Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, then, according to the unanimous consent agreement, I send an amendment to the desk for Senators Bunning, Lincoln, Santorum, Conrad, and Baucus.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to discuss the importance of accurate data to the debate over the budget resolution, particularly as it relates to the distribution of the tax burden. Over the past several days, a number of my colleagues have made claims that the tax relief we have enacted over the past three years only benefits the wealthiest of Americans. In this debate, as well as all tax policy debates, it is important to use accurate data, and to debate the issues in an intellectually honest manner. One of the key questions in any tax relief package is fairness. In evaluating fairness, we frequently look at whether a proposal retains or improves the progressivity of our tax system. Critics of tax relief continue to attempt to use distribution tables to show that tax relief proposals disproportionately benefit upper income taxpayers. The tax relief that has been enacted to date, in the 2001 and 2003 tax relief packages, is promoting investment incentives so that companies will purchase additional capital and labor. Criticizing these plans for benefiting wealthy taxpayers assumes that the rich stay rich and the poor stay poor. Recent studies, including one produced by the National Center for Policy Analysis, indicate that this is untrue. The May 2003 study measures income mobility by breaking same age workers into five income levels and by monitoring their movement between the income quintiles over 15 years. The study shows there is considerable economic mobility in America and that large numbers of people move up and down the economic ladder in relatively short periods of time. Moreover, in recent years earning mobility has increased. The study demonstrates that within a single 1-year time frame that one-third of workers in the bottom quintile move up and one-fourth of workers in the top quintile move down. One-half of the remaining labor force changed quintiles within one year and 60 percent of workers are upwardly mobile within 10 years. The study also showed that after 10 years, two-thirds of workers change quintiles. A University of Michigan study also concludes that taxpayers tend to move between income groups during their lifetimes. This makes sense. Taxpayers are likely to be lower-income earners early and late in life but are likely to be higher-income earners during the mid-points of their lives. My understanding is that the Congressional Budget Office--CBO--is considering the use of income mobility concepts in its analyses. I'm pleased that the non-partisan official scorekeeping organization recognizes the important issue of income mobility. What allowed these people to escape the lowest income quintile and start earning more money is college education and acquiring necessary skills on the job. Interestingly, anecdotal evidence shows 80 percent of individuals on the Forbes 400 list were self-made, as opposed to those who inherited fortunes. Again, this underlines the importance of taking advantage of educational opportunities. Education allowed these people to overcome differences in parental income, increased their chances to escape low wage jobs, and determined the success of their future earnings. Too often distribution tables are used in an almost fetish-like manner. It is important to understand that the tables are, at best, snapshots. The reality is much more complex. Distribution tables are useful policy tools, but they must be used in context. The NCPA study confirms that there is substantial economic mobility between generations. Almost 60 percent of sons whose parents' incomes were in the bottom 20 percent are in a higher income group; 31 percent have incomes in the top 60 percent. Therefore, whoever is saying that once rich, Americans stay rich, and once poor, they stay poor, is purely mistaken. I welcome this data on this important matter for one simple reason: it sheds light on what America really is all about--vast opportunities and economic mobility. Built by people from all over the world, our country truly provides unique opportunities for everyone. These opportunities include better education, healthcare services, land financial security. But most importantly, our country provides people with freedom to obtain necessary skills to climb the economic ladder and live better lives. We are a free nation. We are a mobile nation. We are a nation of hard-working, innovative, skilled and resilient people who like to take risks when necessary in order to succeed. We have an obligation as lawmakers to incorporate these fundamental principles into our tax system.

