Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Those are things that are being discussed. I think it is fair to say it ought to be OK if I don't have an answer to that right now for the simple reason that yesterday, and even earlier today, we tried to get agreements from the other side on some votes, and we weren't able to get them. But those are things that are eventually negotiated, as the vote we just had, and the same thing may happen on other amendments.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Grassley-Baucus amendment at the desk be agreed to and that the bill, as amended, be read the third time.

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Senate now proceed to the consideration of Calendar No. 51, H.R. 1047, the House companion bill.

Mr. GRASSLEY

Mr. GRASSLEY. That is what my Blackberry said 5 minutes ago.

Mr. GRASSLEY. I suggest the absence of a quorum and that it come off of our time.

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

Mr. GRASSLEY. Madam President, first of all, the Senator from Connecticut has been right in the sense that we have raised some concerns, and we are working with him. He has made some modifications. We are still hearing about some more concerns. I have expressed two of those already. I would like to express another concern that I have heard. Yes, it preserves jobs in America if there is not outsourcing of service jobs that are involved. But this is a legitimate concern on our side: The extent to which there might be retaliation by countries that outsource some things to the United States. That goes on as well. We want to make sure if we are losing jobs, we don't have a greater loss of jobs in retaliation for Americans who are already employed by a company outside the United States which is using the services of American people in America. These are concerns that need to be addressed. These are things that will be brought out in debate, and it may be possible to work on continuing modifications of the Dodd amendment so that hopefully we can get it passed without a great deal of opposition. At this point, we are not prepared to vote.

Mr. GRASSLEY. Mr. President, I think maybe I answered too casually when I answered the Senator's question--that maybe I have a feeling there were not legitimate concerns by people on my side. There are a couple legitimate concerns. No. 1, the Senator's amendment does have some mandate on States. That creates a lot of concern--I will bet not only on my side but on his side as well. That is a very philosophical point of view of the impact which we make in the Senate on 50 States, and how many subdivisions I don't know. The other one is the extent to which this might lead to legitimate legal retaliation as a result of the Senator's amendment. That seems to me to be a reasonable, free, and fair trade consideration in any action this body takes. I want to make clear that it is not strictly political. There are some concerns about his amendment. I enunciated at least two.

Mr. GRASSLEY. Maybe I am being more candid than a Republican ought to be, but that is the way it looks to me. You have always been transparent with me. I think I ought to be transparent with you.

Mr. GRASSLEY. I will be glad to respond to that. Some Members on our side have not studied the amendment as much as they felt they should and have some questions about it. I would say there are two things. One is understanding completely the impact of your amendment, which obviously is a legitimate concern. The other is that kind of makes a determination whether some Members on our side would want to take some action, maybe with an amendment to the amendment. That decision has not been made. My guess is that decision is not going to be made today. That decision will be made tomorrow.

Mr. GRASSLEY. I move to reconsider the vote.

Mr. GRASSLEY. Madam President, I feel as if I owe that to the Senator from West Virginia because I already made arrangements for him to speak before we completed this agreement.

Mr. GRASSLEY. Madam President, I ask the following unanimous consent request. We have perfecting amendments that have been cleared on both sides. Therefore, I ask unanimous consent that the first-degree and second-degree perfecting amendments that are at the desk be considered and agreed to en bloc and that the motions to reconsider be laid upon the table; provided further that the committee substitute be agreed to and considered as original text for the purpose of further amendment. I further ask unanimous consent that the next first-degree amendments in order be the following: a Senator Hatch and Senator Murray amendment on R&D, with a Bingaman second-degree amendment which is relevant to the first degree; then Senator Dodd dealing with outsourcing; then Senator Bunning and Senator Stabenow dealing with accelerating manufacturers' tax cut; and then the fourth amendment will be Senator Daschle or his designee.

