Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Isn't this requirement the same standard that applies to the Federal Employees Health Benefits Plan?

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to introduce the Mexican Agricultural Trade Compliance Act. This bill directs the U.S. Trade Representative to retaliate against Mexico over that country's de facto prohibition on the importation of U.S.-produced high fructose corn syrup. I introduce this bill reluctantly. For months I have made it clear, through letters, floor statements, a hearing, and a trade roundtable, that if the Mexican Congress did not lift its illegal 20 percent tax on soft drinks containing high fructose corn syrup, I would be forced to consider introducing retaliatory legislation, such as this ``tequila tariff'' which also covers other agricultural products. We're at the end of our legislative session and there has been no action by the Mexican Congress. So, I'm faced with no alternative but to introduce this bill. Let me explain how we got to where we are today. Mexico was formerly the largest export market for U.S.-produced high fructose corn syrup. But since 1997, Mexico has engaged in a concerted effort to restrict U.S. imports of this product. Throughout this time, Mexico has consistently violated its NAFTA and WTO commitments. Let me give you a short history of Mexico's unjustified actions. In February 1997, Mexico initiated an antidumping investigation of U.S. high fructose corn syrup, followed by the imposition of an antidumping order the following year. The United States challenged Mexico's antidumping order under the NAFTA. On two different occasions, NAFTA panels determined that Mexico's actions violated its NAFTA obligations. The United States also challenged Mexico's antidumping order at the Wortd Trade Organization. On two separate occasions, the Dispute Settlement Body of the WTO held that Mexico's actions violated its international trade commitments. But Mexico continued to ignore its NAFTA and WTO obligations. In fact, Mexico went one step further and in effect threw gasoline onto the fire. On January 1, 2002, in a transparent attempt to evade the NAFTA and WTO determinations against it, Mexico imposed a 20 percent tax on soft drinks containing high fructose corn syrup. The intent and effect of this tax was to continue Mexico's antidumping order on U.S. produced high fructose corn syrup by other means. In April 2002, with its tax now in place, and in a continuous event with the imposition of this tax, Mexico lifted its antidumping order on high fructose corn syrup. These actions enabled Mexico to make the disingenuous claim that it had come into compliance with the findings adopted by the NAFTA and the WTO regarding its antidumping order. The effects of the import restrictions of Mexico's antidumping order continue, with even more egregious results. Because of Mexico's tax, U.S. exports of high fructose corn syrup to Mexico are now at almost zero levels. This is an extraordinary situation. Mexico lost under the NAFTA, and it lost at the WTO commitments, Mexico responded by imposing a de facto ban on imports of U.S. high fructose corn syrup. Mexico is not only violating its international trade commitments, but also causing significant harm for Iowa's corn farmers. Iowa's producers of high fructose corn syrup are suffering as well. I know of no other U.S. agricultural product that has been shut out of its largest export market for so long. The United States has worked diligently, and patiently with Mexico on this issue. U.S. Trade Representative Robert Zoellick and Ambassador Allen Johnson, our Chief Agricultural Negotiator, have put in countless hours trying to convince Mexico to come into compliance with its trade obligations regarding high fructose corn syrup. But still, the tax remains in place. My colleagues on both sides of the aisle, and in both the Senate and the House, have repeatedly contacted Mexican officials reminding them of Mexico's trade commitments with regard to this issue. But still, the tax remains in place. I too have worked hard, since the beginning, to try to convince Mexico to lift its de facto ban on the sale of U.S.-produced high fructose corn syrup. As I have mentioned, I've written letters to Mexican officials, delivered floor speeches, conducted a Finance Committee hearing, and held an agricultural roundtable, all in an effort to convince Mexico to lift its de facto ban on imports of U.S. high fructose corn syrup. During a hearing of the Finance Committee on September 23, I stated clearly that if the Mexican tax on soft drinks containing high fructose corn syrup was not lifted--and soon--I would be forced to consider introducing retaliatory legislation. But still, the tax remains in place. So now, at the end of our legislative session, I see no alternative but to introduce the Mexican Agricultural Trade Compliance Act. The Mexican Agricultural Trade Compliance Act establishes that the Government of Mexico has engaged in a pattern of activity that has continuously denied the rights of U.S. exporters of high fructose corn syrup under existing trade agreements. Further, the denial of these rights is unjustifiable and burdens or restricts U.S. commerce. Therefore, Mexico's actions meet the statutory criteria under section 301 of the Trade Act of 1974 for retaliatory action. The Mexican Agricultural Trade Compliance Act requires the U.S. Trade Representative to retaliate, pursuant to section 301, against imports from Mexico within 60 days of enactment of the Act. However, the U.S. Trade Representative shall not take such action if he certifies, within 30 days after enactment of the Act, that Mexico has eliminated its tax on soft drinks containing high fructose corn syrup and is according the U.S. high fructose corn syrup industry the benefits of all applicable trade agreements. I fully hope that prior to the return of the U.S. Senate in January, the Mexican Congress will act rationally and bring Mexico into