Mr. GRASSLEY. Mr. President, the Boxer amendment purports to deal with the loss of manufacturing jobs and the outsourcing problem. If some on the other side want to do something about manufacturing jobs, they should stop obstructing the FSC/ETI bill with poison pill political amendments. When we come back after next week, I'd ask those on the other side to put results ahead of politics and let us finish the bipartisan JOBS bill. This amendment, on the other hand, just suggests that the Finance Committee repeal the tax policy of deferral and raise taxes on small manufacturers. The tax policy of deferral insures that American companies like Intel and Hewlett-Packard, compete on a level playing field with foreign companies. Eliminating deferral means U.S. companies will face a tax burden that is not shared by Japanese, German, British or other competing companies. The Boxer amendment, though styled as a tax increase on the wealthy, contains a tax increase on our small business manufacturers. It would reverse the bipartisan Finance Committee bill's lower rate for manufacturers. Instead of 32 percent, small business manufacturers tax rates would be raised to a level higher than what the Fortune 500 pay. If you care about manufacturing jobs, why would you punish our manufacturers by raising their marginal tax rates? If you care about manufacturing jobs, help us get the FSC/ETI bill passed and don't raise taxes on manufacturers. I urge my colleagues to oppose the Boxer amendment.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, during this debate on this amendment, we have heard there is going to be $11 billion cut from various programs under the jurisdiction of the Senate Finance Committee. I have the budget resolution in front of me. I defy anybody to tell me where in this budget resolution there is an $11 billion cut. I want to make it clear. What has been said, thus far, is based on some assumptions, assumptions that, in the global view of all the possible assumptions that the Senate Finance Committee could draw on to save a little bit of money, it is in the realm of possibility, but it is a very extreme possibility of just exactly where the Senate Finance Committee ends up to save $3.4 billion, not $11 billion. This comes from the fact the budget includes an instruction to the Finance Committee to reconcile $3.4 billion over 5 years. Now, if you were talking on ``Main Street'' in Waterloo, IA, about saving $3.4 billion over 5 years, out of the trillions of dollars that the Federal Government is going to spend over that period of 5 years, and you wanted to explain to somebody that you could not save a fraction of 1 percentage point, they would say: You better get some businessperson to serve in the U.S. Senate because the average businessperson has to deal with problems like that all the time. It is a small amount of money, but it is still some direction given to the committee. Now, exactly where we might do that--there has been a lot said tonight, that somehow people know exactly where the Senate Finance Committee is going to get this sort of reconciled figure. I would have to say, I do not know yet. I do not know yet because I have not looked at all the possibilities. I do not know yet for a second reason: that even if I had a very good idea of exactly where this ought to come from, a chairman of a committee, particularly of the Senate Budget Committee, does not run the Finance Committee. We do things in a bipartisan fashion in that committee. Even within the Democrats, there is a difference of opinion, not a unified position among Democrats and, for sure, among my Republican members of the committee there is not a unified position. It takes a lot of compromise to do anything in the Finance Committee. When you are talking about even saving a fraction of 1 percent--a very small fraction of 1 percent--let me tell you, there would still be a great deal of difference of opinion that it ought to be done. The fact is, there is nothing in this budget resolution that says where we have to save that money. That is our committee's decision. When you vote this week on this budget resolution or when you vote on this amendment, I want to make it very clear to you that there is nothing in this that says how this money ought to be saved. So I can say to any of my colleagues on the other side of the aisle: I do not want this program cut. Another one says: I do not want that program cut. I can say: There is nothing in this resolution that says I have to cut program ``ABC'' or ``DEF.'' It is what we can do in our committee. For sure, there has been a great deal of talk about it might come out of Medicaid or it might come out of the earned-income tax credit. Maybe it could, to some extent. But I do not know that yet. Even if I knew it, I could not produce 11 votes this minute, and that is the way it ought to be. This has to be a thoughtful process. All we are doing in this budget resolution is making an overview of the fiscal policy of the Congress for the next 12 months. That is all we are doing. We are doing that so all the committees of Congress are disciplined. Before the budget resolution, when it came to fiscal matters, every committee and subcommittee in Congress was a kingdom unto itself. And what was the fiscal policy of the Congress of the United States? It was the total action of all the separate committees. But the Budget Committee is set up so that before you spend money, before you make tax policy, you have a well-thought-out process of keeping within certain limits so that each committee is not a kingdom unto itself, but they are disciplined by the total view expressed in the Congress in a budget resolution--in the Senate and House separately; and then, after compromise between the two Houses, that policy is adopted. Now, the budget assumes additional savings, but the Finance Committee is not required to reconcile these savings. Striking the $3.4 billion reconciliation instruction does not remove these other nonbinding savings. These nonbinding assumptions would remain. This amendment does not change any--does not change any--of those assumptions. The amendment deals with $3.4 billion, but all the debate has been about certain assumptions, and there is nothing in the amendment that changes any of those assumptions. So what all the debate has been about is not what you are going to be voting on. You are going to be voting on $3.4 billion being saved. But the debate has been about, ``Oh, the money is going to come out of Medicaid; the money is going to come out of the earned-income tax credit'' because of some assumptions that were made. But the assumptions are not binding. The amendment before us does not even change the assumptions. As to the point that the House-passed reconciliation bill could be handled in the Senate under what we call the rule XIV procedure--which is a way of bypassing the Finance Committee--the Congressional Budget Act clearly states that only a bill reported by the Finance Committee is entitled to the reconciliation protections. So you cannot bring something over from the House under rule XIV and have it reconciled. Our committee, and only our committee, has the responsibility to deal with this for the Senate. Now, speaking to a specific program, I would address the issue that has come up about Medicaid. As chairman of the Senate Finance Committee--we have jurisdiction over the entire Medicaid Program--I am not bound by those budgetary assumptions. That is the third time I have said it. I hope it is clear. The chairman of the Senate Budget Committee and the Budget Committee can put certain assumptions in the resolution, and those are legitimate assumptions to put in the report, although we do not vote on those assumptions. But they are assumptions because it is legitimate for those of us in the Congress to expect the Budget Committee to be responsible. If you are going to put down a figure, you ought to have something to back it up. It should not be pulled out of the clear blue sky. It ought to be based on certain assumptions. That is what the Budget Committee and the chairman did, and that is what they should be doing. Now, I am not bound by those. I have respect for those, though, I want to point out, as I have respect for the work of the Budget Committee and its chairman. But I don't have to share the assumptions that any Budget Committee makes on how to arrive at the figure. In this particular instance, I might have different views about Medicaid. Frankly, I do. But that is not the issue of debate. I happen to believe Medicaid is a vital safety net program for our most vulnerable citizens. It is for people who are low income. It is for pregnant women. It is for the elderly, for the disabled, and for others. States also spend a significant amount of their budgets on Medicaid. When I look at a program, how we save Medicaid money, if we go there--and we are going to have a responsibility to look at all this stuff; we might not even look at Medicaid at all, but we might--I have to be mindful of any effective changes we make to the Medicaid Program that it might have on the States, because this is a program where there is a partnership between the Federal Government and State governments and, in some States, even local governments. Last year, for instance, this entire Congress felt very serious about doing something to help States, in addition to what we would do through Federal grants to the States, emergency grants, because most of the States had very tight budget situations. We gave $20 billion relief to States, of which $10 billion was just for Medicaid. I say that not that you need to be reminded of it, but I want you to know our committee, even 8 months ago, took into consideration the needs of the States. I am going to look at how Federal tax dollars are spent, but I also have to know there is some impact they have on the States. We also have to look at the reality of every Federal program. They ought to be reviewed from time to time. It seems to me we can look at Medicaid not as some sacred cow. Not that it is not a good program, not that it should not be preserved. It is part of the social safety net of our society. It will be maintained. It is a program that is 38 years old. But it is only an extension of a 200-year history our society has had of taking care of the most vulnerable, originally, entirely by counties or local governments. Then the States got involved, and then, in the 1940s, the Federal Government got involved in several ways. Then that was all kind of put together in the 1960s in the Medicaid Program. There is no reason to think this is some sort of a flawless program that can't be made a better program. You don't even have to assume it is some program that at least a fraction of 1 percent maybe can't be saved to some extent. No conclusions on my part, but I wouldn't be a very good public official, a very good trustee of the taxpayers' money if I thought any program couldn't be looked at to see could we save a half of 1 percent out of that program. I am not opposed to reviewing whether there are instances of fraud or abuse in the Medicaid Program, but I want you to know that I will conduct oversight activities and do it in the open. I will do it in a bipartisan manner. I am going to do it with extensive input from stakeholders. I yield the floor.