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

Mr. GRASSLEY. Mr. President, I am happy to be, once again, on the floor with a very important piece of legislation. With the cooperation of the Democratic leadership of the Senate Finance Committee, Senator Baucus, we bring to the floor a bill that was voted out of committee 19 to 2. Senator Baucus and I always work together as much as we can--that is, most of the time--to bring to the Senate a bill that can get through the Chamber because as so many people who watch the Senate regularly know, the Senate, unlike the House of Representatives, can't function if it does not function in a bipartisan way. So we proceed, then, with this bipartisan bill: the Jumpstart Our Business Strength Act. If I refer to the acronym JOBS, it is jumpstart our business strength. Since March 2000, long before President Bush took office, the manufacturing sector has been under significant economic pressure. Obviously, that has affected manufacturing workers. A recent CBO study estimates that going way back to March 2000, an estimated 3 million workers have lost their manufacturing jobs. The Congressional Budget Office attributes this job decline to the recession that began in November 2000 and the weak economy in demand that followed, part of it a result of September 11 and recovery not coming as normal as recoveries do. But we always tend to look at bad news. Bad news tends to make the front pages of the newspaper. Good news tends to make the back pages, if there is good news printed at all. There is good news on the horizon. That is, that new manufacturing orders, just this past December, surged to their highest levels in 50 years. They haven't been that high since July of 1950. And January was the sixth consecutive month that manufacturing activity expanded. In December, the manufacturing employment index grew for the second consecutive month, but the overall economy during that month added 1,000 jobs only. That was, of course, disappointing. But it wasn't disappointing from the standpoint of the manufacturing employment index growing because it seems that is the lagging sector of this recovery. I believe we are on the right path for a strong recovery. In fact, there has been a recovery underway since economists ruled that the last recession ended October 1, 2001. But when a recovery ends, it is not always visible. Of course, it is visible in most segments of the economy by very strong indices that are there to prove that. But one area that is not is manufacturing employment. We do now have those 2 consecutive months of increased employment. I believe we are on the right path to strong recovery, but we must do more to ensure manufacturing stays on the path of recovery. Manufacturing is so vital to the overall health of our economy, including follow-on sectors that benefit: the service and financial sectors. As government policymakers, which we are, we have to act to revitalize the manufacturing sector. Today we have some good news on manufacturing, and that is, the legislation we bring to the Senate, because it is going to help enhance employment in the manufacturing sector. As I have said previously, but I cannot emphasize too much, by a vote of 19 to 2 this bill was voted out of the Senate Finance Committee. Our bill is a bipartisan balance of domestic tax relief and international tax reforms, all meant to strengthen American business. Not as an end in itself, but as business strengthens, jobs are created. We are talking about jobs for Americans. Most importantly, this bill is revenue neutral. That is important, when we read in the newspapers about facing a budget deficit. This bill then will not add one dime to the Federal deficit. The JOBS bill will repeal the current FSC/ETI regime and use all the money from repeal to provide a 3-point tax rate cut on income from U.S.-based manufacturing. I emphasize U.S.-based manufacturing. We start those cuts phasing in next year. This 3-point rate cut is only for manufacturing and only for manufacturing in the United States. This bill will not help American manufacturers that want to manufacture offshore. I point out how our bill would approach this effort to help create jobs in American manufacturing and do it on American soil as opposed to the way that the Ways and Means Committee of the other body, and even other bills that will be offered in the upcoming debate, would face these issues. Our bill reducing taxes applies to all that manufacture in America. I wish to make clear to our colleagues this is a bill to help manufacturing in the United States. American companies that manufacture overseas will not get the benefit of the corporate rate reduction. Foreign corporations that want to come over here to America and build plants and employ people in this country would get the benefit. But this bill is about helping American manufacturing that takes place in the United States of America. I wish to differentiate the approach we use from the approach the Ways and Means Committee uses. Unlike the pending Ways and Means bill, and other bills that will be offered during the upcoming debate, these cuts apply to all who manufacture in America, regardless of size. So this is going to include sole proprietors, partnerships, farmers, individuals, family businesses, multinational corporations, and foreign companies that set up manufacturing plants in the United States. All of these enterprises will benefit as long as they manufacture. So the objectives of this bill are pretty simple. Three: Jobs, jobs, jobs, meaning jobs that pay money because of manufacturing in America. Manufacturing is important to all States, and I want to point out some benefits. For my State of Iowa--the figures I have are for 2001-- Iowa's gross State product was $91 billion. Of that, $19 billion or 21 percent of the State's wealth was created by manufacturing. From 2001 to 2002, Iowa's exports grew by nearly 15 percent. We shipped nearly $5 billion of goods out of Iowa, and that was during the year 2002. In Iowa, we have 222,000 