compliance with its international trade obligations regarding high fructose corn syrup. If it does not, I'll work hard to advance the Mexican Agricultural Trade Compliance Act through the Senate. Given the large number of unjustified barriers imposed by Mexico over the past months against imports of U.S. agricultural products, Mexico has not been earning goodwill with Members of the Senate. I expect that my legislation will receive broad support. I also intend to work with the U.S. Trade Representative to designate Mexican products upon which retaliatory duties will be imposed. The products on this list will consist first and foremost of Mexican agricultural products that are prospering on account of their access to the U.S. market. These Mexican products will likely include bottled tequila, tomatoes, bell peppers, avocados, limes, asparagus, mangos, papayas, watermelons, honey, pecans, and shrimp and prawns. The total amount of duties imposed on these Mexican products will equal the lost sales being experienced by U.S. producers of high fructose corn syrup on account of Mexico's de facto ban of this product, an amount which-- according to U.S. industry--could be as high as $465 million annually. Let me conclude by stating that I know that some in Mexico are working constructively to try to resolve this issue. Earlier this month President Fox of Mexico sent to the Mexican Congress a formal request to repeal the tax on high fructose corn syrup. I hope that his request becomes law. I appreciated the offer of Mexico's Secretary of Agriculture, Javier Usabiaga, to speak with me regarding the tax, and I regret that our schedules have not permitted us to meet personally. I also note that U.S. and Mexican private sector representatives have been negotiating over access for U.S. high fructose corn syrup to the Mexican market. Regardless of these efforts, Mexico's de facto ban on imports of U.S. high fructose corn syrup remains in place. Meanwhile, Iowa's corn growers and Iowa's high fructose corn syrup producers continue to suffer on account of Mexico's NAFTA and WTO illegal actions. Again, I strongly hope that Mexican legislators will remove Mexico's tax on soft drinks containing high fructose corn syrup prior to the return of the U.S. Senate next January. But if this tax is not repealed by January, I have every intention of working to advance this legislation through the Senate. I'm a strong believer in free trade. I fought hard for passage of the NAFTA. I did so because I know free trade benefits farmers in Iowa and other states. U.S. agriculture certainly benefits from the NAFTA, as does Mexican agriculture. But Mexico has engaged in a blatantly illegal act against U.S. agriculture for too long. Mexico's action is having a particularly negative impact on my State of Iowa. If we are to maintain support for free trade in this country, we must ensure that our trading partners live up to their obligations. If they do not, we must take action. I hope the introduction of this bill sends a strong message to my Mexican counterparts that we are ready and willing to stand up for U.S. agriculture. I sincerely hope that they will do the right thing and repeal their illegal tax on high fructose corn syrup. I hope they repeal their illegal tax to demonstrate their commitment to living up to the letter and spirit of Mexico's promises under NAFTA and the WTO. I hope they repeal their illegal tax to improve relations between the United States and Mexico and to bring the benefits of free trade to consumers and producers in both countries. And, Mr. President, I hope they repeal their illegal tax so the Mexican Agricultural Trade Compliance act is no longer needed. But, if that's what it takes, then that's what we should do.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to introduce the Mexican Agricultural Trade Compliance Act. This bill directs the U.S. Trade Representative to retaliate against Mexico over that country's de facto prohibition on the importation of U.S.-produced high fructose corn syrup. I introduce this bill reluctantly. For months I have made it clear, through letters, floor statements, a hearing, and a trade roundtable, that if the Mexican Congress did not lift its illegal 20 percent tax on soft drinks containing high fructose corn syrup, I would be forced to consider introducing retaliatory legislation, such as this ``tequila tariff'' which also covers other agricultural products. We're at the end of our legislative session and there has been no action by the Mexican Congress. So, I'm faced with no alternative but to introduce this bill. Let me explain how we got to where we are today. Mexico was formerly the largest export market for U.S.-produced high fructose corn syrup. But since 1997, Mexico has engaged in a concerted effort to restrict U.S. imports of this product. Throughout this time, Mexico has consistently violated its NAFTA and WTO commitments. Let me give you a short history of Mexico's unjustified actions. In February 1997, Mexico initiated an antidumping investigation of U.S. high fructose corn syrup, followed by the imposition of an antidumping order the following year. The United States challenged Mexico's antidumping order under the NAFTA. On two different occasions, NAFTA panels determined that Mexico's actions violated its NAFTA obligations. The United States also challenged Mexico's antidumping order at the Wortd Trade Organization. On two separate occasions, the Dispute Settlement Body of the WTO held that Mexico's actions violated its international trade commitments. But Mexico continued to ignore its NAFTA and WTO obligations. In fact, Mexico went one step further and in effect threw gasoline onto the fire. On January 1, 2002, in a transparent attempt to evade the NAFTA and WTO determinations against it, Mexico imposed a 20 percent tax on soft drinks containing high fructose corn syrup. The intent and effect of this tax was to continue Mexico's antidumping order on U.S. produced high fructose corn