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

Mr. GRASSLEY. Mr. President, I am going to oppose this amendment because this amendment is not about paying for tax cuts; it is about avoiding a tax increase. Although I understand the desire to impose pay-go, it should not apply to current law, and that is a very important distinction. Under current law, we have a number of tax provisions, including the expanded 10-percent tax bracket, the $1,000-per-child tax credit, and marriage penalty relief that will expire at the end of this year. If we do not extend these provisions, taxes will go up, and taxes will go up automatically. As I have said before in several other points I have been making on other amendments, it is one thing for Congress to have guts enough to vote a tax increase, but it is quite another to let taxes go up automatically without a vote of the people. I think that is wrong. In order to extend the existing tax law, we need to pass legislation yet this year if we are going to have a seamless continuation of present tax law into the year 2005 and beyond. That is what this amendment is all about. We are going to either extend current law or we are going to let taxes go up. Requiring the Senate to pay for this tax relief we already have in the law, that would not be in the law if we do not take some action this year, could lead to disastrous results. We are talking about disastrous results for families, such as if one is married and they get hit with the marriage penalty, that is a major concern to those families who have to pay more. If they have children and they benefit from the $1,000 child credit and that credit goes down, that is going to hit those families to a greater extent. All families, low income or otherwise, but particularly this 10- percent bracket was put in the law to help low-income Americans pay less taxes. So it is a disastrous result on families, and we should not have to go to the extra extreme of maintaining existing law. If for some reason we could not agree on the necessary offsets that would be required under Senator Feingold's amendment, or if we could not get 60 votes, then current law would expire and taxes would automatically go up, without even any consideration by any of us. There would be 535 people just standing by and letting taxes go up. Some people may be willing to take that risk, but I do not believe that is the right approach. Consequently, we need to reject this amendment. We need to support working families of America by extending the tax reductions that have already been provided for under current law. We need that to be seamless. We do not want to take any chance somehow somebody is going to say next October, just before we adjourn for the election, well, we will worry about this next year. That is a bad situation to leave the families of America. They ought to know what tax policy is for the long haul. Certainty of tax policy is the best tax policy. Even if it might not be exactly the right tax policy, certainty of tax policy is better than the uncertain situation we have facing American working men and women today. I yield the floor.

Mr. GRASSLEY. Mr. President, I yield myself up to 15 minutes of our 17 minutes for remarks I will have on the subject.

