to be very difficult to work on a piece of legislation like this and try to change it before it has been operational. First and foremost, let me be clear about something again. The Medication Modernization Act does not prohibit negotiations with drug companies. That could not be further from the truth. In fact, it requires the Medicare plans to negotiate with drugmakers for better prices. These negotiations are at the heart of the new Medicare drug benefit plan. The absurd claim that the Government will not be negotiating with drugmakers comes from a noninterference clause in the Medicare law. This noninterference clause does not prohibit Medicare from negotiating with drugmakers. It prohibits otherwise the CMS from interfering with those negotiations that are provided for. Let me be clear, the noninterference clause is at the heart of the bill's structure for delivering prescription drug coverage. This clause ensures those savings will result from market competition, rather than through price fixing by the Center for Medicaid Services bureaucracy. Here is what is so funny about what we are discussing today. The same noninterference clause language that we have in the law right now was in the Daschle-Kennedy-Rockefeller bill and the Gephardt-Dingell-Stark bill in 2000. The Daschle bill was in 2002; the Gephardt bill was in the year 2000. I want to read for you what this says: In administering the prescription drug benefit program established under this part, the Secretary may not (1) require a particular formulary or institute a price structure for benefits; (2) interfere in any way with the negotiations between private entities and drug manufacturers, and wholesalers; or (3) otherwise interfere with the competitive nature of providing a prescription drug benefit through private entities. Now, where did that language come from? It comes from the bill introduced by Senator Daschle and cosponsored by 33 Democrats, including Senator Kerry. They all thought their approach, which was incorporated in our legislation passed in 2003, and has now been dubbed by opponents of it, including the sponsors of this amendment, as ``preventing Medicare from negotiating,'' was a fine approach when it was suggested from the other side of the aisle. In fact, at the time, this is what Senator Daschle had to say. Our plan gives seniors the bargaining power that comes with numbers. . . . Our plan mirrors the best practices used in the private sector. For beneficiaries in traditional Medicare, prescription drug coverage would be delivered by private entities that negotiate prices with drug manufacturers. This is the same mechanism used by private insurers. Just for the record, opponents now also have claimed that Republicans insisted on including the so-called ban in the Medicare Modernization Act that somehow we ``pushed through.'' I remind these people--and they are here right now--that the whole concept was developed by Democrats. The Congressional Budget Office has concluded that the market-based approach in the new Medicare law will result in better, higher prescription drug cost management for Medicare than any other approach considered by Congress. That is the green eyeshade people in the Congressional Budget Office.

Mr. GRASSLEY. I would like to be notified when half of the time on this side is used. I want to reserve time for Senator Hatch. Will the Chair inform me?

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, today I am re-introducing a bill directing the Inspector General of the Department of Justice to submit semi-annual reports regarding settlements relating to false claims and fraud against the United States. The False Claims Act, 31 U.S.C. Sec. 3729 et seq., is the government's single most effective program for recouping money improperly obtained from the United States by false claims and fraud. Initially passed during the Civil War at President Abraham Lincoln's request to suppress fraud against the Union Army, the FCA was modernized and updated in 1986. Since President Ronald Reagan signed the 1986 amendments into law, settlements and judgments in FCA cases have exceeded $13 billion. No other anti-fraud program of the Federal Government can match this result. Despite the significance of these results, the Congress does not have a way to evaluate the performance of the FCA program. While the program, which is overseen by the Civil Division of the Department of Justice, appears to be doing well, it is not known at this time how the program is performing as compared to its potential. What percentage of the various frauds perpetrated against the United States is recouped in False Claims Act cases? How effectively does DoJ capture the multiple damages and penalties provided for by the act? How quickly does DoJ move FCA cases? How effectively does DoJ use the tools provided to it by the FCA, such as civil investigative demands? How effectively does DoJ use relators and how well does it reward them? The purpose of this bill is to answer these questions. The bill requires DoJ to submit certain information that will allow Congress to evaluate the Department's performance in managing FCA cases. Thus, under this bill the Department of Justice will be required to describe its settlements of FCA cases. The report to Congress shall include a description of the estimated damages suffered by the United States, the amount recouped, the multiplier used to calculate the settlement amount, the criminal fines collected and whether the defendants were held liable in previous cases. The report will also inform Congress as to whether the defendants have been required to enter into corporate integrity agreements. In addition, in order to understand how the program is working, the Department of Justice will be required to inform Congress as to whether civil investigative demands were issued. The Department will also be required to provide certain information about the conduct of qui tam cases initiated by whistleblowers. For example, Congress will receive information about the length of time cases are under seal, whether whistleblowers (technically termed ``relators'') sought a fairness hearing regarding a settlement and what share of the settlement they received. The Congress would also receive information about whether the agency that suffered from the fraud involved participated in the settlement. In regard to cases involving Medicaid Fraud, the report will provide Congress with the details of how much money was returned to each state participating in the settlement. In a time when many states are struggling with their Medicaid budgets, the Congress needs to know how effectively DoJ is in suppressing Medicaid fraud and returning money to the states. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, today I am re-introducing a bill directing the Inspector General of the Department of Justice to submit semi-annual reports regarding settlements relating to false claims and fraud against the United States. The False Claims Act, 31 U.S.C. Sec. 3729 et seq., is the government's single most effective program for recouping money improperly obtained from the United States by false claims and fraud. Initially passed during the Civil War at President Abraham Lincoln's request to suppress fraud against the Union Army, the FCA was modernized and updated in 1986. Since President Ronald Reagan signed the 1986 amendments into law, settlements and judgments in FCA cases have exceeded $13 billion. No other anti-fraud program of the Federal Government can match this result. Despite the significance of these results, the Congress does not have a way to evaluate the performance of the FCA program. While the program, which is overseen by the Civil Division of the Department of Justice, appears to be doing well, it is not known at this time how the program is performing as compared to its potential. What percentage of the various frauds perpetrated against the United States is recouped in False Claims Act cases? How effectively does DoJ capture the multiple damages and penalties provided for by the act? How quickly does DoJ move FCA cases? How effectively does DoJ use the tools provided to it by the FCA, such as civil investigative demands? How effectively does DoJ use relators and how well does it reward them? The purpose of this bill is to answer these questions. The bill requires DoJ to submit certain information that will allow Congress to evaluate the Department's performance in managing FCA cases. Thus, under this bill the Department of Justice will be required to describe its settlements of FCA cases. The report to Congress shall include a description of the estimated damages suffered by the United States, the amount recouped, the multiplier used to calculate the settlement amount, the criminal fines collected and whether the defendants were held liable in previous cases. The report will also inform Congress as to whether the defendants have been required to enter into corporate integrity agreements. In addition, in order to understand how the program is working, the Department of Justice will be required to inform Congress as to whether civil investigative demands were issued. The Department will also be required to provide certain information about the conduct of qui tam cases initiated by whistleblowers. For example, Congress will receive information about the length of time cases are under seal, whether whistleblowers (technically termed ``relators'') sought a fairness hearing regarding a settlement and what share of the settlement they received. The Congress would also receive information about whether the agency that suffered from the fraud involved participated in the settlement. In regard to cases involving Medicaid Fraud, the report will provide Congress with the details of how much money was returned to each state participating in the settlement. In a time when many states are struggling with their Medicaid budgets, the Congress needs to know how effectively DoJ is in suppressing Medicaid fraud and returning money to the states. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise to respond to Senator Conrad's amendment, the pay-go amendment he brings up as it relates to fixing Social Security. But before I get into my remarks, I wish to call attention to some points raised by Senator Conrad. I do not dispute anything he said, but I would like to give some refinement of some statistics he has given. Recently he spoke about the decline in the value of the dollar. His figures were accurate, as far as the decline of the dollar. But also where he starts, there has been a decline of the dollar, but I think we ought to point out to the people of this country that from 1995 until the year 2002, we had a 50-percent increase in the value of the dollar. When we go back to 1995, the middle of the Clinton administration, we will find that we had a dollar lower in value than presently. Then we had the increase in the value of the dollar, and now we have had a 30- percent decline in the value of the dollar. The value of the dollar still is much higher than it was in 1995. Another point I wish to make is on his dissertation on the estimate of the trustees of what the growth of the economy, of the growth of productivity will be over the next 75 years. He would say that over the next 75 years, the growth of the economy, as the trustees put it, at 1.6 percent is too pessimistic, and consequently maybe the situation over the next 75 years of the Social Security system is not as bleak as the trustees might be led to believe. That is because he would point out that the average productivity of the economy over the last 40 years, from 1960 to the year 2000, was 1.76. So the point being made by the opposition is that the growth of the economy has really averaged more than what the trustees say it will over the next 75 years, so somehow we might not have anything to worry about. If you take subsets of the years from 1960 until the year 2000, you will find from 1960 