Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I yield myself such time as I might consume. When the author of this amendment finished, he spoke about my being inconsistent; that I want to close tax loopholes. He says that takes money out of the economy, so it is inconsistent when I say that it is wrong for him to take money out of the economy. I think the thing for him to remember about closing these tax loopholes, we are taking in money from dishonest taxpayers, whereas he is taking money away from honest taxpayers by raising the marginal tax rate. He would say I am inconsistent in complaining about his taking money out of the economy and running it through Government, whereas I am taking money out of the economy by closing the tax loopholes of dishonest taxpayers. When I close those loopholes, have dishonest taxpayers pay taxes they ought to be paying anyway--except for the fact that they buy tax shelters put together by big corporate lawyers, big accounting firms, and big investment bankers--I am getting money from dishonest taxpayers. But in the bill that I referred to, the JOBS bill, we reduce taxes in America so that companies that do manufacture in the United States will pay less corporate tax as an incentive to create jobs in America. We are taking money from dishonest taxpayers, but we are putting it right back into the economy in the private sector by reduced taxes for people who do manufacturing in America to create jobs. So I think I am totally consistent. I think having dishonest taxpayers pay what they would otherwise pay if they hadn't been buying these tax shelters is the right policy. I think the Biden amendment reducing marginal tax rates and hurting small business is the wrong policy. It is the right policy to have dishonest taxpayers who use tax shelters pay their taxes, and I think it is all right to give tax relief to companies that manufacture in America--not those that manufacture overseas but create jobs in America. That bill passed 92 to 5, and I presume with the support of the Senator from Delaware. I believe we are doing the right thing. I believe he is doing the wrong thing. I believe we encourage job creation and entrepreneurship, particularly among small business. I believe his amendment will actually discourage it. I believe his amendment is the first step towards what Senator Kerry is campaigning for in his campaign for the Presidency--that, if he is elected, he made it very clear he is going to raise the top marginal tax rate not just to 36 percent as the Senator from Delaware would, but raise it to 39.6 percent. Do you think that is the end? There is not enough money there to do all the things Senator Kerry is campaigning on. Pretty soon it is not just 39.6. Pretty soon it is taking away deductions so that the top marginal tax rate might say 39.6, but it is effectively 42, or, in the case of subchapter S, 45 as it used to be. Pretty soon there is not enough money there. Pretty soon you are taxing middle-income people to a greater extent. Who knows where that all ends? I think sometime there has to be a decision made that the Government will only take so much out of the economy; that 535 Members of Congress will only spend so much money. That amount of money is not satisfactory to people on the other side of the aisle, but I decided that where it has been for 50 years--17 to 19 percent of GNP--is where it ought to be, and the tax reductions we passed in 2001 and in 2003 to stimulate the economy, to get us out of the recession, out of the joblessness that came as a result of the September 11 attack on America by terrorism, and to revive the economy, is about right. These tax bills were at their highest level since World War II. We ought to bring it back to where it was for 50 years--17 to 19 percent--for two reasons. No. 1: The economy has grown at that level of taxation very well over that 50 years. It hasn't done any harm to the economy. No. 2: It is a level of taxation that is accepted by the people of this country. There is a basic philosophical difference between that side of the aisle and this side of the aisle. They believe we should bring the money into Washington and let 535 Members of Congress decide how to divide up the goods and services of this country. There is a philosophy we have on this side of the aisle that it is better to leave the money in the pockets of the taxpayers because having 130 million people decide how the goods and services of this country ought to be expended or invested results in a more dynamic economy than if 535 Members elected to the Congress of the United States make that decision for 270 million Americans. When we enacted the individual tax cuts in 2001, the Treasury Department estimated that roughly three out of four taxpayers affected by the 35 percent bracket filed returns with small business activity involving a sole proprietorship, S-corporation, partnership, or a farm. Advocates of tax increases now claim that only 2 percent of small businesses are impacted by the top rates. I would like to address their criticism that a very small percentage of all small businesses are affected by the top brackets. This statistic merely states the obvious. Only about 2 percent of all taxpayers have incomes above $200,000 per year, so it is not surprising that the distribution of small business owners follows roughly the same pattern. Let's consider the impact of this tax increase on small business. A soon-to-be-released study by the Tax Foundation concludes that most high-income taxpayers are active business owners rather than ``passive'' investors. The Tax Foundation study combines IRS data with demographic Census data, and finds that high-income taxpayers are mostly in ``active'' business occupations--such as construction, manufacturing, and retail trade--rather than in passive occupations such as banking, finance, and securities. What is significant about the Tax Foundation report is that, overall, about 74 percent of those hit by the highest marginal rate have active business activity. This business activity comes in three basic forms: Schedule C, for sole proprietorships; Schedule E, for S-corporations, royalties, and partnerships; and Schedule F, farm income. The most common of these are Schedule E. Of those taxpayers hit by the 35 percent rate, nearly two-thirds-- 62.7 percent--have Schedule E income from an S-corporation, royalty, or partnership. It is likely that most of these taxpayers are shareholders in S- corporations. The Tax Foundation data shows that these high-income taxpayers receive about 37 percent of their overall income from salaries and wages which, when combined with their Schedule C, E, and F income, would bring their total amount of business income to 65 percent of their total adjusted gross income. This figure does not include other ways in which a business owner may take profits out of the firm. For example, an entrepreneur who capitalized his business with a loan, may receive regular interest in return. Taxable interest and dividends account for roughly 9 percent of the overall income for high-income taxpayers. While most of this interest and dividend income is likely from traditional investments, a portion could be ``business income'' taken as interest or dividends from their small business. The Tax Foundation was able to isolate the occupations and industries that these high-income individuals are engaged in. They did this by combining IRS data with demographic Census data. They found that high-income taxpayers are engaged in a wide variety of active business industries and occupations throughout the economy. The largest single category of 31.5 percent is ``executive, administration & managerial''--the most likely category that the president or CEO of a firm would choose. By contrast, physicians, lawyers, and judges comprise just 11.4 percent of these individuals. Another analysis shows that high-income taxpayers are engaged across all industries. The one category in which passive investors would most likely be found is within the ``securities, brokerage, and investment companies.'' But only about 4 percent of high-income taxpayers are found in this industry. By contrast, 4.9 percent of these taxpayers are found in the construction industry, 8.1 percent are in manufacture durable goods, 5 percent are in retail trades, and 6 percent are in business services such as computers and data processing. High-income taxpayers engaged in legal services comprise just 3.2 percent of these high-income taxpayers. The data clearly shows that a very large proportion of high-income taxpayers are engaged in some form of active business operation--not clipping coupons and resting back in their rocking chairs smoking their cigars, the image of a lot of rich people. The only conclusion from these findings is that raising taxes on these high-income taxpayers would ripple through every industry, not just passive investors. And as the U.S. Chamber of Commerce says in their letter, it will kill job growth in small businesses. The 1997 economic census--the most recent available--shows that S- corps, proprietorships, and partnerships employed over 30 million people that year. It seems unlikely that 30 million jobs cold be created by ``shell'' companies owned by passive investors. The stakes of this debate are high because there has been an explosion of individual-owned businesses over the past two decades. Between 1980 and 2000, for example, the total number of sole proprietorships, partnerships, and S-corporations more than doubled, from 10.8 million in 1980 to 22.8 million in 2000. S-corps alone grew 424 percent, from 545,389 in 1980, to 2.86 million in 2000, and now far exceed the number of conventional C-corporations. This year, the IRS estimates that nearly 58 percent of all corporate tax returns will be S corporation returns. If you are prepared to vote for a tax increase on small business job growth, then Members should vote for the amendment before the Senate by the Senator from Delaware. If Members care about sustaining the job growth that we have experienced over the past several months, I urge Members not to vote against that growth by increasing taxes on the important small business sector. There is also another problem with the bill. Senator Biden would have Members believe the world is filled with wealthy, passive investors. The truth is, however, that people continually move in and out of high tax rate categories, most likely because they have sold a business or a major asset. The IRS recently released a study of 400 of the highest individual income tax returns for the years 1990 through 2000. That study shows less than 25 percent of those returns appeared in the top 400 more than once and less than 13 percent appeared more than twice, which shows high-income people are not high income through their livee. I could add that low-income people are not always low income throughout their lives because we have a dynamic society, a dynamic economy. Some people improve their lot and some people do not improve their lot. Some people end up in a lower level. What does this mean? The top taxpayers are not a fixed group of people. People move in and out of this group according to economic fluctuations or maybe because of major events. So we are probably looking at a large number of business owners who are selling their businesses or selling their farm. If members think they are voting for a tax increase on a class of idle rich, think again. These are not coupon-clipping people who get their money, smoke their cigars, and lean back in their rocking chairs. These are people that create jobs, probably never retire, keeping that small business going by reinvesting their earnings. If Members vote for this amendment, I am not sure they will know whose taxes they are increasing. How much time remains on this side?