Mr. GRASSLEY. Mr. President, first of all, I think, based upon my close working relationship with the Senator from Montana and our work on guiding the Finance Committee, from what he said, I have just one disagreement with his position. I think the difference between what he said and the position I am taking is that I, myself, as leader of the committee, want to do things through regular order. I think we can do things through regular order. But just in case we cannot, since this tax policy is so important to working men and women--not increasing their taxes next year is so important--I want the insurance policy a reconciliation package gives us, just in case there is something unpredictable out there. Now, I do not think I would have said that same thing in 2001, I would not have said that same thing in 2003, where I believed we needed to absolutely pass something that was going to be so controversial that it would not pass maybe except by reconciliation. In this particular case, I believe we are going to have the spirit, the bipartisanship to get this stuff done without going through reconciliation. So I think that is the only place I disagree with my colleague. In other words, I am speaking for the budget resolution as it came out of the Budget Committee. But what we are setting the stage for is a debate on whether the Finance Committee will have an opportunity to reduce taxes for families and children or, in this particular case where we already have these tax reductions in place, to keep them from automatically, without a vote of the Congress, going up next year. I want to underscore the word ``opportunity,'' because that is what this debate is all about today on the budget resolution, an opportunity--with some assurance because of reconciliation as a shotgun behind the door--for tax reduction. This vote is not about the tax reduction itself. That debate and vote will come later, on the product of our committee, the Finance Committee, when we mark up tax reduction legislation. This vote today is about whether we will consider the tax reduction under reconciliation or the possibility of using reconciliation because reconciliation, just plain and simple, as we sit here today, is the only way that we can guarantee tax relief to the American people in a timely fashion. Now, there have been some very strong statements made by some on the other side of the aisle about tax relief and about reconciliation. Let me say to those who are worried about this instruction, I, as chairman of the Senate Finance Committee, plan to use this as a backstop, not as my primary tool. My hope is that we deliver family tax relief through regular order. I will not use this instruction, should it survive this vote in conference, unless we have to. We have reconciled tax cuts on several occasions--1995, 1997, 1999, 2001, and we did it last year. The opposition is not based on precedent. The precedent is very clear. The measures we are talking about are supported on both sides of the aisle. I am talking about the child tax credit, the marriage penalty relief, and expansion of the 10-percent bracket. Let's be clear. If the Congress does not act, we are talking about a tax increase for nearly every American who pays taxes. It will also help out a lot of low-income families with a refundable child tax credit, if we can deliver this relief. That is another thing I would suggest to people on the other side. If they want a refundable child credit and we get into a hassle where it cannot be done through regular order, it would seem to me they would want to have a process of reconciliation because it guarantees finality. You never get anything until you get to the finality of votes. A bigger tax credit is a better tax credit. A tax benefit under refundability of $300 per child means a lot to hard-working men and women in my State, and every State. Keep in mind the opposition has no problem with raising taxes in reconciliation. Somehow that is OK. It has been done many times. If the 1993 Clinton tax increase were repealed today, it would score over $1 trillion over 10 years. Who is to say that a $1 trillion tax increase is appropriate in reconciliation, that somehow you can use the process of reconciliation guaranteeing finality, cutting off debate after 20 hours, OK, if you want to raise taxes. That would be for a $1 trillion tax increase. But somehow it is wrong to do it for a $90 billion tax reduction. Democrats, in 1993, used reconciliation--within their rights from our view--to further their President's program, a partisanly designed major tax increase. Eleven years later, we are faced with a different situation, though I am hopeful more than one Member on the other side will support the final product. Republicans, by a razor-thin edge, control the Congress and have a President of our party in the White House. I want to make another point that, for those of us on this side of the aisle, is very compelling, especially in the context of our side's concessions in the power-sharing agreement. We believe the Byrd amendment should not be necessary. Reconciliation affords us a backstop to ensure that tax relief stays in place. I hope the Finance Committee will not need reconciliation. Hopefully, one way or the other, we will get this tax relief. A vote against the Byrd amendment is a vote for an insurance policy that tax relief will get to American families. In closing, I point out this would be a hypothetical family, but presently for the year 2004, this family would be paying $6,000 a year in taxes. If we don't do anything before this year is out, then automatically certain provisions are going to expire. This family, starting January 1, 2005, is going to be hit with a 26-percent tax increase. You can see it would go up $600 because the $1,000-per-child tax credit would expire. When the marriage penalty relief expires, that family is going to pay $911 more. Why? Just because they are married. If they weren't married, they wouldn't be stuck with this, if they were filing separately. Then because they are going to have expiration of the 10-percent bracket expansion, they will pay $100 more. That is $1,611 more in taxes because of inaction by this Congress. That is wrong. We have a chance to do something about it. We ought to do something about it. I think we can do something about it in a bipartisan way through regular order. But in case we cannot, because this body gets locked up too often--call it a filibuster, it is locked up, no finality. It takes a 60-vote supermajority to overcome it; sometimes you can't overcome it. Then for this family, they ought to be entitled to a reconciliation, shotgun, behind-the-door process so we can guarantee them no tax increase. It is one thing for us to vote a tax increase: it is another thing to have a tax increase because of inaction by this Congress. That could happen. I don't want that to happen. It doesn't have to happen this way. We can use regular order. But we ought to provide some assurance to this family that they don't get a 26-percent increase in taxes. I yield the floor.