to the year 1975 we had a growth of productivity of 2.4 percent. But if you look at the period of time from 1975 until the year 2000, you would see that productivity growth was 1.38, to compare with what the trustees had used for the next 75 years. So I don't think it is right to point out what the trustees have used as a figure because, compared to the last 25 years, it is not pessimistic whatsoever. You could even make an argument that maybe it is too optimistic. As we listen to these figures, I hope there will be an effort on the part of my colleagues to study these figures and not just to take these charts at face value, because they may not tell the entire story. Having pointed that out, I would like to speak about the amendment of Senator Conrad, not reinstating the pay-go rules until Congress addresses the Social Security issue. Stop to think what sort of proposition this really is. The amendment says we should not do anything else to deal with overspending by Congress until we address the Social Security issue. Unfortunately, no one I am aware of who supports this amendment has a plan before Congress to fix Social Security. So we have an amendment that says, in a sense, don't do anything until we fix Social Security but those who support this amendment don't have a plan to fix Social Security. So, as I see this amendment, this is an amendment to just simply do nothing--not do anything about a plan to keep spending under control or, if you can't do that, then under this amendment you can't do anything about Social Security. Due to the retirement of the baby boomers, Social Security will face rising deficits in just a little bit more than a decade. In fact, some people, including me, can legitimately say that this problem really starts in 3 years, when baby boomers start retiring, because their retirement is going to lessen the amount of surplus going from the payroll tax into the Social Security trust fund, which really becomes a problem when we have negative cash flow, just 13 years down the road. Because Americans are living longer and having fewer children, there are going to be in the future fewer workers to support each beneficiary. That means that Social Security will face rising deficits long after baby boomers are retired and gone. There is widespread agreement that Social Security is facing a significant financial problem. We could lay out 10 different charts here that would demonstrate the problems of Social Security. I do not think there is a single Democrat or single Republican who would have any disagreement with the problems of Social Security, now or for the next 75 years. It is mathematical and we ought to be able to find a mathematical solution to it. But when it comes to finding a solution, there is very little agreement on what needs to be done to address this problem. President Bush has made saving Social Security one of his top priorities this year. We ought to thank the President for doing it, because now we are in a position 3 years away from where baby boomers are retiring. We can look at this issue very dispassionately, not under a crisis environment. This is the period of time to deal with these problems. If President Bush had not raised this issue in the minds of the American people, we would not be dealing with it in Congress. I have to say, as chairman of the committee that has to deal with this, I wish there was not a Social Security problem. Maybe people could say, Senator Grassley, you are chairman of this committee; why didn't you deal with this 2 or 3 years ago, or 4 or 5 years ago? There are some things you could spend a lot of time on and not get anywhere, if you don't have any colleagues who want to deal with it. But President Bush, using the bully pulpit of the Presidency, has raised this in the minds of people now. Polls show the vast majority of the people know this is a problem Congress ought to deal with. So we ought to praise the President for helping us along a very difficult road here in the Congress, dealing with something that we would not otherwise even be talking about. So it is one of his top priorities, and we ought to thank him for making this a top priority. He should be commended for his leadership. There are a lot of Members in this body who are now fully committed to saving Social Security and doing it this year. So, as chairman of the Senate Finance Committee, I must be ever mindful of the concerns of my colleagues and the rules of the Senate. Social Security improvement is one of the most politically sensitive issues Congress can ever deal with. That is why the last time it was dealt with was in 1983. That is 22 years ago. President Clinton brought this issue to the attention of the American people and to the Congress by his very well-thought-out statement: Save Social Security first--before you do anything else. He even referred to Social Security as a crisis. Somehow, according to my colleagues here, when President Bush says Social Security is in a crisis, that is wrong. But I didn't hear those same people, in 1998 or 1997, when President Clinton said it was a crisis, ``save Social Security first,'' saying that there was anything wrong with calling it a crisis back then. Well, if it was a crisis then, it is more of a crisis now. I don't care whether it is a crisis, a problem or a challenge, it is something we need to deal with and deal with today. That is because if we deal with it today, this year, as opposed to next year, it is $600 billion less of a problem, because it costs $600 billion more on a cumulative basis over the next 75 years to deal with it next year instead of dealing with it this year. President Clinton raised this issue, and even brought up the issue of investing in the stock market as an example. But then, all of a sudden, it was dropped like a hot potato, and it was not brought up again until President Bush brought it before us. This is a very sensitive issue, one dealt with every 20 years. We ought to deal with it now. We ought