Mr. GRASSLEY. I yield the floor.

Mr. GRASSLEY. My time has expired.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I rise to speak in support of the amendment offered by Senators Bunning and Bingaman. This amendment, of which I am a cosponsor, makes significant and much needed reforms to the Energy Employees Occupational Illness Compensation Act of 2000. Congress passed this law to provide timely, uniform, and adequate compensation to sick nuclear workers. These Department of Energy employees or contractors were made sick from exposure to toxic substances or radiation while assembling our nuclear deterrent. This law required DOE to help these former workers compile employment and medical records to assist in the filing of State workers compensation. There are two facilities in Iowa that are covered under this law. Over 600 claims have been filed by former workers of the Iowa Army Ammunition Plant located in Middletown, IA. These patriots served on our Nation's homefront during the cold war, putting themselves at risk building nuclear weapons. The least our Government can do is provide the necessary assistance to ensure that those eligible for compensation receive it. However, one thing has been made perfectly clear. The Department of Energy does not have the capability or expertise to fulfill their responsibilities under this act. I began to question DOE's ability to process these claims in April of 2003, when I noticed they had received over 15,000 claims and only a handful had been fully processed. I questioned Secretary Abraham on this point. I followed up with Under Secretary Card a few months later. I was told on both occasions that all DOE needed was more time and more money. I was skeptical, to say the least. Then, last fall, the General Accounting Office confirmed my suspicions. Their conclusions, in a report I had requested, were stunning. Of the more than 19,000 claims filed with the Department of Energy, only 6 percent had been completely processed, and over 50 percent remained untouched. Even more, GAO concluded that more money alone would not result in more timely processing. Becasue it was clear that DOE had a substandard operation in place to implement this important program, Senator Lisa Murkowski and I took action. We offered and had accepted an amendment to the Energy and Water appropriations bill to transfer the claims processing from DOE to the Department of Labor. We knew at the time that DOE was not on the right track, and that DOL had the experience and expertise to handle this compensation program. While we were successful in the Senate, the Department of Energy and their contract had their way, and our amendment was stripped in conference. Since that time, I have testified before Chairman Domenici's Energy Committee twice to outline the abysmal performance of the Department of Energy. It was at the second hearing where I shared information I had uncovered about the contractor that DOE had hired to do this work. While only 6 percent of claims had been fully processed, DOE believed it was perfectly reasonable to pay the program manager of their hired contractor $401,000 annually. The head of DOE's contractor costs the taxpayer more than the salaries of Secretary Abraham and Secretary Chao combined. Today's bipartisan amendment is a comprehensive approach to finally put an end to the perpetual delay in claims processing and address the lack of a willing payor to pay valid claims in Iowa. It is my understanding that the administration opposes our amendment because they believe it will create an unworkable process and delay the processing of claims. This is precisely the same position they held last October when Senator Murkowski and I pushed similar reforms. It is unfortunate that the administration hasn't realized during this time that the unworkable process and unnecessary delay is not a result of our efforts here in Congress but the result of 4 years of ineffectiveness at the Department of Energy. This amendment simply makes the original law work. I hope my colleagues can support our efforts on behalf of the thousands of sick nuclear workers across the Nation. Through this amendment, these sick workers will finally receive the compensation they so richly deserve.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to be joined by my colleague Senator Feinstein in support of amendment No. 3402 to S. 2400, the Department of Defense Reauthorization bill. We hope this resolution expressing Congress's expectations will encourage the Department to do more to address narcotics trafficking in Afghanistan. This resolution calls upon the President to make the elimination of drug trafficking in Afghanistan a priority in the global war on terror; encourages the Secretary of Defense to increase cooperation and coordination with the Government of Afghanistan and our allies to assist in providing a secure environment for counterdrug personnel operating in Afghanistan; and calls upon the Armed Forces to work with our allies against the regional illicit narcotics trade. These are not original observations. In testimony before both committees in both Chambers, several officials from the Department of Defense have affirmed that there is a strong, direct connection between terrorism and drug trafficking. We know from this testimony and other evidence that some of the profits generated by narcotics trafficking support terrorists. This resolution is needed, because there is some inconsistency between the direction that we are providing to our troops in Afghanistan and the narco-terrorist connection. I do not believe that we will see long-term success in the global war on terror until the financial underpinnings of terrorists are eliminated, and I do not believe that Afghanistan can avoid becoming a narco-state if the drug trafficking there is not addressed. To avoid these potential pitfalls, we must step up our counter-narcotics activities in Afghanistan. I hope the administration, and particularly the Department of Defense, will heed this resolution. Narcotic trafficking is not only a source of funding for terrorist organizations, but its production poses a threat to the future stability of Afghanistan. President Karzai has stated repeatedly that he believes opium production poses a significant threat to the future of Afghanistan. His concerns are echoed by the United Nations Office on Drugs and Crime, which recently warned that Afghanistan is at risk of again becoming a failed state if strong actions are not taken against narcotics. If we are going to assist the people of Afghanistan in their efforts to create a stable country, we cannot ignore their pleas for greater action against the narco-terrorists operating in the region. Mr. President, I believe that our current policy in Afghanistan does not square with these observations about the threat that narcotics pose to the future of Afghanistan. Attempts are being made to separate anti- terror operations from anti-drug operations, despite the acknowledged link between the two. We know that drug trafficking is a war industry of terrorism. If we are going to be successful, we must eliminate the financial underpinnings of terrorism just as effectively as the organizations themselves. Those who sell and trade opium in Afghanistan are narco-terrorists. They support terrorists and insurgents who oppose the legitimate government. By supporting terrorists and insurgents, they become legitimate targets for the Combined Forces Command-Afghanistan. Just as ball bearing factories in Nazi Germany were important military targets during World War II, drug labs, and those who facilitate the drug trade, should also be considered viable military targets as we prosecute the War on Terror. I believe that the United States should treat narcotics traffickers no different than others suspected of cooperating with terrorists. The connection is real, and cannot be ignored. I urge my colleagues to join us in supporting this resolution.