Mr. GRASSLEY. I yield myself such time as I might consume off the 18 minutes remaining on this side. Madam President, once again I remind the Senate about some of the issues that face the Senate Committee on Finance which I chair and how certain assumptions being made by some of the amenders of the budget resolution might be affected by that or how their decisions might affect decisions we have to make. First of all, there is the general proposition with all budgets and all amendments that pretend to dictate to committees where they ought to get the money or what legislation they ought to pass. This is just a recommendation that has no force of law. It can be entirely ignored by any of the committees, including the Committee on Finance. So when there is a premise certain loopholes ought to be closed, certain tax rate changes ought to be made to affect upper income limit people, the people voting on this amendment and similar amendments ought to understand they are voting on numbers they are giving us, nothing else, because we will have to make those decisions not just on the substance of the dictates of the budget resolution but also on the responsibility to report a bipartisan bill. We will have yesterday, today, and much more tomorrow, a whole series of amendments coming from the Democrat side of the aisle, trying to dictate something Democrats want Congress to accomplish, but with almost no Republican support. The Senate Finance Committee cannot function under that sort of partisanship. We have to get things done in a bipartisan way. If people who offer amendments to the budget expect their amendments to be adopted, it starts with bipartisanship. I have not seen that in very many of the amendments we have had thus far. I guarantee, nothing will be done by the Senate Finance Committee in a strictly partisan way. That is a dead end. That is an alley with no opening. We have to report a bipartisan bill if we expect to get it through the Senate. The other thing I want my colleagues to understand, and why they should vote against this amendment, is it assumes gaining certain revenue from loophole closings. I can tell you of tens of billions of dollars we are going to get from closing loopholes, but we are doing that because of the responsibility of the Senate Finance Committee, first of all, has to have a fair Tax Code, and secondly because we have the obligation, if we are going to make tax changes, to have those offset. Without revenue neutrality we do not have bipartisanship, and without bipartisanship nothing is going to get through the Senate. A lot of very popular tax provisions Democrats or Republicans expect me to get passed before this year is out, like the marriage penalty, like the $1,000 tax credit for children, and the 10-percent bracket so we can help low-income people pay less tax because they need that money themselves to live rather than sending it to us to spend--both Democrats and Republicans expect me to get that passed. We are going to use the revenue from the loophole closings to fund those provisions. We cannot have that money spent on appropriated accounts. It has to be used to offset this social and economic policy that is involved in doing away with the marriage penalty--the $1,000 child credit and the 10-percent bracket, and even in addition to that, maybe, finding some bipartisan solution to bringing finality to what the estate tax ought to be in America as opposed to what it is now or what it will be in 2011 when we go back to just the $1 million exemption. Those are things we are going to do. Obviously, we ought to close these tax loopholes and shelters because they are unfair. Some of them are outright schemes for corporations to avoid taxation. However, we cannot use that money twice. It will be used once. It will be used by our economy to establish a fair tax policy. In addition to that, and unrelated to my position on the Senate Finance Committee, how I react to the debate we have had thus far on this amendment--particularly when I hear some Senators on the other side say something like this: Don't tell me we have increased education spending by 60 percent, because I know that. What that Senator wants us to hear is we have not appropriated what somebody thought we ought to appropriate, which we seldom do anyway. I am well aware of that. I am well aware of promises that were made by an administration on education expenditures, maybe in the first year of this administration, but what I have not heard from the other side of the aisle is, they decide how money ought to be divided, is what happened on September 11 and the war on terror and how that changes everything. How has that changed everything? You put your resources behind the men and women in battle. You put your resources behind winning a war. That has caused the President of the United States and the Congress, in turn, to divert some money from domestic expenditures to the war on terror, to the Defense Department, and to homeland security. That is what is different now from the time when people thought this administration made certain promises on a lot of Federal programs, not just education. It seems to me a responsibility we have when we overwhelmingly pass a resolution for war that, if we are going to put our men and women on the battlefield, you have to give them all the resources it takes to win that effort. If you do not, you should not be going to war. Now, those who voted against that resolution may have the privilege of voting against funding our men and women in the battlefield, but it seems to me, regardless of whether you voted for the war resolution or not, you have a responsibility to stand behind our men and women. That is what has changed between promises being made on education and today. There has been a diversion of money. But even considering all that, this administration, on the present budget and on previous budgets, has put education No. 1, after the war on terror--including Afghanistan and Iraq--and after homeland security, because education is the domestic program that gets the biggest increase in expenditures over anything else. With that in mind, I ask that we defeat this amendment. I ask that it be defeated because the revenue supposedly being used is the revenue we are going to use to make the Tax Code more fair to implement the social and economic policy we have that we call doing away with the marriage penalty, helping families, by keeping the $1,000 child credit, and helping low-income people to pay less tax and to have more money in their pockets so they can support their families to a greater extent. I yield the floor.