jobs in manufacturing. So that shows how important it is for the United States to be competitive in manufacturing both home and abroad because of 222,000 jobs just in my State. Those kinds of export numbers translate into very good and lasting jobs at home. Many of our country's manufacturing jobs are dependent upon the current FSC/ETI international taxing regime. I have a map behind me that makes this very clear. It shows by State the jobs that are existing today because of the current FSC/ETI provision: South Carolina, 47,000 jobs; my State of Iowa, 35,000 jobs; California, 429,000 jobs; Texas, 262,000; New York, 215,000; Illinois, 156,000; Washington State, 107,000 jobs generated by FSC/ETI. As my colleagues probably know, FSC/ETI stands for Foreign Sales Corporation, extraterritorial income. This is what was determined to be contrary to our international trade agreements, and that is why we have this legislation before us because if we do not do something about this issue, these numbers of jobs that are dependent upon this legislation are in jeopardy because our manufacturing will not be competitive with our foreign competition. Of course, what this is all about is passing legislation that will be in agreement with our trade agreements and, consequently, still protect American manufacturing as the FSC/ETI has done over the last 25 to 30 years. FSC/ETI reduces the income tax on goods manufactured in the U.S. and sold overseas. FSC/ETI is critical to the manufacturing sector. It can reduce taxes on exports by as much as 3 to 8 tax rate percentage points. The nonpartisan Joint Committee on Taxation says that 89 percent of the Foreign Sales Corporation benefits go to manufacturing companies. Many of those companies are the largest manufacturing employers in the Nation. This reduced rate of tax on exports of U.S.-manufactured goods keeps our companies competitive in the international marketplace. It allows our companies to compete with the European Union countries, which happen to have a taxing system where they get a rebate on their value-added tax on exports. If we did not have the Foreign Sales Corporation, we would be exporting more of our taxes, making us uncompetitive with the European Community that has a different taxing system, value-added tax, that they do not export. Several years ago, the European Union filed a claim with the World Trade Organization challenging FSC/ETI as an illegal export subsidy. Hence, we are here repealing such an important provision because under trading rules, according to the decision, we cannot have a subsidy if it is contingent upon the act of exporting. The World Trade Organization ruled that the FSC/ETI is an illegal export subsidy and has authorized the European Union to impose up to $4 billion a year of sanctions against U.S. exports. The European Union has already started this because March 1, this year, was the date to do it. The sanctions start at 5 percent of the $4 billion, and they are going to increase 1 percent for each month if we do not repeal the FSC/ETI provisions. They are going to cap out at 17 percent. So by November, these sanctions will be 12 percent. How are we going to compete when the tax benefits that were supposed to level the playing field are not only used, but the European Union, in a legal way under our trade agreements, is levying sanctions. Just as the United States when the European Union lost a case on our beef--they did not take our beef--we leveled sanctions against European products that are coming into this country, all in a legal way but not necessarily in the best way to conduct international trade. So eventually, these sanctions are going to get up to 17 percent, and at that point the European Union will review the effectiveness of the sanctions, and further increases are possible. The European Union has been consistent in its message, that the FSC/ ETI must be repealed; the same way that we were insistent upon Europe and we won a case in the World Trade Organization that they take our beef. This is a serious threat against American manufacturing, and Europe knows where to hit us. One of those is agricultural products, plus paper products, and also a number of important manufacturing industries, and they are hitting us right now in our soft underbelly. These sanctions are going to undermine the economic recovery that is underway, as I indicated before--underway with 2 months in a row of a positive upturn in the manufacturing index. So I believe it is important for the United States to fulfill its obligations under our trading rules. Now, it so happens that we win a lot more cases than we lose, and it also is true that the United States has been a leader--in fact, the entire world recognizes us as a leader, and they wait for us sometimes--in reducing trade barriers around the world. We have shown leadership for the last 60 or 70 years in this area going back to the reciprocity agreements of the 1930s of reducing trade barriers. As we expect Europe to import our beef when we win a case, it seems to me that we must show leadership in complying with these rules. What the World Trade Organization is all about is to bring the rule of law to what would otherwise be a jungle of international trade. That is because we get more business activity when there is predictability and understanding of how we are going to do business. Just as that is true in our domestic policy for business expansion, it is true in international trade; if there is predictability, we will get more business expansion around the world. Domestic law has made that possible within the United States. We need to support a regime that does the same thing in international trade because we have seen under that regime of rule of law in international trade for the last 50 or 60 years the expansion of the world economic pie. We are not talking about something that is just good for the United States. It is good for the United States. But we are talking about something that is good for the entire world. We have a growing world population. If