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, at sunset last Friday, the 40th President of the United States was laid to rest on a hill overlooking the Pacific Ocean. The consummate optimist, who etched the promise of a ``shining city upon a hill'' into the Nation's conscience, leaves behind a legacy that beckons us to stay true to the American spirit. Whether folks agree with his political philosophy or not, the actor- turned-politician-turned-statesman from the Midwest helped usher in the dawn of a new day for millions of jobless Americans and to those living in oppression behind the Iron Curtain. Through bold, buoyant leadership, Ronald Wilson Reagan, 1911-2004, persuaded his fellow citizens that it was ``morning again in America'' by restoring the promise of peace and prosperity. The outpouring of support during last week's remembrance for the former President reflects Reagan's ability to bring out the best in people and unite America. The pageantry evoked patriotism. The solemnity of the events underscored the public's appreciation and respect for this leader who championed the cause of freedom all around the world. For 8 years, he served as a beacon of hope for those cast under the dark shadows of totalitarianism. The ``Great Communicator'' arrived in the Oval Office when America was licking wounds left by Watergate and Vietnam. Stifled by a sinking economy, joblessness and sky-high inflation, the national mood also wavered under the uncertainty of the Cold War. Americans yearned for brighter days. Elected to his first term in November 1980, President Reagan exuded optimism, charm and kinship with ordinary Americans. His good-natured disposition, self-deprecating humor and can-do attitude launched a new era in American politics. Like Reagan, I won an upset victory over an incumbent in that election. He and I shared a conservative political philosophy rooted in core beliefs spelled out by the Nation's Founders and agreed much more often than not. Now 24 years after the ``Reagan Revolution,'' I am privileged to continue advancing our shared principles: Big ideas instead of big government. Deregulation to foster free enterprise. Tax relief that encourages productivity, growth and individual ingenuity. Self-reliance rather than self-pity. Reagan's policies proved that economic and political freedom bring about peace and prosperity. As Reagan said in his 1989 farewell address to the Nation: ``Democracy, the profoundly good, is also the profoundly productive.'' Many people grossly underestimated the strength of Reagan's convictions and the foot soldiers who helped sweep him into office. With a steely determination coupled with folksy charm, Reagan masterminded the efforts that liberated Eastern Europe in 1989. Eight years earlier, he had predicted the end of Communism as the ``sad, bizarre chapter in human history whose last pages are even now being written.'' Reagan's leadership helped change the course of history for the better. On June 5, 2004, Reagan lost his 10-year battle with the Alzheimer's disease. A decade earlier, in a hand-written note to the American people, Reagan again looked on the bright side: ``When the Lord calls me home, whenever that day may be, I will leave with the greatest love for this country of ours and eternal optimism for its future.'' President Reagan valued the gift of life. He used his to expand human freedom. His legacy shapes America's character and lights our way as we continue the ``march to freedom'' against evil in the world.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, every half hour, somewhere in this country somebody is killed as a result of an alcohol related traffic accident. This is a sobering statistic. Thanks in part to a massive national response, nearly 1.5 million people are arrested and taken off the road each year for driving under the influence of alcohol, undoubtedly saving lives. But, there is an equally dangerous and potentially devastating problem lurking on our Nation's highways that is going largely undetected. In 2002, nearly 11 million people drove under the influence of illegal drugs, according to the National Survey on Drug Use and Health Report. While the effort to reduce drunk driving is making progress, those using illegal drugs like marijuana, cocaine, methamphetamine, and opiates continue to get behind the wheel, putting each of us at risk everyday. According to the National Highway Traffic Safety Administration, drugs are used by approximately 10 to 22 percent of all drivers involved in fatal motor vehicle crashes. In 2003, a study conducted at the Shock Trauma Center at the University of Maryland Hospital in Baltimore found that testing for alcohol alone would have identified less than 30 percent of all the substance abusing drivers admitted to the trauma unit as a result of a motor vehicle accident. Drugged driving is clearly a serious problem. While it is illegal in all 50 States to drive a motor vehicle under the influence of alcohol or drugs, there is no consistency in the way the States approach drug impaired drivers. In fact, existing laws often hinder the prosecution of drugged drivers. Adding further difficulty, there currently is no road side test to detect the presence of a controlled substance in a driver's body. In response to these challenges, today I am pleased to be joined by Senator Feinstein in introducing legislation designed to encourage States to develop and carry out drug impaired driving traffic safety programs. By adopting a model statute, States become eligible for grants that would assist drivers in need of drug treatment, as well as grants that would enhance the training of law enforcement and prosecutors. Furthermore, in an effort to keep drug impaired drivers off the road, passage of this legislation will advance the research and development of a roadside testing mechanism. Clearly there is a need to strengthen efforts to identify, prosecute, and treat drugged drivers. Just as the coordinated efforts to prevent drunk driving have saved lives, so too can the devastating consequences of drugged driving be prevented. I encourage my colleagues to join in support of this legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to pay tribute to PFC Brandon Chauncy Sturdy, the fourteenth Iowan to be killed in Iraq in brave service to our country. PFC Sturdy was a machine gunner in the 2nd Battalion of the 1st Marine Regiment in the 1st Marine Division. I offer my deepest sympathy to his parents, Shelly Rivera and David Sturdy and his fiance, Tricia Johnson. PFC Sturdy was killed by the explosion of a homemade bomb in Iraq on Thursday, May 13 in the Al Anbar Province near Fallujah. I thank him for his patriotic duty to his country and am proud to honor the courage he boldly displayed as a Marine. PFC Sturdy was a 2003 graduate of Urbandale High School in Urbandale, IA. A statement released by Brandon's family describes him as ``the best of the best'' who ``set the bar high for us to reach for''. He was a top notch Marine who had already been awarded the National Defense Medal and a Purple Heart. Brandon Sturdy died a hero fighting to preserve freedom. He was a brave patriot whose presence will be missed. I am proud of the model of service he provided to Iowans and I again offer my condolences to his family. Maj. William E. Burchett

Mr. GRASSLEY. Mr. President, I would like to pay tribute to Petty Officer 2nd Class Trace Dossett who valiantly gave his life for his country on Sunday, May 2, 2004. Petty Officer Dossett was one of five Navy Seabees from Naval Mobile Construction Battalion 14 killed during a mortar attack on the Ramadi Marine base in Iraq. I offer my deepest sympathy to his wife, Angela, their two daughters, Cassidie and Raimi, and his parents, Larry and Cheryl of Wapello, IA. Petty Officer Dossett was a 1985 graduate of Wapello High School in Wapello, IA. He was respected in the community for his strong mind and sense of devotion to serve our country. Trace joined the Navy shortly after graduating from high school and ended his six year tour in the early 1990s. He joined the Naval Reserve a year ago and was activated in January. I am proud of the patriotism displayed by Petty Officer Trace Dossett and his exemplary commitment to defending America. I offer my condolences to his family and close with the words of his wife, ``Trace died a hero and he would have had it no other way.'' PFC Brandon Chauncy Sturdy