Mr. GRASSLEY. I thank the Chair and I thank the Senator from New Hampshire for his great leadership in dealing with education. I spoke about the necessity of the Finance Committee having the freedom to use revenue we can raise by closing these tax loopholes, and the necessity of getting a bipartisan bill out of committee to do it. I think the Senator from North Dakota spoke very well about some of the problems we have with corporations and schemers and scammers using the Tax Code to avoid taxation, by ridiculous things like leasing a subway for a city in the United States, where there is no risk or economic substance to the process. We want to close those loopholes. I thought I ought to bring to the attention of the Senate one of the bipartisan bills out of committee that was using some of those loophole closings. They definitely have an impact upon some major industries and jobs in this country where they are going to be hurt, because the World Trade Organization has ruled contrary to our trade agreements, the foreign sales corporation, and the extraterritorial income provisions we have had to make to make our business competitive with European business. Since that is ruled out, a lot of jobs in major corporations--Microsoft and Boeing, to name a couple--are going to be hurt and be uncompetitive because of that. We are taking some of the loophole closing money that is available to offset the revenue, to reduce corporate tax from 35 down to 32, so our businesses can be competitive. We can save jobs at Microsoft and Boeing which would otherwise be uncompetitive as a result of the foreign World Trade Organization ruling. I don't want the Senate Finance Committee's hands to be tied by a scheme that thinks this money can be used four or five times and can be spent on domestic programs, when we have to have this money to offset very important tax provisions we want to get passed. Saving jobs through this JOBS bill that was before the Senate last week, and will be up again in 2 weeks, is an ideal place to use that revenue. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, what we have to think about when people suggest raising taxes is, I have hardly ever had anybody ever tell me they want to raise taxes. How high do taxes have to be to be high enough to satisfy the people asking to raise the taxes? Since we hear that more from the other side of the aisle than we do from this side of the aisle, I cannot help but ask anybody on that side of the aisle who is going to be suggesting during this debate on the budget to raise taxes, how high do they have to be to satisfy you? We have had marginal tax rates of 93 percent in the last 50 years. Was that high enough? We had 70 percent in the last 20 years. Is that high enough? We have had them as low as 28 percent. People felt an awful lot of economic good happened, particularly promoting entrepreneurship, when they were lower. I think the most important thing for my colleagues to think about during this debate is on the issue of process. Quite frankly, we are being given some direction through this amendment to raise taxes. We are being told the intent is to raise them on the very wealthy, but that is not how the budget resolution works. The budget resolution just says to the Budget Committee, raise X number of dollars based upon what that budget says. We decide where that is going to be raised. Anybody who believes that by voting for this amendment, they are putting the burden on just the wealthy, for instance, are sadly mistaken. What it takes to get a bill out of the Senate Finance Committee is a bipartisan compromise, and just taxing one class of people is kind of a nonstarter for our committee, if you believe in bipartisanship. In addition, if the issue of raising taxes just on millionaires is an issue, you need to remember you cannot just tax the wealthy. You confiscate all the income of people over $1 million, and you are going to run the Government for a few days. If you see that as a solution to our budget problems, you don't study the statistics, you don't study the impact taxation can have on the economy. Also, if it is the millionaires, just think in terms of the top 1 percent, earning about 27 percent of the income, paying 33 percent of all of the income tax coming into the Federal treasury. Once again, how much is enough for the top 1 percent to pay? They make 27 percent of all the income. They pay 33 percent of the taxes. Should they pay 50 percent? Pretty soon it gets to the point where maybe they ought to pay 100 percent of it all. But that is a nonstarter. There is not enough income there to take care of our problems. What does this high tax philosophy lead us to? It eventually leads us to taxing the common ordinary American to a greater extent than is good for the country, good for economic freedom, and obviously a discouragement to entrepreneurship. I believe I saw on the chart, the one the Senator from Arkansas had, does taxing higher tax rates or lowering marginal tax rates really help small business? That is probably based on the argument that every small business does not pay the highest marginal tax rate. We are not dealing just with what is the highest marginal tax rate; we are dealing with fairness between self-employed, sole proprietors, and their highest rate of taxation and the highest rate of taxation of corporations. So anybody who is suggesting we ought to raise the marginal tax rate above where it is now at 35 percent is being unfair to sole proprietors, self-employed people, compared to corporations. We should not have a penalty against small business in America. Regardless of the income of that small business, there should not be a penalty. When you have a 38.6-percent marginal tax rate, that is a 13- percent penalty on small business. It is unfair to sole proprietors. There is no reason individuals paying taxes in America ought to have to pay more than corporations. I am not arguing raising the corporation tax because we know what that does to our international competitiveness. That hurts our international competitiveness because we have high cost of capital. But I am arguing for fairness between corporations and sole proprietors, self-employed people, people who scrounge to get money to invest. They don't have stockholders. They can't go to the bond market like corporations can. They have to raise their capital. They live relatively moderately and maybe even low income throughout their livelihood to reinvest their earned income, to expand their business, to create jobs. Why do we want to penalize them? That is basically what this business of taxing the wealthy is all about. There isn't enough wealthy in this country to do everything they want to do on the other side. Eventually it filters down to hurting the middle class. We have to protect the middle class. What we are doing is talking about lower rates of taxation, protecting working men and women from having their resources confiscated by government. I urge we defeat the amendment.