to welcome the opportunity to deal with it. We can deal with it in a calm atmosphere, not the crisis of 1983 when we were borrowing money from Medicare to keep Social Security checks going, or when we as a Congress put--I don't know whether it was $10 billion or $20 billion, but we put billions of dollars from general revenue into the trust fund to keep checks going. Prior to that, a lot of people were saying, I will never increase taxes, I will never cut benefits. But you know what happens when you are in a crisis; you end up doing both. We have an opportunity to do this in the calm and correct way, such as the promise Congress made 28 years ago--not in 1935, not in the original contract where these promises were made. These promises we can't keep today were made 28 years ago. We have a chance to correct them and we ought to take advantage of that opportunity. Of course, as we are dealing with this sensitive issue, we are all mindful that the Senate's rules require at least 60 votes to reform Social Security; that is, assuming that you would have a filibuster and you would have to overcome the filibuster. As a result of anything which is going to get done, we have to build strong bipartisan support if we are to succeed. Consequently, even if every Republican would vote for Social Security, that would be 55 votes, and you aren't going to get all of one party going in the same direction. We have to have bipartisanship to get anything done. To begin the process of building bipartisanship and support for Social Security, I have met with the ranking Democratic member of the committee. I do that on a regular basis, not just on Social Security but on everything before our committee. We are going to try to find some common ground. We usually do. Everything should be on the table for discussion. We should consider all of our options. Developing a plan to protect and improve Social Security will be a complex and challenging task. It will require the support of both Democrats and Republicans. If we make a commitment to build a strong bipartisan consensus, we can break down partisan roadblocks that threaten the future of Social Security, but the first step is to agree on the nature of the problem. As I said, if I laid out 10 different charts with different aspects of the problems of Social Security, nobody would dispute them. It is quantifiable, it is mathematical, and hence the agreement. We have had in this debate, though, some critics who would muddy the water claiming that the Social Security problem is due to tax cuts that Congress enacted in 2001 and 2003. I don't quite understand how cutting the income tax has anything to do with the trust fund being in trouble, because we have followed the pattern that was laid out by Franklin Delano Roosevelt in 1935; that he wanted a payroll tax, money designated for Social Security so that there is a relationship between what you pay into it with what you get out, so that it would be an insurance program and not be a welfare program. Maybe today, welfare doesn't receive the public's lack of respect it did in the 1930s. In the 1930s, it was a shame to be on welfare. Maybe today it is not. That is part of our problem with our society as a whole. Franklin Delano Roosevelt wanted to be very careful that people who received Social Security checks were not seen as being on welfare. They weren't on welfare because they paid into it. They were buying insurance when they did that. Arguing that the cutting of the income tax has something to do with taking money out of the Social Security trust fund would be the same as saying we are going to put this income tax into the trust fund and get away from the principle of a direct relationship between what you pay in and you get out in interest and principal, and, consequently, have it lean more toward being a welfare program. The Social Security problem has nothing to do with the tax cuts of 2001 and 2003. The critics say that repealing the 2001 and 2003 tax cuts for the rich would cover the Social Security deficit. But according to the Congressional Budget Office, by the year 2050, the cost of extending the tax cuts, if you wanted to say it had something to do with the Social Security problem and make it a welfare program instead of an insurance program, would be 0.7 percent of gross domestic product. As you can see by this chart, the Social Security deficit is in fact 1.4 percent of gross domestic product. In other words, repealing the tax cuts for everyone, not just the rich, would cover only half of the Social Security deficit in the year 2050. If you want to start figuring that way, then turn the Social Security program into a welfare program where you get away from the principle set by Franklin Delano Roosevelt, that there had to be a relationship between what you pay in and what you draw out so that you weren't on welfare, so you didn't have the shame of welfare of the 1930s. Moreover, the sustained use of general revenue to fund Social Security would destroy the historical link between individual benefits and contributions, thereby turning Social Security into another tax- and-spend welfare program. The figures being used by critics do not come from the Congressional Budget Office. They were made up by a liberal think tank often quoted here on the floor of the Senate. The critics' figures are also based upon what we call present-value calculations. Such calculations now would assume that a dollar of additional taxes collected today will pay about $17 of Social Security benefits down the road 50 years. How could this be? These present-value calculations assume that all the money the Government collects from repealing the tax cuts would somehow be saved and be invested in interest-bearing assets, paying 5.8 percent a year in interest. There is simply no way for our Government to make this kind of investment. History shows that the Government spends every dollar of taxes it collects. In fact, I often have said in the Senate I might be willing