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to be an original cosponsor of bipartisan legislation to authorize the modernization of the lock and dam infrastructure and enhanced environmental restoration on the Upper Mississippi and Illinois Rivers. Modernizing the inland waterway transportation system remains a high priority for the Upper Mississippi River basin and for agricultural, commercial, and labor interests that rely on the river to transport their products. In addition to strong grassroots support for this endeavor, the State legislatures have passed resolutions endorsing lock and dam modernization, ecosystem restoration, and Congressional action. Agriculture and related industries in Iowa and the other States on the Upper Mississippi remain competitive in world markets, despite higher production costs, because of the efficiencies inherent in river transport. More than 60 percent of all grain exports move from the Upper Mississippi, making this competitive advantage vital to their ability to operate their business. Over 400,000 full and part-time jobs in our basin are connected to the river. Without modernization, Midwest producers will not be able to compete in anticipated world grain export growth. Furthermore, a recent study estimates the loss of 30,000 jobs nationwide, $562 million annually in lost farm income and $185 million annually in lost State and local tax receipts if the lock and dam system is not upgraded. Providing U.S. agricultural producers every opportunity to export their products to world markets is essential for their financial well-being and future viability. While it is important to consider economic benefits, we must also protect the ecosystem of the river. A cooperative solution can meet the needs of farmers and waterway users while at the same time improve the environment and stem the decline of the Rivers' ecosystems through enhanced authorities. Restoring the ecosystem is not mutually exclusive to lock modernization. After 12 years and $70 million of study, we firmly believe that the time has come to take action. I urge my colleagues to support this legislation providing initial authorization to begin the modernization process and enhance the authorities to address broader ecosystem restoration. Without immediate action, the health of both the agriculture economy and river ecosystem will continue to decline.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to be an original cosponsor of bipartisan legislation to authorize the modernization of the lock and dam infrastructure and enhanced environmental restoration on the Upper Mississippi and Illinois Rivers. Modernizing the inland waterway transportation system remains a high priority for the Upper Mississippi River basin and for agricultural, commercial, and labor interests that rely on the river to transport their products. In addition to strong grassroots support for this endeavor, the State legislatures have passed resolutions endorsing lock and dam modernization, ecosystem restoration, and Congressional action. Agriculture and related industries in Iowa and the other States on the Upper Mississippi remain competitive in world markets, despite higher production costs, because of the efficiencies inherent in river transport. More than 60 percent of all grain exports move from the Upper Mississippi, making this competitive advantage vital to their ability to operate their business. Over 400,000 full and part-time jobs in our basin are connected to the river. Without modernization, Midwest producers will not be able to compete in anticipated world grain export growth. Furthermore, a recent study estimates the loss of 30,000 jobs nationwide, $562 million annually in lost farm income and $185 million annually in lost State and local tax receipts if the lock and dam system is not upgraded. Providing U.S. agricultural producers every opportunity to export their products to world markets is essential for their financial well-being and future viability. While it is important to consider economic benefits, we must also protect the ecosystem of the river. A cooperative solution can meet the needs of farmers and waterway users while at the same time improve the environment and stem the decline of the Rivers' ecosystems through enhanced authorities. Restoring the ecosystem is not mutually exclusive to lock modernization. After 12 years and $70 million of study, we firmly believe that the time has come to take action. I urge my colleagues to support this legislation providing initial authorization to begin the modernization process and enhance the authorities to address broader ecosystem restoration. Without immediate action, the health of both the agriculture economy and river ecosystem will continue to decline.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to make an appeal to our Democratic colleagues to end this obstruction of legislation vital to our Nation. I am appealing to my Democratic colleagues to abandon this harmful, politically motivated, election year strategy of gridlock, and if I may be so bold, to suggest a different election year political strategy that will not hurt Americans. The Democrats' obstruction strategy is no secret in Washington, although it may not be so obvious to those outside the beltway. We have all heard of the old ``blame game.'' Well now, Congressional Democrats have taken it to a new level and created a new game. I call it the ``Block and Blame Game.'' According to a lobbyist, a few weeks ago one of the Senate's Democratic leaders gave a briefing to campaign contributors. First, all were assured, naturally, that the Democrats would take over the Senate. Second, they were told that to help secure this Democratic victory, they were implementing a strategy to block all major legislation, except for some appropriations measurers. So how does blocking legislation elect Democrats? The answer came within days as a Senate Democrat blasted away, charging that while Republicans control the White House, the Senate and the House of Representatives, the GOP is getting nothing done. The block and blame game. Democrats must think that as long as no one outside Washington can figure out the nuances of the legislative procedures of obstruction, then as they say, ``the proof is in the pudding,'' nothing is getting done, the Republicans are in control, and therefore the Republicans are to blame. Who is really hurt by this strategy? Republicans? Maybe, if they are unable to explain the complicated procedures that are being used by Democrats to block the business of the Senate. Clearly, it is the American people who are harmed. And for what reason? Simply, the interests of Americans are being sacrificed upon the altar of the selfish, political power struggle. Please understand that I refuse to insult my Democratic colleagues by suggesting that they should not vigorously compete for control of Congress and the White House. But they can do it in a way that helps Americans, not hurt them. I do strongly urge them to abandon the block and blame game strategy and instead to join Republicans in making this closely divided Government work. Let's all acknowledge that there are precious few legislative days left in the 108th Congress, that we have a large number of bills very important to our country, and that we do not have the luxury of debating and voting on each and every amendment we desire. Let's recognize that no legislation will be perfect in everyone's mind, but let's not block it simply because we don't get everything we want. Instead, let's work hard together to get these important bills to the President's desk to be signed into law. And that is the basis of a better campaign strategy for Democrats, and one that will not undermine the vital interests of Americans. Simply, Democrats could share credit for all the legislation enacted this year, but then they are free to argue with voters that had they been in control of the Congress and the White House, they would have done much, much better. Or, Democrats might try to persuade voters that if they are elected, provisions that Democrats view as ill-conceived, will be repealed or modified. Republicans are happy to engage Democrats in the debate this fall over the issues, our goals and our vision for our nation's future. And Democrats should be just as enthusiastic. In short, there is no need to obstruct legislation. It makes no sense, it is totally irrational, for Democrats to be blocking critically needed legislation, crucial for their own constituents, simply because they fear that Republicans might get credit for passing and enacting legislation. The ongoing fight over the Energy bill is a perfect case study that underscores my point of how the vital interests of Americans are being sacrificed on the alter of political ambition. Last year, lobbyist working hard for either the medicare prescription bill or the Energy bill, were telling me that the Senate Democratic caucus was struggling with the following question: ``Which, if either bill, should we allow to pass? We definitely cannot let the President have two victories.'' Let me repeat, Congressional Democrats concluded that they could not let the President have two victories. So as it happened, Medicare was passed first, but then Democrats mounted a successful filibuster against the Energy bill. They wanted to deny the President a victory. Where did they get that crazy notion? What genius political consultants and pollsters are advising them? Enacting the Energy bill would be a victory for all Americans, not just the President! It would be a victory for people of all political stripes. There are provisions in the Energy bill that would help increase oil production, which would reduce gasoline prices. Do you thing Americans, who drive up to the pump today, having to spend well over two dollars a gallon for gasoline, give a hoot whether or not enacting the energy bill could be considered a victory for the President? Do you think for one moment that even the most dyed-in-the-wool Democrats living outside of Washington, DC say to themselves, ``Well, we may be paying $2.50 for gasoline, but thank goodness Congressional Democrats denied the President a legislative victory''? Why don't Democrats do to the Energy bill, what they did to the prescription drug bill? Let it be enacted into law, and then go out and tell everyone what a terrible bill it is. Tell voters that the Energy bill is just terrible, but