Mr. GRASSLEY. Yes, I do want to speak.

Mr. GRASSLEY

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

Mr. GRASSLEY. Mr. President, these Senators speaking remind me that ``made in America'' has always been a badge of honor, a badge of distinction--``made in America.'' It shows that America can compete. America has competed and America has won over the long, long haul. We have been hearing from the defeatist wing of the Democratic Party, not from the wing of the Democratic Party that says the United States can compete and win and can even do it from a position of leadership. I am not prepared to be a defeatist in international trade. I intend to wear that badge ``made in America'' with honor, as it has been for decades and decades. I think we need to remind the Senate now, after 24 hours on this legislation, what we are facing. It looks as if we have from here until hell freezes over to get this legislation passed. Already we are in a situation where the United States is suffering as a result of inaction by Congress. People need to remember that Senator Baucus and I worked very carefully to put together a bill that would go through this body very easily, and now we are seeing it stalled with things that may be legitimate issues. But while people are complaining about jobs going overseas, this bill that was voted out of committee 19 to 2 is being stalled. In the process of stalling, U.S. manufacturing is already facing a 5- percent surcharge by Europe, to the point where it is not a case of just paying 5 percent more. It is probably the case with a lot of our products that our products might not even be competitive and we are not selling. When you can't sell, people are laid off. So I think instead of worrying about situations that you want to help for the future, we have an opportunity to keep jobs that we know exist today, will continue to exist, and are only in jeopardy because of sanctions being put on our products by Europe. We might be facing an amendment on overtime coming up shortly. It is one thing to worry about people getting overtime, but if you don't have a job, you can't even get overtime. So we have to get back to the basics. The basics are what this legislation is all about--maintaining the competitiveness of our industry, not going backwards. While this bill is being stalled by other issues that are very legitimate--and I have talked to the Senator from Connecticut about the legitimacy of his issue and also about some modifications he made to get this through--it is holding up a bill that came out of committee 19 to 2. Those two votes were not cast by Democrats against the bill. They were cast by Republicans. This bill should go forward to get rid of that 5-percent surcharge that we have on our products. In April it is going to be 6 percent, and in May it is going to be 7 percent. By the election it is going to be 12 percent. That is the basic issue before us. I also wish to address some of the things that Senator Kennedy said. I don't want to address them from my point of view. I wish to address them from the point of view of the intellectual wing of the Democratic Party. We heard from the political wing of the Democratic Party by Senator Kennedy. So I would like to refer to an article written by Robert B. Reich, Secretary of Labor in the Clinton administration, a Secretary of Labor concerned about the rights of labor, concerned about jobs. He also is an adviser to the Democratic candidate for President. He ought to be listened to. This is what former Secretary Reich had to say in an article, printed December 26: It's hard to listen to a politician or pundit these days without hearing that America is ``losing jobs'' to poorer nations--manufacturing jobs to China, back-office work to India, just about every job to Latin America. This lament distracts our attention from the larger challenge of preparing more Americans for better jobs. It seems to me that what Secretary Reich is saying to the political wing of the Democratic Party from the intellectual wing of the Democratic Party is we ought to be looking to the future, there are big challenges out there, and you should not spend all of your time haranguing about stuff that maybe you can't do a whole lot about. ``Most jobs losses over the last 3 years,'' Professor Reich says, ``haven't been due to American jobs moving anywhere.'' I will start that over again: Most jobs losses over the last 3 years haven't been due to American jobs moving anywhere. They have resulted from an unusually long job recession. Hopefully, that is coming to an end. It is, and that is my parenthetical comment. We can debate whether the Bush administration has done a good job, or the right things to accelerate a job recovery, but job growth eventually will resume-- Parenthetically, we know it is resuming-- as aggregate demand bounces back. Continuing to quote: It is true that U.S. manufacturing employment has been dropping for many years, but that's not primarily due to foreigners taking these jobs. Let me stop there. Senator Kennedy, do you realize the intellectual wing of your party says manufacturing employment dropping hasn't been primarily due to foreigners taking these jobs? Then I quote: Factory jobs are vanishing all over the world. Economists at Alliance Capital Management took a look at employment trends in 20 large economies and found that between 1995 and 2002, 22 million factory jobs had disappeared. The United States wasn't even the biggest loser. We lost about 11 percent of our manufacturing jobs in that period-- Wasn't most of that 5 years during the Clinton administration? [B]ut the Japanese lost 16 percent of theirs. Even developing nations lost factory jobs: Brazil suffered a 20 percent decline, China a 15 percent drop. What happened to factory jobs? In two words, higher productivity. Parenthetically, that is exactly what we have seen in the U.S.-- higher productivity over the last year and a half. Last month was the highest productivity in 50 years. You have to go back to July 1950 to have the productivity gains that we have had. Professor Reich goes on to say: I recently toured a U.S. factory containing two employees and 400 computerized robots. The two live people sat in front of computer screens and instructed the robots. In a few years, this factory won't have a single employee on site, except for an occasional visiting technician who repairs and upgrades the robots, like the gas man changing your meter. I suppose I could quote the whole long article, but there is one other thing I ought to say. The intellectual wing of the Democratic Party is advising everybody, but it is good advice for the political wing of the Democratic Party as well: We should stop pining after the days when millions of Americans stood along assembly lines and continuously bolted, fit, soldered, or clamped whatever went by. Those days are over. And stop blaming poor nations whose workers get very low wages. Professor Reich asks the question: ``Want to blame something?'' If the political wing of the Democratic Party wants to blame something for loss of these assembly line jobs, he says: ``Blame new knowledge.'' Well, isn't that something we expect in the evolving world--new knowledge and making use of new knowledge? He says here: The Internet has taken over the routine tasks of travel agents, real estate brokers, stockbrokers, and accountants. With digitization, high-speed data networks and improved global band width, a lot of back-office work can now be done more cheaply abroad. Last year, companies headquartered in the U.S. paid workers in India, China and the Philippines almost $10 billion to handle customer service and paperwork. Well, this article is probably summed up in a subheadline in the middle of the article, which says: ``Remember the elevator operator? Jobs become extinct.'' Isn't that true? But in the Senate we still have elevator operators running automatic elevators, pushing buttons that somehow a Senator doesn't have time to push or something. What does the political wing of the Democratic Party want? Do they still want people making buggy whips when we don't have buggies anymore? Times change, but the defeatist wing of the Democratic Party has lost confidence in America. They don't think ``made in America'' is a badge of distinction anymore. There is one other reference I would like to make. When this issue was talked about on ABC News on February 22, we had these exchanges between George Stephanopolous, Senator John Edwards, and Senator John Kerry. I don't hear this complaining that I hear from the political wing of the Democratic Party from these three Democrats. I don't hear their suggestions for solving this problem having anything to do with the amendment of the Senator from Connecticut. So I am going to quote George Stephanopolous, as he has a short interview with these two candidates: Another big jobs issue has come up in the last couple of weeks, the issue of outsourcing. The very issue of this amendment. The chairman of the Council of Economic Advisers for President Bush got into a lot of trouble when he said that outsourcing is a plus for the American economy. We have been over that 100 times. But when you look at this issue-- He is asking Senator Edwards-- what can you do about it? Senator Edwards: This is a very complicated issue. OK, can we agree that it is a very complicated issue? If it is a complicated issue, I doubt if just President Bush is responsible for it or just President Bush is going to do anything about it. Anyway, he says: This is a very complicated issue. It has caused a whole group of things. One is--the thing that actually concerns me the most is that I worry that we are starting to lose our edge in science, math, and technology. China graduated about half a million engineers last year. We graduated 60,000 to 65,000. And since we are going to have the standard of living we have in this country, in fact we want to improve it, not make it worse. We always--it is going to be critical for the American worker to be more productive than other workers around the world. Then he goes on, after a short comment by George Stephanopolous, to say: We--training, education. We need better and stronger science and math curriculums, particularly in our early grades. We need to strengthen our graduate programs in this area. The other thing that we can--where we can have a real image is we ought to build broadband high-speed Internet out in every community in the next four years, because there are lots of parts of America where it is easier for these companies to do business in India and China because they have access, and they don't have that access in rural communities in a lot of America. Every one of us ought to be able to buy into that, but it seems that Senator Edwards is speaking for the intellectual wing of the Democratic Party, looking to the long view, education and training, not some short solution that probably won't work and might even do more harm than good. And then George Stephanopolous asks this question to John Kerry: Senator Edwards says the most important thing to do is to improve math and science education. Do you agree with that? Senator Kerry: It's one of the most important things to do. If you don't give the American worker a fair playing field to compete on, we're going to continue to be disadvantaged. I'll give you an example. China manipulates the currency. China does not enforce intellectual property laws. China and other countries have not allowed us to have fair access to the marketplace. Skipping down: Education, I mean that's not new. Education was the centerpiece of Bill Clinton's Presidency. It's the centerpiece of my proposals. There are a whole series of things that we can do. Here again the person who is following the advice of Robert Reich representing the intellectual wing of the Democratic Party is looking ahead. I do not see these people offering any of the political sound- bite type solutions that have to be used if we are going to solve this problem, which I would put in the category of the political wing of the Democratic Party that we have heard from this morning. I yield the floor.

Mr. GRASSLEY. Madam President, I move to reconsider the vote.

Mr. GRASSLEY. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. GRASSLEY. Madam President, I send an amendment to the desk and ask for its immediate consideration.

Mr. GRASSLEY. If it is OK with the Senator from Kentucky, yes, I will yield.