you don't have a growing world economic pie, there will be less for more people and less for more people means political, economic, and social instability, and chaos. So we have seen under this regime of rule of law in international trade that the world economic pie has grown tremendously, and to a great extent because of international trade. The United States has led the way. We need to continue leading the way. There are some lobbyists who are suggesting this is no big deal, this doesn't have to be done now, it can be done tomorrow, it can be done next year, and somehow these sanctions don't mean anything. They do mean something because they are going to make our products uncompetitive and then we can't sell. If these were put on John Deere tractors in Waterloo, IA, one-fourth of the jobs could go. One-fourth of the jobs at John Deere tractor in my home State are related to trade. But we do have to abide by the rule of law in international trade unless we want chaos, unless we want the jungle. These lobbyists say sanctions don't matter. They argue: After all, sanctions only start at 5 percent. They would say: There has been a decline in the dollar. That is going to take care of that problem. With a decline in the dollar, add on 5 percent, no difference. But I will bet these lobbyists who are spreading this word that Congress doesn't have to act don't represent anybody--any workers or any firms--on this retaliation list. But for those industries that I have already talked about, and there are a lot more, sanctions do matter because they will not be able to export if they can't compete. Five percent right now, and for sure 17 percent a year from now, is going to make a big difference. In regard to the lower value of the dollar against the euro, that somehow merely restores the status quo of the 1990s for a lot of American companies so they can export more. The recent decline in the dollar helped these companies regain lost market share in Europe, and we have lobbyists saying they ought to be back in that position that they were in just a year ago, not being able to sell because of the high cost of the dollar? Why would Congress want to deprive these companies and their employees, where these are good American jobs, of the opportunity to export? That is beyond me. These are good jobs, because statistics show conclusively that jobs connected with exports pay 15 percent above the national average. Besides, there is no guarantee that the value of the dollar will not go up tomorrow because our official policy is a strong dollar policy. Our official policy is also to let the marketplace decide the value of the dollar. But if it does go up, it is going to leave American exporters in even a worse situation than they are today with that 5 percent and next month 6 percent. It is plain wrong for us in Congress, when we can do something about it--and this bill does something about it--to gamble the future of these American working men and women on the volatile international currency market. There is another fancy suggestion from these high-paid lobbyists, that all we have to do is cut a Government check to these U.S. exporters that are hurt by the sanctions. That suggestion is just as stupid as the previous one. First, it is likely that the World Trade Organization would find such a scheme to be a prohibited export subsidy anyway, just as they originally did. That would continue the cycle of noncompliance and retaliation. These birds don't believe in the rule of law on international trade. They like the jungle of international trade. In fact, most lobbyists like a jungle because they are the ones who think they are smart enough to sort it out. We are not going to allow that jungle to grow just so lobbyists can prosper. But this scheme, as the original suggestions, is unworkable. It would probably require a new government bureaucracy to administer. You know what. This JOBS bill is about creating manufacturing jobs, not jobs in a government bureaucracy. It has also been suggested that the U.S. Government could simply pay compensation to some foreign government rather than comply with our international trade obligations. I suppose, in the era of foreign aid, you might say that suggestion is theoretically possible. But it is not very realistic. Under the World Trade Organization dispute settlement system, there is only one way, just one way, a nation can bring itself into compliance with an adverse ruling, conforming with the WTO-inconsistent measure, and that is with a report adopted by the dispute settlement body. That would dictate that as long as FSC/ETI is not repealed, the United States remains in violation of these international trade commitments. So paying compensation to some government, in my reading of the obligations under the trade commitments, is not going to bring the United States into compliance. Furthermore, it has to be remembered that compensation in lieu of retaliation is only a viable option if the prevailing parties agree. I think that is something the European Union is not inclined to do. Even if it were possible, I am not going to suggest on the Senate floor that the United States taxpayers ought to be writing a check to the country of France. I, for one, don't think Congress is going to buy these arguments that we don't have to deal with this now and there are other ways around. These proposals are shell games expounded by Washington lobbyists trying to confuse Congress, confuse the public, and thus avoiding a real permanent solution to a longstanding FSC/ETI dispute with the European Union. This is not realistic. They will not stop the imposition of European sanctions. People suggesting these alternatives ought to face facts. Gambling America's exports on the volatile currency market won't work. Cutting government checks to U.S. exporters won't work. Transferring taxpayers' money to foreign governments such as France won't work. These are shell games. There is only one real solution for American workers. This is something that has been worked out in a