that Republicans are in control, and if that's their idea of good energy policy, so be it. But if you elect us, we will do this and that differently, and you will be far better off. That type of political strategy does not undermine Americans. That strategy sets the stage for vigorous campaigns that will we won or lost based upon who have the best ideas and vision. Perhaps, therein lies the problem for Democrats. Perhaps the block and blame game is easier to play for those who are not confident that they have better ideas and winning arguments about their goals and vision. We came within two votes of shutting off the Democrat-led filibuster against the Energy bill. There are provisions in that bill of vital interest to virtually every part of our country, let alone establishing critically needed energy policy for our Nation as a whole. For the upper Midwest's farm country, it contains renewable fuel provisions that will expand farm markets for corn and soybeans which in turn will increase income for farmers and rural Americans while expanding job opportunities. It contains provisions that increase our sources of oil and gas which will reduce the production costs of farmers as well as save money for all consumers throughout our country. Each and every one of us can point to things we did not like in the bill, but instead of passing it for the greater good, it has fallen prey to the Democrat's block and blame game. Just 3 weeks ago, Democrats sacrificed the renewable fuels section of the Energy bill to the block and blame game. It is inconceivable that the renewable fuels amendment offered by the Democratic leader on April 27 could have been designed any better to assure its failure. It was guaranteed to fail. If you understand Senate procedures, and the importance of passing a regionally attractive, comprehensive Energy bill, it is obvious to you that this amendment was designed to fail. Let me offer the proof. First, everyone knows that any energy bill that has any hope of passing this Congress must be a comprehensive package that addresses a wide variety of energy issues and that draws bipartisan support from all regions of the country. This fact has long been recognized by ethanol and farm organizations who have been working hard for approval of the renewable fuels standard. Moreover, these groups recognize that the comprehensive energy bill has provisions beyond ethanol and biodiesel that are very important to their members. So why did the Democratic leader fail to offer instead the comprehensive energy bill, which included the renewable fuels standard, as an amendment? He has been around here long enough to know Senators from other parts of the country, who want to pass pro-energy provisions more important to their states than ethanol, are not likely to vote to strip ethanol out. After all, such an effort would unravel the energy coalition, and thus reduce the likelihood of passing their preferred energy provisions. So the Democratic leader offered an amendment that he knew was less likely to pass. The second bit of evidence that this effort was part of the block and blame game, is that no pro-ethanol Republican ally was contacted in advance to help develop a strategy to assure that we secure enough votes. We have always counted on bipartisan cooperation to support ethanol legislation, and for the first time that I can remember, neither I nor any other pro-ethanol Republican was contacted. Third, and even more telling, the Democrat leader failed to contact the ethanol and corn grower lobbyists in advance. That, I know, has never happened. If you really want to pass renewable fuels legislation, every one of us in this body knows you better have the National Corn Growers and the Renewable Fuels Association ready and able to help you line up the votes. Why weren't they contacted? Perhaps it is because Democrats knew they would refuse to be part of an effort to splinter the broad energy coalition, sinking all hope of passing any energy legislation this year, including that for renewable fuels. They would not willingly let themselves become victims of the Democratic block and blame game! The fourth bit of evidence that this amendment was designed to fail involves Senate procedure. As soon as the amendment was offered, a signed cloture petition was immediately offered by the Democratic leader to his own amendment. This cloture petition, by the way, was signed exclusively by Democrats. The most obvious reason to invoke cloture is to cut off a filibuster. But who in the world was going to filibuster this amendment? We were trying to pass a long-overdue solution to differences that has stalled the internet tax bill. Moreover, if the Democratic leader's renewable fuels amendment was so popular, why worry about a filibuster? Let's just vote up or down on the amendment. Although cutting off debate is the obvious, normal purpose of filing a cloture petition, there is another purpose which is not so widely understood. If cloture is invoked, all amendments to that underlying provision must be germane. If a second degree amendment is not germane, then you have constructed a hurdle requiring 60 votes to overcome. Could it be, therefore, since no one was filibustering this amendment, that an attempt to invoke cloture was aimed at blocking the more popular, comprehensive energy legislation as a second degree amendment? Indeed, Senator Domenici, recognizing hopes for energy legislation was being jeopardized by this block and blame game, offered the comprehensive energy bill as a second degree. What most constituents do not know, is that had the democratic leader succeeded in gaining the 60 votes needed to invoke cloture on his amendment, the Domenici amendment would have been ruled out of order as non germane because it was far more expansive than the underlying amendment. It would have taken another 60-vote majority to overcome this ruling. That may not be impossible, but we know that some Senators vote will vote differently on a procedural question than they might on the underlying amendment. So this was another hurdle, another attempt at blocking the more popular provision that, remember, included the renewable fuels standard and had a much higher likelihood of passing. The fifth piece of evidence that the Democratic leader's amendment was designed to fail is that he offered it to S. 150, instead of the compromise substitute amendment developed and offered by Senator McCain, the chairman of the Senate Commerce Committee. Given the long stalemate over the internet tax bill, we all knew that Senator McCain's substitute had broken the impasse and that if anything was going to pass, it was his compromise. But his amendment, No. 3048 was an entire substitute to the language of S. 150. We all know, therefore, that any amendment to S. 150, including amendment No. 3050 offered later by the Democratic leader, would fall when the McCain substitute was approved. So you should offer an amendment to the substitute that will prevail. If you did not think you knew which would prevail, then you could offer two amendments--one to the underlying bill, and one to the substitute amendment. Here is a good way to explain this. Suppose our objective is to get supplies to the space station. Do you load your supplies on the booster rocket, or do you load it into the space shuttle? The booster rocket in this case was S. 150, and the McCain substitute was the space shuttle. And we all knew that. The next bit of evidence that the Democratic leader's ethanol amendment was designed to fail, is the very fact that he picked a bill, again, the internet tax bill, that is controlled and managed by the Senate's most out-spoken, anti-ethanol Senator. If everything else failed to fail, adding an amendment to a bill to be taken to conference by Chairman McCain was the iron-clad guarantee it would be rejected. And in fact, that is exactly what Senator McCain stated on the floor of the Senate. He stated emphatically, and quite predictably, that if the ethanol or energy amendment passed, he would drop it in conference. So the Democrat leader's amendment was designed in so may ways to fail, and thus, to block his own amendment. And guess who gets the blame? Republicans. Farmers lose. All energy consumers lose. But if the block and blame game works and Republicans lose, too, then it is all worth it, because Congressional Democrats win. The block and blame game. An interesting exchange occurred between Chairman McCain and Senator Dorgan during the debate of this amendment. Senator McCain said, ``I am sure there may be a headline in South Dakota that says: Senator Daschle fights for ethanol.'' Senator Dorgan responded, ``Senator Daschle has not offered an amendment for the purpose of a headline in South Dakota.'' Guess what. As soon as his amendment failed, Senator Daschle did issue a press release. And not only that, the press release attacked Republicans. The release, according to the Congressional Quarterly, was headlined, and ``Washington Republicans abandon ethanol.'' The block and blame game: hurts the farmers, hurts Americans, but helps the Democrats. I would like to share a statement issued by the National Corn Growers following the vote: Yesterday, during consideration of legislation dealing with internet sales taxes, Senator Daschle offered an amendment to create a Renewable Fuels Standard (RFS). Senator Domenici offered S. 2095 as a second degree amendment to the Daschle amendment. S. 2095 contains the RFS as well as other energy provisions. NCGA will support all efforts to pass an energy bill that contains an RFS and addresses the serious problem our nation faces regarding energy. We again call upon Congress to set aside partisan bickering and to pass an energy bill. I agree wholeheartedly with the National Corn Growers Association. We have serious problems facing our nation, and we have several very important bills aimed at addressing these problems that are falling victim to the block and blame game. I wish that what I was told by a Democratic lobbyist, about the strategy to block everything this year . . . I wish that it were not true. I hope that the Democratic leaders will have a change of heart and a change of campaign strategy that allows vital pieces of legislation to be signed by the President this year, and then let the election be fought over who has the best ideas or who will do better if they take control of Congress or the White House.