to increase taxes if I thought every dollar collected would go to the bottom line to reduce it. But what I find in the Congress, you raise taxes $1 and it gives Congress permission to spend $1.10 or $1.20 and sometimes even more. I have never run into anyone in Congress who wants higher taxes who has ever told me how high taxes have to be to satisfy their appetite to spend money. Until I can find out how high taxes have to be, I will be very squeamish about raising taxes and somehow reducing the deficit. The only way to prevent the Government from spending the tax cuts they would propose would be to put them in personal accounts. Unfortunately, those who claim the tax cuts would pay for Social Security are the very same ones who oppose personal accounts. There are a number of ways to address the Social Security long-term deficits. One such proposal would change the benefit formula from wage indexing to price indexing. Some critics of price indexing claim it would increase poverty among seniors. This point has been made in the Senate, but it is based on a number of erroneous assumptions. First, critics say if you go back in time, reducing today's average benefit level to the level that would have been paid in 1940, benefits would be lower and poverty would be higher. What sort of spurious comparison is that? In 1940, the average retirement benefit was 40 percent of the poverty level. In 1960, the average retirement benefit for Social Security was about 60 percent of the poverty level. Today, the average retirement benefit is about 120 percent of the poverty level. So it is just this simple: no one is going to index benefits back to 1940. But that is the argument being made by our colleagues. The proposal that has been put forward would adjust, instead, today's benefits going forward into the future, not backward. I also point out that many of the price indexing proposals include a new minimum benefit for low wage workers. An analysis by the Social Security Administration shows that a minimum benefit would actually reduce poverty more than current law does. So no one should be fooled by these spurious comparisons going back to 1940. It is almost laughable that someone would make that argument in the Senate. The President has made Social Security a priority issue, and Congress should take advantage of this Presidential leadership. The chance to fix Social Security problems may not come again in 10 years. They will come for sure in 10 years because if we do not do anything, we get to the point of a crisis where people who want to increase taxes will not have a problem getting their heart's desire of raising taxes. But you will also do what no one wants to do: change the benefits. So we should not miss this opportunity. President Bush needs to keep using the spotlight to educate the public about why we need to take action on Social Security. We want a safe and secure retirement for every American. That is part of the social fabric of America. It is kind of like Grandpa Grassley. I am 71. I draw Social Security benefits. I am benefiting from a very good deal from the New Deal of President Franklin Delano Roosevelt--a good deal for me, my mom and dad, my grandparents. But for Carrie Grassley, 9 years old, my granddaughter, it is going to be a raw deal because doing nothing around here is not an option. Doing nothing is a guaranteed benefit cut for Carrie Grassley. It is kind of a moral issue, whether Grandma and Grandpa Grassley today ought to be concerned about a secure retirement for our children and grandchildren. Do we want to be selfish? I don't think I have a right to be selfish. I believe I need to be concerned about the next generation. We have that opportunity now. Are we going to take advantage of it? Social Security is a successful program. It definitely is a part of the social fabric of America. These young people who are our pages are paying in dramatically for me to receive my Social Security check. Even if we did something today and they get 100 percent of the benefits that are promised today, they are still getting maybe not a raw deal but not as good as the deal I have. For sure, if we do nothing, 70 percent of those benefits is a raw deal. We have an opportunity to do something about it. There has been a lot of attention brought to personal accounts by the other side of the aisle. The other side of the aisle has had a free ride on the question of solvency of Social Security. What about keeping promises to Carrie Grassley and the young pages so they can have what we have. What about everything else dealing with Social Security. Do they have a responsibility? After all, we all get paid $160,000 a year. You mean you cannot come to the table to negotiate with Chuck Grassley on a problem we all agree ought to be done with or without personal accounts? But don't figure you are negotiating in good faith if you say, before you sit down at the table, you can't have everything on the table. That is what negotiations are about. The other side has had the luxury of the public's attention on personal accounts, and they are clouding that issue. This has given them the opportunity to avoid these tough issues of providing for Social Security for the pages or for Carrie Grassley. I don't think they can get away with it very long. I hope by this summer my committee is able to meet and report out a Social Security bill. It is my intention to do that. Will I get the cooperation to do that? One person cannot provide the votes, but we ought to have that sort of discussion and see what we can do to bring it before the Senate. I yield the floor and suggest the absence of a quorum.