bipartisan way for the Senate to consider by the Senator from Montana and this Senator. This is the JOBS Act that is before us, and the best solution is to pass the JOBS Act now. I hope my Senate colleagues and our counterparts in the House of Representatives will act on the Finance Committee's FSC/ETI legislation. It is all of our responsibility--Democrat and Republican alike--to pass this bipartisan legislation. If we, as a body, fail to act, American workers will suffer with fewer jobs, and the United States will lose an opportunity to rejuvenate and remain globally competitive in the mainstay of its economy--the manufacturing sector of our economy. Our majority leader, Senator Frist, should be commended for bringing this bill to the floor so that the Senate can act now to end sanctions before they seriously damage the economy and before they damage our transatlantic relations. The bill needs to be passed so we can end the sanctions as soon as possible. Repealing FSC/ETI raises around $55 billion over 10 years. Eighty- nine percent of it comes from jobs in the manufacturing industry. If that money is not sent back to help the manufacturing sector to be competitive with Europe, FSC/ETI repeal will be a $50 billion tax increase on manufacturing. The old rule of economics is if you tax something more, you get less of it. So there is going to be less jobs in manufacturing. I think we can all agree that a $50 billion tax increase on manufacturing will not stimulate job growth in that sector. That is why the JOBS bill passed by the Finance Committee uses every penny from the FSC/ETI bill repeal. To give this 3-percentage tax rate cut on all income derived from manufacturing--that is done in the United States-- there is no benefit to American companies manufacturing overseas. There would be a benefit to international companies that come here to create jobs in America in manufacturing. Our 3-point rate reduction is not export contingent under the World Trade Organization rules. Unlike the FSC/ETI regime, this 3-point rate reduction applies to goods manufactured in the United States and which are sold domestically in the United States, or if they are exported for sale outside the United States. If you make it here, we cut your taxes regardless of whether you are a U.S. or foreign corporation--bringing those manufacturing jobs, then, to the United States of America. The JOBS bill starts phasing in the 3-point percentage tax rate reduction immediately in 2004. If you look at this next chart behind me, you see on average, European Union manufacturing income is taxed at 21 percent but U.S. manufacturing income is taxed at 24 percent. As you can see, the 3- point rate cut on manufacturing income in the JOBS bill keeps us even with the European Union on manufacturing tax burdens. We included in the JOBS bill several international tax reforms that are aimed specifically to help manufacturing. The whole JOBS bill is slanted towards manufacturing. Flaws in our international tax rules seriously undermine America's ability to compete in the global marketplace. International tax reform, like doing something with FSC/ ETI, is long overdue. Our current system is built upon a framework dating back to President Kennedy in the early 1960s. We clean up problems that cause foreign earnings to be double taxed by the United States and the foreign countries where those profits are earned. We reform subpart (f) to ensure that active foreign businesses are taxed when the money is brought home and not when the United States companies are locked in battle with foreign companies that do not pay taxes. You will hear a lot of noise in the upcoming debate about these international provisions. But let me tell you right now that the international provisions in our bipartisan JOBS bill are targeted to benefit U.S. manufacturing companies. Members may be surprised to learn our international provisions can actually harm a company's expansion in the United States of America where we want companies to expand so that jobs are created here and so that those jobs are not exported. It is a simple thing to do. Just fix our tax laws so that jobs are created in America as opposed to overseas. We will have plenty of opportunity to talk about that issue in the upcoming debate. In an era of expanding global markets, in an era of falling trade barriers, and in an era of technological innovations that melt away traditional notions of national borders, it is critical that our international tax laws keep pace with these new business realities. We also include a provision for manufacturing that is not making money right now. We allow a 3-year net operating loss carryback. This will allow companies to reclaim prior taxes paid. This will give them cash liquidity to weather the current storm. I understand there may be some effort to expand this 3-year carryback to a 5-year carryback. The JOBS bill also includes the Homeland Reinvestment Act sponsored by Senator Smith of Oregon, Senator Ensign of Nevada, and Senator Boxer of California. That is a bipartisan group to which anybody ought to be drawn. This subpart of our JOBS bill, which is sponsored by Senators Smith, Ensign, and Boxer, is intended to encourage companies to bring their foreign earnings back to the United States by temporarily providing the reduced rate of tax. This bill will tax foreign earnings at 5\1/4\ percentage points instead of the 35 percent that would normally apply. Advocates of this Homeland Investment Act claim that those moneys will be invested overseas instead of the United States, if we don't tax them at a lower rate than the 35 percent. These colleagues view this measure as I do, very much stimulative to the economy and helping with our unemployment problem. One last point I will make is that our bipartisan manufacturing tax bill is revenue neutral. I don't think it does harm to emphasize, sometimes we pass a tax bill and less money comes into the Federal Treasury and we might have a bigger deficit. This bill does not do that. Not one dime is added to