Mr. GRASSLEY

Mr. GRASSLEY. I thank the Senator from Virginia. The IRS Free File Program is a direct result of the goal that Congress set for the IRS to have 80 percent of returns filed electronically by 2007. The partnership agreement calls for the Free File Alliance to provide free tax preparation and filing to at least 60 percent of all taxpayers or approximately 78 million individuals who file an individual tax return. Each participating software company has its own eligibility requirements. The eligibility requirements ensure that lower income, disadvantaged and under-served taxpayers benefit from the free file program with the Free File Alliance, LLC. The provision in the bill was intended to ensure that the taxpayers participating in the Free File Program were affirmatively consenting to solicitation for other products or services. I look forward to working with him to ensure that we continue to promote such public-private partnerships.

Mr. GRASSLEY. Mr. President, today the Senate has approved the Tax Administration Good Government Act. This legislation is the first legislation addressing tax administration since the IRS Restructuring and Reform Act of 1998. The legislation contains five major components. First, it provides additional safeguards for taxpayers. Second, the legislation significantly simplifies the current interest and penalty regimes. Third, the act also includes the proposals passed out of the Finance Committee on April 2, 2003 and included in a bill introduced by Senators Hatch and Breaux to modernize the United States Tax Court. Fourth, our legislation also includes several provisions, some of which were requested by the Treasury Department and the Joint Committee on Taxation, to strike an appropriate balance in protecting taxpayer confidentiality through disclosure reforms. Finally, the legislation takes an important step toward simplification of the Tax Code through the elimination of obsolete provisions and unifying the definition of child within the Tax Code. We have worked closely with the Treasury Department, the Internal Revenue Service, the National Taxpayer Advocate, and the Joint Committee on Taxation to develop this package of proposals to promote good government in the administration of our Tax Code. Congress's responsibility for the tax system does not stop after we pass tax law changes. We have an oversight responsibility to ensure that taxpayer rights are protected, that our tax laws are not administered counter to congressional intent, that the judicial body with primary jurisdiction over the tax laws has the tools necessary to provide independent review of controversies between taxpayers and the Internal Revenue Service, and to take steps to simplify the Tax Code whenever possible. We are pleased to say that today, the Senate has taken a big step in that direction.

Mr. GRASSLEY. I thank the Senator from Florida for his comments. This is a provision that I have also supported. The provision included in the bill will go a long way for those seniors who live in the affected CCRCs. I also want to clarify one point with Senator Baucus. It is my understanding that the purpose of the amendment is to bring the tax treatment of those CCRCs described in section 7872(g) into alignment with the treatment that has historically been afforded to those CCRCs that are not described in section 7872(g). In other words, there is no intent to alter the treatment that the IRS has historically provided for CCRCs that are not described in section 7872(g). I am committed to working with Senator Graham as we move this legislation forward.

Mr. GRASSLEY

Mr. GRASSLEY. I thank the Senator from Virginia. The IRS Free File Program is a direct result of the goal that Congress set for the IRS to have 80 percent of returns filed electronically by 2007. The partnership agreement calls for the Free File Alliance to provide free tax preparation and filing to at least 60 percent of all taxpayers or approximately 78 million individuals who file an individual tax return. Each participating software company has its own eligibility requirements. The eligibility requirements ensure that lower income, disadvantaged and under-served taxpayers benefit from the free file program with the Free File Alliance, LLC. The provision in the bill was intended to ensure that the taxpayers participating in the Free File Program were affirmatively consenting to solicitation for other products or services. I look forward to working with him to ensure that we continue to promote such public-private partnerships.