Mr. GRASSLEY. Mr. President, I yield myself such time as I may consume.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, today I rise in remembrance of a fellow Iowan who has fallen in service to his country in Iraq. Specialist Seth Garceau died on the 4th of March after being seriously injured by a roadside explosive on the 27th of February. A member of the Iowa Army National Guard Company A, 224th Engineer Battalion, Specialist Garceau is survived by a mother, Lori, a father, Rick, and a sister, Tess. Seth Garceau grew up in Oelwein, IA, and enlisted in the Iowa Army National Guard in 2000 while he was still in high school. Seth graduated from Oelwein High School in 2001 and was mobilized for Operation Iraqi Freedom in 2004. Officials announced on the 5th of February that Specialist Garceau will be promoted posthumously to the rank of Sergeant. Former President Calvin Coolidge once said, ``No person was ever honored for what he received. Honor has been the reward for what he gave.'' Seth Garceau has given his life, that greatest of gifts, and for that, we shall forever honor him. I offer my most sincere sympathy to his family and friends who have felt this loss most deeply. May we always remember Seth with respect and admiration. For his life and the sacrifice he made, he deserves no less.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise to urge my colleagues to vote for final passage of the bankruptcy reform bill. I have been working on this piece of legislation for a long time, and I am pleased to see that we are nearing the end. This bipartisan bill has been maligned by many, and I want to set the record straight. What we are trying to do is fix a bankruptcy system that has gone awry, where individuals who have the ability to repay their debts don't do so, and the rest of us are left holding the bag. What we have tried to do with this bill is inject some fairness into the system, whereby people who have assets and the ability to repay back their debts go into a chapter 13 repayment plan, and people who do not have any means and no ability to repay go into chapter 7. We've kept the safety net of full chapter 7 bankruptcy discharge for those who truly need it, and channeled others that can pay their creditors into a repayment plan. This is done through a means test, which is fair and flexible enough to take into account all the unique circumstances a debtor and his family face. The means test takes into account all reasonable and necessary expenses for a debtor and his family. We provide for a court to consider ``special circumstances'', so that a debtor can show that he doesn't have the ability to repay, and should stay in chapter 7. The bill excludes from the means test poor people, those individuals who are below the median income. So if individuals can pay and they really don't have the ability to pay, they will continue to have their debts fully discharged in chapter 7 bankruptcy, while those who do have assets cannot hide them from their creditors and escape repayment. Let me mention a couple of things this bill does not do. This bill doesn't put the credit card companies first or leaves hard working families out to dry, as some of the bill's detractors have claimed. In fact, the bill helps women and children and improves their situation when someone files for bankruptcy because it provides new priorities and tools so that child support and alimony will be collected before other creditors. We move child support up in priority, up to number one from number seven in line, and that means that they will be paid before a lot of other creditors, including the credit card companies. The bill makes staying current on child support a condition of discharge. We provide that debt discharge in bankruptcy is made conditional upon full payment of past due child support and alimony. Domestic support obligations are automatically non-dischargeable, without the costs of litigation. The bill also makes payment of child support arrears a condition of plan confirmation. The bill provides better notice and more information to facilitate child support collection, and tracking down deadbeat parents. Further, the bill protects the name of a debtor's minor children from public disclosure in a bankruptcy case. This bill also doesn't help credit card companies and other lenders take advantage of honest consumers, as some have alleged. In fact, the bankruptcy bill contains some new real and significant consumer protections. The bill requires credit card companies to make new disclosures that benefit customers and prohibits deceptive advertising of low introductory rates. It requires credit card companies to provide key information about how much money people owe and how long it will take to payoff their credit card debt by only making a minimum payment. The bill requires lenders to prominently disclose when late fees will be imposed, the date on which introductory or teaser rates will expire, and what the permanent rate will be after that time. The bill also prohibits lenders from canceling an account because the consumer pays the balance in full each month to avoid finance charges. The bill also provides that consumers will be given a toll-free number to call where they can get information about how long it will take to payoff their own credit card balances if they only make minimum payments on their balance. This will educate consumers about their financial situations. In addition, the bill allows for more judicial oversight of reaffirmation agreements, to protect consumers from being pressured into onerous agreements. The bankruptcy bill also includes a debtor's bill of rights to prevent bankruptcy mills from preying upon those who are uninformed of their rights. The bill provides for penalties on creditors who refuse to renegotiate reasonable payment schedules outside of bankruptcy. The bill provides for penalties on creditors who fail to properly credit plan payments in bankruptcy. The bill strengthens enforcement and penalties against abusive creditors for predatory debt collection practices. Finally, the bill contains credit counseling programs to help consumers avoid the cycle of indebtedness. So with the bankruptcy bill, we've tried to close loopholes in the system and eliminate abuses. We've created new consumer protections. We've made chapter 12 permanent. We've