the current deficit. Thank God, the President has been in the forefront of this, asking for a bill that would be revenue neutral. We have delivered for our colleagues who believe in revenue neutrality of tax bills. We have delivered for the President. The JOBS bill provides over $112 billion in business tax relief which is paid for by shutting down tax shelters and by closing abusive loopholes. Let me emphasize that because people are reading about this every day in the newspaper, companies setting up shell corporations overseas, with nothing but a cabinet and maybe an address, a post office box, for the sole purpose of avoiding taxation. They dash and stash the cash, whereas we have all these other patriotic companies staying in America. There are other schemes I will not go into, but we deal with those schemes in this legislation, bringing in additional revenue that can be used, then, to make our international taxing regime more fair and do it in a way that creates jobs in the United States of America, not overseas. It is a fact of life with most bills that come to the Senate, there is never complete agreement on an approach. There is always 20 percent on the right and 20 percent on the left that might disagree with something that comes to this Senate. What this Senate is all about is moving things to the center, to get a consensus to get something passed. In the process, there is never complete agreement. For instance, some Members did not favor including this Homeland Reinvestment Act which Senators Smith, Ensign, and Boxer have written. We have included it in this bill. So we may have votes on that. Our bill contains a temporary haircut on the rate reduction some Members would like to remove and others would like to retain. We will probably have that divisive issue before the Senate. Some Members prefer a reduction in the top corporate rate in place of all these international tax reforms and manufacturing rate cut deductions. Now, that is a more simple approach than we have, but this approach misses a couple of factors. First, the top level rate cut would only go to the biggest corporations of America. It would not go to the local family-held S corporation or partnership as our finance bill does. We think we ought to help small business in the process. Second, FSC/ETI repeal will not create a large tax increase on the service industry. That repeal will be a $50 billion tax increase on manufacturing. If we redirect the FSC/ETI repeal money to an across- the-board corporate cut, as a couple of my colleagues will offer an amendment to do, then the manufacturing sector will be the revenue offset for the services sector of tax cuts. It is a fact that we have a struggling manufacturing sector and I don't think a sector of our economy that is slowly recovering ought to be hit with this sort of a revenue offset for the benefit of the service industry. We have to face what is the current crisis in manufacturing. Working families are living in financial fear. We owe a secure future to these hard-working men and women. For them, we have a secure future. Their employers must be able to compete and thrive both at home and abroad. Then their future is secure. Their employers cannot thrive if these companies are burdened with excessive tax rates at home and international tax barriers abroad. Our bipartisan JOBS bill presents the best opportunity to end that burden and to make a downpayment on putting Americans back to work. Let's hope the Senate gets to work, puts American manufacturing back in the game. That is why I am here, urging my colleagues to support a bipartisan JOBS Act and cooperate to get this bill on the President's desk. In closing, I have one message for the 39 Democrats who are not on the Finance Committee and may not see this, other than just a piece of legislation voted out of the Senate Finance Committee. I say to the 39 Democrats who are not on the committee, they have an opportunity to help us very quickly move a bill to the other body, very quickly help us pass a bill to help manufacturing, help us pass a bill to create jobs for American men and women in manufacturing, which is slow to recover. They have an opportunity to help with bipartisanship in the other body because there are bills in the other body, but they are short of the number of votes they need. Part of the reason is maybe the other body does not see the need to pass a bipartisan bill as we do in the Senate. There are Republicans and Democrats in the other body who are working on a way to do this, a way that is not far removed from our legislation. If we have a real strong vote over here and we get this done quickly, we might be able to help the House of Representatives pass some legislation and to do it in a bipartisan way. Helping to pass legislation in a bipartisan way is not a bad goal for Senators, since we practice that. Also, those 39 Democrats will have an opportunity to help the Senate Finance Committee do something we want to do because we can get it done in this bipartisan way and it is not exactly the way the White House wants us to get it done. Here again, we share governing responsibilities with the President and with the House of Representatives, and so Democrats working with Senator Baucus and myself, Democrats who are not on the committee, can help get a bill to the President, help the President to see maybe the aspects about this bill they do not like, they ought to take a second look at to see the good work, and help get a bipartisan bill through the House of Representatives. I don't say that in a defensive way because I don't know of any reason the other 39 Democrats do not want to help us accomplish what we want to accomplish. What I have just said is not for that purpose, but only said for the purpose of those Democrats who are not on this committee, there is a larger aspect than just the language of the legislation that is before the Senate. It benefits them for a lot of goals they want to accomplish that sometimes cannot be accomplished as a minority part of this body.