Mr. GRASSLEY. I thank the Senator from Florida for his comments. This is a provision that I have also supported. The provision included in the bill will go a long way for those seniors who live in the affected CCRCs. I also want to clarify one point with Senator Baucus. It is my understanding that the purpose of the amendment is to bring the tax treatment of those CCRCs described in section 7872(g) into alignment with the treatment that has historically been afforded to those CCRCs that are not described in section 7872(g). In other words, there is no intent to alter the treatment that the IRS has historically provided for CCRCs that are not described in section 7872(g). I am committed to working with Senator Graham as we move this legislation forward.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I would like to congratulate the students from Central Academy in Des Moines, IA, who participated in the ``We the People: The Citizen and the Constitution'' national finals in Washington, D.C. The annual competition is the culmination of the students' extensive study of the American system of constitutional democracy. The team from Central Academy won the State competition, earning the honor of representing Iowa in the national finals on May 1- 3. I am proud to say that performance of the Central Academy students in the national finals earned them the Regional Award for the central states, which is given to the best non-finalist team in each region. I offer my sincere congratulations to these exemplary students. I had the opportunity to meet with these students when they were in Washington. They are a remarkable group of politically engaged young people and I am proud to have had them representing Iowa during the national competition. The ``We the People: The Citizen and the Constitution'' program, run by the Center for Civic Education with the help of Federal funding, provides an outstanding curriculum that promotes civic competence and responsibility among elementary and secondary students. Students take away a solid understanding of the origin of American constitutional democracy as well as the contemporary relevance and application of our founding documents and ideals. In short, the We the People program produces better citizens. In closing, I would like to personally recognize the Central Academy students who participated in this program, Oliver Borzo, Andrew Dahm, Andrew Eilts, Becki Gell, Andrew Greiner, Sean Noonan, Carole Peterson, Paige Richards, Maura Walsh, Shannon Wenck, Emma White, Molly White, Christopher Woods, Ru-Huey Yen, Ru-Shyan Yen and their teacher, Michael Schaffer. They can all be very proud of their knowledge and accomplishments. I would also like to recognize the ``We the People'' district coordinator, Ivette Bender, and the State coordinator for Iowa, Linda Martin, for all their work in getting an Iowa team to the national finals.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise in support of the Gregg amendment to provide a little more equity to school districts in the often overly litigious world of special education. Currently, IDEA only allows parents who are prevailing parties to collect attorney's fees. Even if the school district prevails in court, it must pay its attorneys out of its own budget. Under the Gregg amendment, this would still be the case in vast majority of cases. The Gregg amendment does not cap attorney's fees allowed under IDEA and it is not even a straight ``loser pays'' provision. The Gregg amendment simply provides that State or local education agencies may be awarded attorney's fees, at the judges discretion, only in those very limited cases where the parent's case is--``frivolous, unreasonable, or without foundation, or the parent continued to litigate even after it became clear that the case was frivolous'' or-- if the parent's complaint was ``presented for any improper purpose.'' This is a very strict standard and is based on existing laws and precedents. This strikes me as a very limited, reasonable amendment. I should mention that in Iowa, we do not have a great many due process hearings and they rarely go to court. In fact, Iowa is a model of dispute resolution in the area of special education. It also helps that Iowa schools generally provide an excellent education to all students. However, I have heard from many Iowa educators that the Federal IDEA law is too litigious. School districts often find themselves at a disadvantage when trying to prove that they have done right by a child. School districts find that it is usually easier and cheaper to give in to parents' demands rather than to go to court, even if school officials are convinced they have acted properly. I am not suggesting we tip the scales the other way so that parents of disabled children are less able to advocate for the education they feel their children need. The standard in the Gregg amendment is strict enough that it would still be to the advantage of school districts to settle all but the most egregious, frivolous complaints. This amendment would not discourage any parent from pursuing any legitimate complaint, even if the parent might ultimately lose the case. Parents must be able to defend the right of their child to a free, appropriate public education, even in court if necessary. However, frivolous due process complaints under IDEA abuse the rights of parents and hurt children. When a school district must spend money to defend against frivolous cases, it drains funds away from needed services for other disabled children. This amendment also protects parents from unscrupulous attorneys who would prey on parents when they are most vulnerable by encouraging them to litigate or prolong litigation in order to collect fees. The law should protect children, not the pockets of trial lawyers. Again, this amendment would in no way limit or discourage parents from pursuing legitimate complaints against a school district if they feel their child's school has not provided a free, appropriate public education. It would simply give school districts a little relief from abuses of the due process rights found in IDEA and ensure that our taxpayer dollars go toward educating children, not lining the pockets of unscrupulous trial lawyers. Mr. GREGG. Mr. President, IDEA currently allows only parents who are ``prevailing parties'' in disputes to collect attorney's fees, in the court's discretion. The law does not permit school districts that prevail in a case to recover their attorney's fees. In most cases, this is the right policy, as we do no want to discourage parents from seeking redress when they believe their child is not getting what is promised under IDEA. However, there are sometimes cases where the parent's case was frivolous, unreasonable, or without foundation, or the parent continued to litigate the case even after it became clear that the case was frivolous. Or, there are sometimes situations where a parent or their attorney files a number of complaints and requests for due process hearings, triggering the school district to spring into action to prepare for the hearing. The parent subsequently drops the complaint, but the school has spent considerable time and money preparing for the hearing; a closer look at the facts reveals that the complaints were not filed for any proper purpose, but instead were done to harass or retaliate against the school district. In these limited instances, school districts should be able to recover their attorney's fees. This amendment makes such a change to the law. The amendment provides that a court, in its discretion, may award reasonable attorney's fees to a school district if the parent's complaint or subsequent cause of action is frivolous, unreasonable, or without foundation, or the parent continued to litigate after it clearly became so, or was presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. The legal standards in this amendment are not new concepts, but are based upon well-established laws. The first part of the amendment comes from the U.S. Supreme Court case of Christiansburg Garment Co. v. EEOC 1978, which involved an employment discrimination claim under title vii of the civil rights act of 1964. Christiansburg held that a plaintiff which brings an action that is frivolous, unreasonable, or without foundation may be held liable for the prevailing defendant's attorney's fees. It is fair to apply this same standard in IDEA. In fact, a 1985 senate labor and human resources committee report on the predecessor of idea stated the committee's intent to adopt the policy of christiansburg garment company v. eeoc, which is that a party which brings an action that is `frivolous, unreasonable, or without foundation' may be held liable for the prevailing defendant's attorney fees. It is important to note that this is a very high standard and prevailing defendants are rarely able to meet it and obtain a reimbursement of their attorney's fees. The Supreme Court has said: to award attorney fees to defendants in a civil rights suit, the plaintiff's action must be meritless in the sense that it is groundless or without foundation; the fact that plaintiff may ultimately lose his case is not in itself sufficient justification for fee award. Finally, case law directs courts to consider the financial resources of the plaintiff in awarding attorney's fees to a prevailing defendant. The second provision in the amendment--that relates to bringing lawsuits for an improper purpose, such as to harass or cause unnecessary delay or needless increase in the cost of litigation--comes from another well-established Federal law: Federal Rule of Civil Procedure 11. In interpreting this language from Rule 11, courts must apply an objective standard of reasonableness to the facts of the case. Let me give you some examples of frivolous or improper lawsuits, where the school districts had no recourse. In DeLeon Indepen. Sch. Dist. v. Seth B., 4:CV-00-1770-Y (N.D. Tex. 2001), a school district asked for injunctive relief against a parent who had filed seven requests for due process hearings over the course of 2 years. The school district asserted that the parent required the school district to convene at least 20 IEP meetings during that time, and claimed that the parent had abused her entitlements under IDEA by filing repeated requests for hearings and later canceling or refusing to attend. The school district further alleged that it had spent over $154,000 in attorney's fees and costs to defend the parents' filings. The court held that the IDEA law did not give the court subject matter jurisdiction to provide the school's requested relief. We heard from a small district with an annual budget of $10,000,000. At the end of the 2001 school year an IEP student graduated and failed to pass an exam for entrance into a postsecondary trade school. The parents sued the district demanding among other things $1 million in lost future wages because the school had allegedly failed to address his learning needs sufficiently for him to get into the trade school. The district believed that it followed all legal requirements properly for full parent cooperation and agreement during the child's years in school. A decision was made to settle for $140,000 spread over four years partially in fear of consequences if a court battle ended in favor of the parents. A demand of one million dollars would have the effect putting the district into a negative fund balances and the risk of no longer being able to function. A director of pupil personnel with special education responsibility reports: Next month I will go to Federal court with an attorney who is seeking fees for a recent Due Process Hearing. The District prevailed on 100 percent of the issues, not even a hand slap was given to the District. Why are we going to Federal Court? Because the attorney wants fees and the only way he can get them is threaten Federal court and hope we settle the fees versus the cost of Federal court. She described the situation as blackmail. One principal says: Attorneys that drag out a hearing for weeks, do so because once the attorney fees equal the post of the placement, the case gets resolved. I was involved in a case 9 years ago in which an aggressive attorney insisted on a 10 day evidentiary hearing. When it was clear the hearing officer had no control over the hearing, the district caved to the parents' position and wrote a settlement agreement. But the worst example of egregious conduct comes from a suburban school district with over 33,000 students and 1,600 teachers. I will come to that in a minute. Mr. President, we need to have a mechanism to protect schools in the rare instances in which the complaint filed against them is frivolous, or when litigation is being used to harass or retaliate against the school district. This amendment is fair and reasonable. It would apply established legal principles and standards to protect defendants from burdensome litigation having no legal or factual basis. The intent of this amendment is not to discourage parents from using the procedural safeguards under IDEA to bring complaints against school districts. And I don't believe this amendment will do that. However, other Federal attorney fee statutes--(e.g., title vii of the civil rights act and section 1983 claims)--allow prevailing defendants to ask for attorneys' fees in egregious instances. Why can't we allow for the same mechanism under IDEA? We want Government dollars targeted for IDEA to go to special education services for children with disabilities--not for school districts to pay attorney's fees to defend themselves in frivolous law suits. This amendment will not chill representation--it does not put a new dollar limit on attorney's fees. Rather, this amendment is intended to give school districts some relief in those rare situations where a parent has abused their due process rights. Let me tell you about the most egregious example of frivolous, groundless behavior against a school. I know of a suburban school district with over 33,000 students and 1,600 teachers. Noted for excellence, student performance, and distinguished programs, this district has received local, State, and national recognition. Within this district, ``Mrs. X,'' as I will call her for privacy reasons, has two children attending the schools in the district: a high school-age son, identified as a special education student, and a middle school regular education daughter. In May of 1998, the district settled a playground injury claim brought by Mrs. X resulting from her daughter's fall from monkey bars. That incident has been followed by the most egregious and long-standing abuse of every form of complaint, fair hearing, and litigation processes. In summary, Mrs. X has filed complaints with the office of civil rights, tort liability suits, and multiple district internal personnel complaints--ranging from senior district personnel ``dishonesty'' to a substitute teacher leaving the door open in her son's room. Mrs. X currently has six suits filed in Federal Court against the district-- the Board of Education Trustees, the Assistant Superintendent, the Executive Director of Special Education, the Program Specialist, the Director of Special Education, the Deputy Superintendent, the Superintendent, the Attorney retained by the district; nine hearing officers; the U.S. Department of Education Office for Civil Rights, Region IX; and the California Department of Education Superintendent of Schools. As difficult and vexatious as these proceedings may be, by far the most expensive and draining of all of Mrs. X's actions are those resulting from her rights under the IDEA. Since June 1998, she has filed 15 complaints and fair hearing requests. These demands are accompanied by a daily barrage of letters, faxes, and telephone voice messages left for various District employees. Because of IDEA requirements, these need a timely response. The District has spent $195,000 on attorney's fees to defend against these cases. In November 2001, the District office began a log these communications so that the level of harassment and disruptions to the organization could be documented. Since that time, 828 communications have been sent to District personnel, representing well over 2,440 pages. Currently, one of the District's program specialists devotes the majority of her time handling the issues generated by this one parent. This detracts from the District's ability to deal with the urgent and legitimate special education needs of students and parents. Here is the list of the due process filings by Mrs. X. I ask unanimous consent it be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. I agree with the Senator from Tennessee that such an exception to the ``kiddie tax'' would be good public policy. I commit to you that my staff will work with the Treasury Department, the Social Security Administration and your staff during conference negotiations to craft language that addresses Mr. Domm's concerns but also contains solid anti-abuse language. My hope is that we could place such language in the final version of S. 1637 or another appropriate tax bill.