made sure that financial markets are not subject to risk. Although the bill doesn't contain everything I would have liked to include, it is a good start to putting an end to the abuses. It has been a long haul, but I think we are finally seeing this bill through to the end. And there are many people that I'd like to thank because they've been instrumental in getting us to this point. I've been quite busy lately as chairman of the Finance Committee, working on social security, medicare and tax reform. I take that responsibility very seriously. Because of Finance Committee markup and hearing conflicts, I have had to rely on my colleagues to manage this bill on the floor. But the job has been in very good hands. In' particular, I appreciate Senator Hatch and the diligence that he has shown towards this bill. On more than one occasion, he made sure that the bankruptcy bill made it through the committee process so that we could have it considered on the floor. He has stepped up to the plate many a time to manage the bill, work on compromises, and keep the engines running. Senator Hatch is a good friend and colleague, and I respect his perseverance as well as his legal expertise. I'm glad to see that all his hard work during the years has finally come to fruition. Senator Hatch has been a true stalwart through the years, and I thank him for his dedication to bankruptcy reform. I also want to thank his able staff, Perry Barber, Kevin O'Scanlin and Bruce Artim for all their help on this bill. I especially want to thank Senator Sessions for being a tireless champion of bankruptcy reform here in the Senate. I have relied on his intellect and legal prowess for the last eight years that we've been working on this bill. I believe that Senator Sessions has brought a unique perspective to the bankruptcy bill with his dedication to eliminating abuses in the bankruptcy process. He is a firm believer that if you borrow money, you have to pay it back. So I truly am thankful for all the work that Senator Sessions has done, especially in managing this bill on the floor. He is one sharp lawyer, and I am honored to have him as my friend. I also want to thank his staff for their excellent work, in particular his talented Chief Counsel William Smith, Cindy Hayden, Amy Blankenship and Wendy Fleming. I want to thank Chairman Specter for placing this bill at the top of the agenda in the Judiciary Committee, and for moving it so quickly and ably in this Congress. His staff, Harold Kim, Mike O'Neill, Ivy Johnson, Hannibal Kemmerer, Tim Strachan, Brendan Dunn and Ryan Triplette have been extremely helpful in getting the job done. I want to thank Majority Leader Frist and his staff, Allen Hicks, Eric Ueland, Sharon Soderstrom and Dave Schiappa, as well as Senator McConnell and his staff, John Abegg, Kyle Simmons, Malloy McDaniel and Brian Lewis. I would be remiss if I didn't thank our friends on the House side, and in particular Chairman Sensenbrenner and his staff, Phil Kiko, Susan Jensen and Ray Smietanka. Chairman Sensenbrenner has really been a leader on bankruptcy reform, and a true driving force behind this legislation. I look forward to additional collaborations with him. In addition, I want to thank Senator Carper, Senator Nelson, Senator Biden and Senator Johnson. This is truly a bipartisan bill, and it couldn't have gotten done without their help. Finally, I thank my own staff, my Finance Committee Chief of Staff and Legislative Director Kolan Davis and my Judiciary Committee Chief Counsel Rita Lari Jochum, for their hard work on the bill. I also want to thank my former staffer John McMickle, for his expertise and advice on this important piece of legislation. Good staff is hard to find, and I am proud to say that my staff is probably the best in town.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I move to reconsider the vote and to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. GRASSLEY. I would like to speak for a short time. Mr. President, under current law, investment banks are not allowed to compete on the same playing field as other professionals. Right now, investment banks are precluded per se, in many circumstances, from representing a debtor in a business bankruptcy if the investment bank acted as the investment banker for the company before it filed for court protection. I think this is a draconian rule. The bill would give the bankruptcy judge the ability to determine whether an investment banker is disinterested, just as the judge determines whether other professionals are disinterested. The provision in the bill, it seems to me, is not only fair, but it will also safeguard the proceedings from any conflict of interest. Do we trust our Federal judges, or don't we, to make this determination? After all, the environment for this is in the judiciary--before judges. We happen to trust them for all other professionals involved in the bankruptcy proceedings, whether there is any conflict of interest for anyone involved. So then the question becomes, why should it be different for investment banks? I think the provision in the bill is fine as it is. It is part of the compromise. We should allow a judge to make this determination and, thus, protect the integrity of the bankruptcy process. So I ask my colleagues to oppose this amendment. I suggest the absence of a quorum.

Mr. GRASSLEY. Mr. President, reserving the right to object, and I will object, but I would like to take just 30 seconds to explain that there are problems with the Coal Act. They are within the jurisdiction of the Senate Finance Committee, and we ought to look at all these issues in the context of a comprehensive review and a comprehensive solution. So I would see a piecemeal approach, as is being done now through the bankruptcy bill, as, first of all, intervening in the jurisdiction of the Finance Committee, which as chairman I should protect, and, secondly, making more difficult the comprehensive solutions that we ought to find. So I object.