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

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I come before this body to state that I would object to any unanimous consent or other requests to address H.R. 2751, S. 1522, entitled the GAO Human Capital Reform Act of 2003, as amended. The bill would, among other things, allow new authority to the General Accounting Office, GAO, to modify its personnel and workforce practices to allow greater flexibility in determining pay increases, pay retention rules, and other compensation matters. I am objecting to this bill because, at this time, I am evaluating a number of matters involving the operation and management of the General Accounting Office and one or more of its offices.

Mr. GRASSLEY

Mr. GRASSLEY. I support the amendments offered by my colleagues from North Dakota and Oklahoma. I was disappointed that, despite our best efforts, we were unable to clear the full text of the Conrad-Nickles amendment. But for an objection that was unrelated to the purpose of the Conrad-Nickles amendment, the highway bill would contain the full agreement between Senators Baucus, Nickles, Conrad, and me. I want to assure them that I fully intend to make good on the promise made in the committee markup. As the legislative process moves forward, I pledge that I will continue working to address their concerns.

Mr. GRASSLEY

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

Mr. GRASSLEY

Mr. GRASSLEY. 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 SPEC Joshua L. Knowles of Sheffield, IA who courageously gave his life for his country in Operation Iraqi Freedom. He is the 10th Iowan to be killed since the start of hostilities in Iraq. My deepest sympathy goes out to his parents, Sandy and Les, and his two sisters, Breanna and Michelle, as they deal with their loss. SPEC Joshua Knowles graduated from Sheffield-Chapin/Meservey-Thornton High School in 1999 where he played football. He enlisted in the Iowa National Guard 1133rd Transportation Company out of Mason City, IA, on February 18, 1999 and served as a motor transport operator. Specialist Knowles was killed on Thursday, February 5, 2004, when the cab of the military cargo truck he was riding in was hit by mortar fire as the convoy passed through Checkpoint 6 at the Baghdad International Airport. He was in the cab with fellow Iowan, SPEC Peter Bieber of Nora Springs, who was also injured in the attack. Specialist Knowles will be honored posthumously for his patriotic service to his country with the Purple Heart as well as the Bronze Star, which is awarded for members of the military who distinguish themselves ``by heroic or meritorious achievement or service while engaged in an action against an enemy of the United States''. In a press statement, Specialist Knowles' family recalled a shirt that he had sent them from Iraq. The shirt says, ``U.S. Soldiers Never Die, They Just Take Cover Until the Next Mission'' which they said exemplified his attitude toward military service. We can all be proud of this exceptional Iowan and I know he will be greatly missed by all those who knew him. In giving the ultimate sacrifice for his country, Specialist Knowles showed himself to be a true hero and patriot. I again want to express my sympathy for his family and my gratitude for his courageous service.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, is my great honor and pleasure to be acquainted with Duane Halverson. In his 33-year career with Land O'Lakes, he has helped sustain agriculture, independent producers, and local economies through his dedication and commitment to rural America and the cooperative way of doing business. Through his leadership, farmers across America now control a powerhouse supplier of agricultural inputs--feed, seed, crop nutrients, and protection products as well as state-of-the art technical advice and expertise. Duane learned his love of agriculture and the people who work in it from growing up on a family farm near Eagle Grove, IA. Like most farm kids, Duane was active in 4-H and FFA. He earned a bushel full of ribbons from showing pigs and calves, and his 4-H projects focused on helping improve his dad's hog operation. Through 4-H and school, Duane also began honing his leadership skills. He was elected president of the Webster County Boys' 4-H Clubs, and during his senior year at Eagle Grove High School he was chosen Mr. Future Business Executive of 1963 by the Future Business Leaders of America. It was in High school that he met his future wife Mary Voigt. They now have two sons, Christian and Nicholas, and grandson, Jon. After high school, he headed to Iowa State University where he earned his bachelor's and master's degrees in agricultural economics. In 1970, Duane was hired by Land O'Lakes as a corporate planner. It was there where his illustrious career began. In 1978, he was named vice president of the petroleum division--the youngest vice president in the company's history. He rose through the ranks, heading up feed, seed, agronomy, international development and member services. By 1993, he was executive vice president and managing Land O'Lakes combined ag. services and dairy foods businesses. During his 5 years at the helm, total sales of Land O'Lakes doubled. By the time he retired in December last year, Duane had helped build one of the most dynamic cooperative business systems in the world. Duane has dedicated his life and his career to the agriculture industry. His legacy is a strong ag-supply cooperative system owned and controlled by those who do business with Land O'Lakes. Through his leadership, America will continue to be the bread basket of the world. All of this is why it has been an honor for me to share his accomplishments today. We thank Duane Halverson. He deserves it.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs be authorized to meet on Thursday, February 12, 2004, at 9:30 a.m., for a hearing entitled ``DOD Contractors Who Cheat on Their Taxes and What Should be Done About It.''