Mr. GRASSLEY. The obvious thing going on here is that my colleague from Iowa wants to go out of turn and jump ahead of the line. We have an agreement lining up amendments. We did this yesterday morning. The overtime amendment is in that line, and it is just a matter of waiting until that sequence comes and that opportunity is going to be there. That is the fair way of doing business around here. As the manager of the bill, I am going to make sure we do this in a fair way. I did offer an amendment to the Bunning amendment. That one part of the amendment that was just read is something that is very important to Iowa. We are going to have the largest wind energy generating project in mid-America in Iowa, if we can get the wind energy tax credit extended. This is an amendment that extends a lot of the provisions that have run out. Wind energy is one of those. This gives an extension to all of these extenders that have run out. One of those is for wind energy, which affects the entire country, of course. But one of the largest wind energy projects ever is going to be in Iowa. If we can get this wind energy tax credit extended----

Mr. GRASSLEY. I ask unanimous consent, without the Senator from Kentucky losing his right to the floor, if I could have 60 seconds to say where we are right now.

Mr. GRASSLEY

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

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of Calendar No. 43, S. 671.

Mr. GRASSLEY. Mr. President, I ask unanimous consent that all after the enacting clause be stricken and that the text of S. 671, as amended, be inserted. I further ask unanimous consent that H.R. 1047, as amended, be read the third time and passed; that the motion to reconsider be laid upon the table en bloc; and that S. 671 be returned to the calendar.

Mr. GRASSLEY. Mr. President, I would like to comment on a bill that has traveled a long and difficult journey to get to the floor today; S. 671, the Miscellaneous Trade and Technical Corrections Act of 2003, commonly called the miscellaneous tariff bill. In fact, this bill's journey began nearly 2 years ago. The Senate historically passes a miscellaneous tariff bill at the end of every Congress. The bill under consideration today was supposed to have been passed at the end of the 107th Congress. However, a markup scheduled for September 26, 2002 was cancelled, leaving the bill as unfinished business for the current Congress. Upon resuming the chairmanship of the Finance Committee, my intention was to complete unfinished business from the 107th Congress as quickly as possible. To that end we passed the bill out of the Senate Finance Committee by voice vote on February 27, 2003. It was hoped that early passage of this bill would pave the way for consideration of another miscellaneous tariff bill in the 108th Congress. But that was not meant to be. Traditionally, miscellaneous tariffs bills are non-controversial and pass the Senate by unanimous consent. Sometimes there are attempts to load the bill down with costly and controversial items, which is why we didn't produce a bill in the 107th Congress. That's also the reason this bill was delayed this Congress. Contrary to traditional practice, a few Senators insisted on adding unrelated and controversial provisions. Unless we agreed to add these controversial provisions, these Senators would not allow the full Senate to consider the bill. In effect, a few Senators have held this legislation hostage for months for their own parochial purposes. And that is truly sad and disappointing. I hope these members know that they have all but guaranteed the end to this process. This package contains many trade provisions, primarily duty suspensions, reductions and extensions, for products that are not produced domestically. This bill supports American factories and workers by allowing manufacturers to save money when they import these products. At this stage in America's economic recovery, we must give every opportunity to our manufacturers to reduce costs and pass the savings on to consumers. A product generally must meet three tests to be eligible for inclusion in a miscellaneous trade bill: first, it must be non- controversial and non-competitive, that is there can be no domestic producer who objects to inclusion of the provisions. Second, the product should be intended to benefit U.S. downstream producers, that is someone who utilizes the product in manufacturing. Third, the volume of imports and corresponding revenue loss should be relatively small. To ensure that the provisions in this bill met that this test, each provision went through an extensive vetting process including a public notice and comment period to ensure that they were eligible for inclusion in the bill. This process began during the first session of the 107th Congress. The bill also contains a number of liquidations or reliquidations for certain entries. The general rule for inclusion here is that the product entered the country under an incorrect duty rate due to Customs or other administrative error. These provisions allow those entries to enter the country at the correct duty rate. We also included in this bill a provision that extends preferences under the Generalized System of Preferences (GSP) to allow duty-free treatment for hand-knotted and hand-woven carpets. This provision is designed primarily to help the citizens of Afghanistan and Pakistan. I believe that allowing these products to be considered as eligible articles under GSP, will help beneficiary countries that have joined the United States in the fight against global terrorism. With respect to Afghanistan, which is rebuilding and looking for opportunities for its people, this provision is needed now more than ever. Another important provision in this bill corrects a mistake in the Trade Act of 2002, P.L. 107-210, that inadvertently and temporarily raised duties on Andean originating handbags, luggage, flat goods, work gloves and leather wearing apparel under the Andean Trade and Preferences and Drug Eradication Act, ATPDEA. This provision retroactively reinstates the reduced duty treatment for eligible products that entered the United States from August 6, 2002, the date ATPDEA was signed, and the time in which these products met the import sensitivity test, several months later. It provides for continued duty- free treatment for these eligible products, which was the intent of the Trade Act. I am also pleased that the bill includes the Emergency Protection for Iraqi Cultural Antiquities Act of 2003. I introduced the EPIC Antiquities Act of 2003 to authorize the President to impose immediate emergency import restrictions on the archaeological and ethnological materials of Iraq. The purpose of this bill is simple--to close a legal loophole which could allow looted Iraqi antiquities to be brought into the United States. If Congress does not act to provide the means for establishing an interim ban on trade, the door may be opened to imports of looted Iraqi antiquities into the United States. Already the press has reported allegations that European auction houses have traded in looted Iraqi antiquities. The last thing that we in Congress want to do is to fail to act to prevent trade in looted artifacts here in the United States. Also included in the package is a provision that simplifies the U.S. Customs Service's ability to process commercial importations, thereby resulting in increased efficiency and productivity for both Customs and the trade community. I want to point out that the provisions I have covered are not the only important provisions contained in this bill. This bill makes a number of other technical yet meaningful changes to our trade laws. While I am very disappointed some members have delayed the passage of this bill, and even tried to kill this bill with controversial provisions, I would like to thank my colleagues who respected the traditional rules governing this important legislation. I appreciate their support.