Mr. GRASSLEY. Mr. President, this would be a good opportunity for us to consider the general environment and the reason for this legislation. First of all, there has not been any major rewrite of the bankruptcy legislation for more than 25 years. During that period of time, there has been a dramatic change in the economy, particularly the globalization of the economy. It has brought about reasons for changing parts of the Bankruptcy Code. We have gone from around 300,000 bankruptcies a year to a high of 1.6 million or 1.7 million bankruptcies a year. So there has been an explosion of bankruptcies. Even in the best of times there has been an explosion of bankruptcies. It has become an economic problem where the average person in America is paying an additional $550 for goods and services because somebody else did not pay their bills. All of these things have brought about reasons for changing the Bankruptcy Code. This legislation that is 500 pages that has been referred to is not something that just has been dropped on the Congress of the United States. First of all, at least 10 years ago, the Judiciary Committee set up a commission of experts in bankruptcy, not made up of Members of Congress, a commission of people from the private sector and from academia to study what needed to be done with the bankruptcy laws to bring them up to date with the global economy, to bring them up to date with the changes in our domestic economy, and to look at the problem of so many people filing for bankruptcy. This commission worked several months--more than a year--to produce a product. That was the basis for the introduction of legislation in 1997. In that period of time, this bill has passed the Senate in several different Congresses and has passed the House in several different Congresses, has been worked out in conference, an agreement between the House and Senate in several different Congresses, one of those even reaching President Clinton for his signature. But it was the end of the year, and he pocket-vetoed it. We did not have a chance to reconsider that veto. The legislation before us, as I have introduced it, and basically the legislation that is before the Senate is legislation that has been so compromised, except for the Schumer amendment--and I will not go into what the Schumer amendment is--but except for that amendment, the bill we introduced and maybe four or five technical changes that were accepted in the Judiciary Committee is the legislation that was signed off on by Democrats who had a majority in the conference committee in the year 2002 when the Democrats controlled the Senate. Is that exactly the way that I would write this legislation? No, it is not. There are a lot of provisions in this bill I would like to be different. But in the Congress of the United States as a whole--and particularly in the Senate where there is no limit on debate, where filibusters are possible, where the minority has rights they should have, and the only place minority rights are protected--you have to reach compromises. I know no better compromise that I could put before the Senate than the wording of a compromise that was worked out between a Republican House and a Democratic-controlled Senate in the year 2002. That is what we have before us. There are probably a lot of people who do not want any bankruptcy reform, but they will probably end up voting for it because this bill in different Congresses has passed by a margin of 97 to 1 on one occasion. The last time it passed the Senate, I think the vote was 85 to 12. I think all of this is evidence of a bipartisan agreement that the bankruptcy laws need to be reformed. I do not know what more evidence I can give the American people of the way our political system works, the way the Congress works, to arrive at compromise, than the compromise that I lay before the Senate. We recently heard from my good friend, the Senator from Illinois, the Democratic whip, that there have been many opportunities to help this group of people or that group of people or another group of people. We refer to that sort of helping this group or that group or another group as a carve-out. My colleagues have seen amendment after amendment that was introduced to do that. We defeated that, because there ought to be uniformity of application of law across the United States, not separating something special for this group or that group or another group when it comes to justice in the bankruptcy courts. And if we added all of that up, we might not have a lot of people left who are going to be affected by what a bankruptcy judge is supposed to decide, which is justice between creditors and debtors. In this legislation, we preserve one of the main goals of bankruptcy for the last 100 or more years, and that is the principle of a fresh start, where somebody is going to bankruptcy because they have problems that they cannot deal with, financial problems, natural disaster, divorce, medical, whatever it takes to get into financial trouble, that might not be any fault of one's own. To make it clear that we are not after people who do not have an opportunity--when people are below the median income of their State, they are practically guaranteed a fresh start under this legislation, and if people are above the median income for their State, there is a simple process called a means test, where one puts down all of their income and assets and what they owe and through that makes a determination of whether they have the ability to repay some of their debt. My friend from Illinois mentioned the figure of $150 or $175 that maybe over the next 10 years one would have to pay. If people have the ability to repay some of their debt, should they not have to repay some of their debt? It seems to me to be fair to those people to whom they do pay their debt. So we preserve the principle of a fresh start, but we also establish a principle that if one has the ability to repay some their debt, they are not going to get off scot-free. It is just not those two principles that ought to be looked at to understand whether Congress might be doing the right thing. I am not saying just an overwhelming vote in support of legislation is the only way that one ought to judge whether that legislation is justified, but surely the extent to which things are more bipartisan in the way they are done in this body ought to be some justification that certain tests of justice and fairness are being done or they would not get that kind of support, because I do not know a single Senator who for the most part is not concerned about doing right for the people of his State. So that is the sort of consideration I hope the people of this country will give to this legislation, the need for it, the justification for it, the fairness of it, and most importantly those two principles of a fresh start for those who deserve it and the principle that if one has the ability to repay some of their debt that they are not going to get off scot-free.

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

Mr. GRASSLEY. Mr. President, this bill is all about fairness and balance. This bill, as I introduced it minus the Schumer amendment, is exactly the bill that Democratic leaders of the Judiciary Committee signed off on in the summer of 2002 when they controlled the U.S. Senate. I don't know how much more compromise you can get than that. But this amendment would gut one of the major compromises of this legislation that has evolved over that period of time going back to August 2002. The bill's homestead compromise that we have would create a Federal cap of $125,000 on the homestead exemption, but would allow those States with higher or unlimited exemptions to take advantage of them as long as they comply with the 2-year residency requirements and a 10- year fraud reachback provision. The bill's compromise is a good one that all parties have signed off on. The Kennedy amendment would gut it. I ask you to kill this amendment. I ask for the yeas and nays.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Senate now proceed to the consideration of S. Res. 75, which was submitted earlier today.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of S. Res. 74, submitted earlier today by Senators Biden, Clinton, Lugar, Kohl, and others.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, in order to place the bill on the calendar under the provisions of rule XIV, I object to further proceedings.

Mr. GRASSLEY. Mr. President, I understand there is a bill at the desk that is due for its second reading.