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I spoke, similar to what I am going to say today, last week on the floor of the Senate because I heard these very same considerations and very same criticisms of the Senate Finance Committee bill at that particular time. And at that particular time, I thought for Senators who don't have time to read legislation, or be advised by their committees or by their staffs on what the committee might be trying to accomplish--I ought to take time to inform colleagues about what my committee actually did. I can tell by the debate today that either no one was paying any attention to my explanation last week or they forgot or they didn't care, because I am hearing the same criticism this week. I want to state why that criticism is unfounded, and I want to say to my colleagues that what we are doing in this legislation is following precedent and making sure that money that ought to be in the trust fund is in fact in the trust fund, and that any sort of exemption we have is to make all those exemptions and/or subsidies perfectly consistent. I have found the unfounded criticism of the legislation that has come out of my committee falling into two categories: First, the general fund money is going into the trust fund. In other words, nonroad- related money is going into the road fund and the highway fund, the trust fund, the transportation fund, whatever you might want to call it. Second, the Senate Finance Committee has made changes that are in fact not legitimate changes but are gimmicks. Let me respond to those. This response is not much different from what I would have stated last week. In response to the argument that general fund money is going into the trust fund, under the Finance Committee amendment no general revenue is transferred to the highway trust fund. We keep hearing this incorrect allegation. I encourage the critics to read the Finance Committee title of the transportation bill. Under the Finance Committee amendment, the highway trust fund will retain more excise taxes. It is not general fund revenue. That is excise taxes. And excise taxes go into this trust fund. We accomplish this by eliminating the partial exemption for ethanol-blended fuel. Ethanol-blended fuel users will now pay the full excise tax and the trust fund will receive the money. The benefit will be taken as a tax credit against the general fund. And just to verify that this is a totally consistent policy, this is exactly as all other energy production incentives are handled. Likewise, the trust fund, as a second source of revenue, will retain the excise taxes collected from certain users, such as exemptions that are given to State and local governments. Those vehicles use our highways, use our transportation systems; should they not be paying taxes? Should that money not be going into the road fund? Under the Finance Committee amendment, the refund is not charged to the highway trust fund, so that every mile that a city of Des Moines vehicle puts on, that money would go into the road fund, just like the gas tax I pay for the car I drive on the highways in the State of Iowa. Again, this means, then, that the trust fund retains more of the excise taxes. So let's be clear. The Finance Committee amendment does not transfer general revenue to the trust fund. The second argument is that we have used accounting gimmicks. We hear the allegations that the Finance Committee is doing this many times on the floor of the Senate. It is an unfair, incorrect allegation. What the Finance Committee did in our amendment to this transportation bill was to ensure that the trust fund keeps more of excise taxes that should actually be in the trust fund and should be spent on our transportation system. The Finance Committee also recognized that the trust fund should earn interest on its balance. You know, just like we are telling our senior citizens all the time, that surplus in the Social Security payroll taxes coming in, that is not being paid out currently, is invested in Treasury bonds. The interest on that is accumulated and accounted to the Social Security trust fund. So doesn't it make sense to ensure that any surplus in the transportation fund--and there must be some surplus to cover shortages after September 11 when people didn't drive as much and not as much road tax money was coming in--for items beyond what we can plan for needs to be accounted? That surplus then earns interest. That hasn't been accounted for in the highway fund. It now will be. These changes align trust fund receipts with spending purposes. There are policy initiatives that burden the highway trust fund that have nothing to do with highway policy. We are going to unburden the highway fund. These policy initiatives have, in fact, reduced highway trust fund receipts, money that should have been available to build highways, not available because of exemptions. We accommodate those exemptions. Accommodating an exemption, consistent with good accounting practices, is not a gimmick. The effect is that these policy initiatives are carried in the general fund where they belong. I heard one of my colleagues'--Senator McCain--harsh criticism of the Finance Committee. Senator McCain's committee, the Commerce Committee, approved new spending of $7 billion in its programs. The Finance Committee didn't question the Commerce Committee's needs and, without reservation, the Finance Committee found a way to fund the needs of this specific committee doing their legitimate work. The Senator from Arizona legitimately put a burden on the Finance Committee, and we accepted that responsibility within our jurisdiction, within our power, within our responsibility. We bore the Commerce Committee's burden. Now, after doing their work, the Finance Committee is criticized for what it did. It is easy to put burdens on others. It is easy to criticize those who did the heavy lifting. It is a lot harder to find ways to do the heavy lifting. But that is not their responsibility. They did what they needed to do under the responsibilities of that committee for this transportation bill. I find no fault with what they have done, and I assumed the responsibility as chairman of the Finance Committee, working with my 20 members, to make sure the money was available. This isn't just because that is something I assumed. This is something that last summer the leader of the Senate, Senator Frist, asked us to do. He got members of the Commerce Committee, the Banking Committee, the Finance Committee, and the Environment and Public Works Committee together and said that we needed to find something, a common ground we could agree on or he didn't want to bring this bill to the floor. That was last summer. We didn't have time last year to get it done. We extended it until February 29, but as far as I know, that same collegial assumption of responsibility to produce good transportation policy is still in effect. The three committees decided what those programs should be and the Finance Committee, the committee I chair, met our responsibilities. Let's deal with reality for a second. As the cloture vote shows, the will of the Senate is to provide resources at the levels provided by these three authorizing committees. The Finance Committee did the job and provided funding at the outlay level. The Finance Committee preserved its role by maintaining the importance of the trust fund. A week ago, I spoke to these points. I asked the critics, in light of where the Senate was on the numbers, how would you fix it? We have a few vocal people throwing rocks at this bill. None of the rock throwers have accepted my challenge and answered the challenge. What would you do and have it be sustained by the Senate, particularly, as I stated last week and I haven't said yet this week, when we did have that vote of 79 to 21 last year where there was a clear decision made by the Senate to spend a lot more money on transportation. I was one of the 21 who felt we should not go that far, but how are you going to argue with the Senate making a decision, with only 21 dissenting votes, that the Senate is wrong? I still may think they are wrong, but that doesn't change my responsibility to provide the revenue to meet the needs of the three committees, and I assumed that responsibility. That is what we have done. It is easy to criticize. It is a lot harder to legislate and do the people's business, and that people's business I think is represented by that 79-to-21 vote last year and by the work of the three authorizing committees--the Environment and Public Works Committee, the Banking Committee, and the Commerce Committee--on how much money needs to be spent. It falls on my shoulders to do it. I have done it in a way that is consistent with the way excise tax money ought to be handled. It is done in a way that any subsidy the Congress thinks ought to be established is done. What do you want me to do? Last week I said if you don't like what we did, I am open to suggestion. I have one promise that I made to my committee, in the meantime, about the package that is before us. We followed the same policy that we did in the tax bill of 2001, and that was to make some changes in the payment of the corporate tax so that we would have a revenue- neutral bill coming before the committee. At least the leaders of the Budget Committee asked me and Senator Baucus during our committee's deliberation to not use that source of revenue, and we are committed to responding to that request. Beyond that, I think the bill voted out of the committee stands, and it is one that meets our responsibility to the Senate, to the leader who asked the four committees to work together, to the transportation needs of our Nation, and, most importantly, in this body doing something in a bipartisan way which, if it isn't done, this body does not have a product for the American people. I yield the floor.

Mr. GRASSLEY. Mr. President, I would like to say a word about tax provisions being included in non-tax titles. The Finance Committee has sole jurisdiction over tax matters. The reasons for this are rooted in the U.S. Constitution. As a committee, it is imperative that we weigh in on all tax matters. This is particularly true with the provision included in the EPW Committee Substitute. We have heard from the Justice Department that this provision, as drafted, could jeopardize law enforcement efforts against organized crime and money laundering. The provision did not have the benefit of committee review or process. I appreciate the sponsor's interest in this issue. But I would remind Members that the chairman and ranking member take the responsibilities of the Finance Committee seriously. When we go to conference, I also want to ensure that regardless of the fact that the provision is included in the EPW title, the tax-writers are given responsibility to oversee the provision.