Mr. GRASSLEY. I agree with your concerns, Senator Baucus, and I also am in favor of giving Treasury this expanded authority.

Mr. GRASSLEY. Mr. President, I want to assure Senator Lincoln that I will continue to work with her to make sure adequate incentives for LFG are included in any final package from the upcoming House-Senate conference. Her concerns are my concerns as well. She has stated them well and I will devote my best efforts to resolving them as we move forward on discussions and deliberations with the House of Representatives. car provision

Mr. GRASSLEY. Madam President, Senators Kyl and Nickles say that a lower rate just for manufacturing is ``bad tax policy and is virtually without precedent in our history.'' Well, this is just wrong and the evidence is staring them in the face. FSC/ETI itself is a tax cut for manufacturing. FSC/ETI keeps U.S. manufacturing competitive by lowering tax rates on exports. Manufacturers could lower their rates by 3 to 8 points. The Joint Committee on Taxation says that 89 percent of all FSC/ETI benefits go to manufacturing companies. The Kyl-Nickles Treasury proposal would take money from FSC/ETI and spread it to other industry sectors. Kyl-Nickles will be a $50 billion tax increase on manufacturing. It will not send the FSC/ETI repeal money back to manufacturing. It is mathematically impossible for their proposal to work any other way. We know that tax increases do not create jobs. So why would Senator Kyl and Nickles increase manufacturing taxes by $50 billion? There are other reasons why we did not go the route of the Kyl- Nickles approach. First, their top-level rate cut would only go to the biggest corporations in America. It would not go to family-held S corporations, partnerships, or smaller corporations. Under the Finance Committee bill, all manufacturers in America, regardless of size, get a 3-point rate cut, including S corporations and partnerships. S corporations and partnerships benefit under current FSC/ETI law, so the Kyl-Nickles bill takes a benefit away from them and gives it to large corporations. Kyl-Nickles claim that a manufacturing tax cut ``penalizes all other U.S. businesses.'' I think just the opposite is true. The manufacturing sector should not be a revenue offset to give investment bankers a tax cut. Kyl-Nickles claim that our definition of manufacturing is too difficult to understand. But the definition we use in the JOBS Act is the same definition used for both FSC and ETI. It covers property that is manufactured, produced, grown or extracted within the United States. This definition is 20 years old, but suddenly no one understands what it means. We did confirm that manufacturing includes computer software, films, and processed agricultural goods. Kyl-Nickles claim that these are special interest definitions of manufacturing. However, all of these activities qualified as manufacturing under the FSC/ETI rules, which have been in place for 20 years. We also ensured that farm co-ops get the same benefit that they do under current law. In response to our energy crisis, we provided that refining oil pulled from American wells would qualify as manufacturing. They claim it is too difficult to allocate income and expenses in determining the amount of manufacturing income. But for 20 years, Treasury has had administrative pricing rules on its books that tell taxpayers how to allocate expenses in figuring FSCETI benefits. Our JOBS bill grants Treasury broad latitude to revise the cost allocation rules, based on existing tax principles. Kyl-Nickles also claims that Canada recently gave up a similar manufacturing rate cut because it did not work. This is not correct. For many years, Canada had a special lower rate for their manufacturing sector. Canada created their manufacturing rate cut in reaction to the U.S. creating FSC back in 1982. They reduced their rate on manufacturing so they could stay competitive with the U.S. Canada recently repealed that provision because they reduced all their corporate rates to the lower manufacturing rate. Canada did not repeal their manufacturing rate cut because of its complications. Canada ended their manufacturing regime because it worked so well, that they extended it to all sectors. But when Canada reduced their overall tax rates, they did not do so at the expense of their manufacturing sector. We put together a strong bipartisan bill, with a 19-to-2 vote out of committee, that will cut our manufacturing tax rate this very year. There is no purpose in blocking such a strong bipartisan bill. These days, is it rare that we can reach such strong agreement on anything. Mr. President, the CBO report says the flat corporate rate cut would yield slightly more long-term growth than the JOBS bill. But the reason has nothing to do with our manufacturing tax cut. CBO says the antitax shelter provisions and Senator Smith's and Senator Ensign's homeland reinvestment provisions are the cause. CBO says that because we shut down shelters, corporations' taxes won't be as low and, therefore, their long-term growth is not as high. CBO also concludes that Senators Smith's and Ensign's temporary 1- year rate cut won't help in the long-term. The CBO concludes that a flat rate cut could be more ``efficient'' than a manufacturing rate cut. So what do they mean by ``efficient''? They said it means that a manufacturing rate cut would cause more capital to flow into the manufacturing sector. So I have to ask, what is the problem? I thought tax cuts were designed to increase capital investment. Isn't that what we want for manufacturing? If we increase taxes on manufacturing, then capital should flow out of the manufacturing sector. Is that what we want?

Mr. GRASSLEY. On this side, too.

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