syrup by other means. In April 2002, with its tax now in place, and in a continuous event with the imposition of this tax, Mexico lifted its antidumping order on high fructose corn syrup. These actions enabled Mexico to make the disingenuous claim that it had come into compliance with the findings adopted by the NAFTA and the WTO regarding its antidumping order. The effects of the import restrictions of Mexico's antidumping order continue, with even more egregious results. Because of Mexico's tax, U.S. exports of high fructose corn syrup to Mexico are now at almost zero levels. This is an extraordinary situation. Mexico lost under the NAFTA, and it lost at the WTO commitments, Mexico responded by imposing a de facto ban on imports of U.S. high fructose corn syrup. Mexico is not only violating its international trade commitments, but also causing significant harm for Iowa's corn farmers. Iowa's producers of high fructose corn syrup are suffering as well. I know of no other U.S. agricultural product that has been shut out of its largest export market for so long. The United States has worked diligently, and patiently with Mexico on this issue. U.S. Trade Representative Robert Zoellick and Ambassador Allen Johnson, our Chief Agricultural Negotiator, have put in countless hours trying to convince Mexico to come into compliance with its trade obligations regarding high fructose corn syrup. But still, the tax remains in place. My colleagues on both sides of the aisle, and in both the Senate and the House, have repeatedly contacted Mexican officials reminding them of Mexico's trade commitments with regard to this issue. But still, the tax remains in place. I too have worked hard, since the beginning, to try to convince Mexico to lift its de facto ban on the sale of U.S.-produced high fructose corn syrup. As I have mentioned, I've written letters to Mexican officials, delivered floor speeches, conducted a Finance Committee hearing, and held an agricultural roundtable, all in an effort to convince Mexico to lift its de facto ban on imports of U.S. high fructose corn syrup. During a hearing of the Finance Committee on September 23, I stated clearly that if the Mexican tax on soft drinks containing high fructose corn syrup was not lifted--and soon--I would be forced to consider introducing retaliatory legislation. But still, the tax remains in place. So now, at the end of our legislative session, I see no alternative but to introduce the Mexican Agricultural Trade Compliance Act. The Mexican Agricultural Trade Compliance Act establishes that the Government of Mexico has engaged in a pattern of activity that has continuously denied the rights of U.S. exporters of high fructose corn syrup under existing trade agreements. Further, the denial of these rights is unjustifiable and burdens or restricts U.S. commerce. Therefore, Mexico's actions meet the statutory criteria under section 301 of the Trade Act of 1974 for retaliatory action. The Mexican Agricultural Trade Compliance Act requires the U.S. Trade Representative to retaliate, pursuant to section 301, against imports from Mexico within 60 days of enactment of the Act. However, the U.S. Trade Representative shall not take such action if he certifies, within 30 days after enactment of the Act, that Mexico has eliminated its tax on soft drinks containing high fructose corn syrup and is according the U.S. high fructose corn syrup industry the benefits of all applicable trade agreements. I fully hope that prior to the return of the U.S. Senate in January, the Mexican Congress will act rationally and bring Mexico into compliance with its international trade obligations regarding high fructose corn syrup. If it does not, I'll work hard to advance the Mexican Agricultural Trade Compliance Act through the Senate. Given the large number of unjustified barriers imposed by Mexico over the past months against imports of U.S. agricultural products, Mexico has not been earning goodwill with Members of the Senate. I expect that my legislation will receive broad support. I also intend to work with the U.S. Trade Representative to designate Mexican products upon which retaliatory duties will be imposed. The products on this list will consist first and foremost of Mexican agricultural products that are prospering on account of their access to the U.S. market. These Mexican products will likely include bottled tequila, tomatoes, bell peppers, avocados, limes, asparagus, mangos, papayas, watermelons, honey, pecans, and shrimp and prawns. The total amount of duties imposed on these Mexican products will equal the lost sales being experienced by U.S. producers of high fructose corn syrup on account of Mexico's de facto ban of this product, an amount which-- according to U.S. industry--could be as high as $465 million annually. Let me conclude by stating that I know that some in Mexico are working constructively to try to resolve this issue. Earlier this month President Fox of Mexico sent to the Mexican Congress a formal request to repeal the tax on high fructose corn syrup. I hope that his request becomes law. I appreciated the offer of Mexico's Secretary of Agriculture, Javier Usabiaga, to speak with me regarding the tax, and I regret that our schedules have not permitted us to meet personally. I also note that U.S. and Mexican private sector representatives have been negotiating over access for U.S. high fructose corn syrup to the Mexican market. Regardless of these efforts, Mexico's de facto ban on imports of U.S. high fructose corn syrup remains in place. Meanwhile, Iowa's corn growers and Iowa's high fructose corn syrup producers continue to suffer on account of Mexico's NAFTA and WTO illegal actions. Again, I strongly hope that Mexican legislators will remove Mexico's tax on soft drinks containing high fructose corn syrup prior to the return of the U.S. Senate next January. But if this tax is not repealed by January, I have every intention of working to advance this legislation through the Senate. I'm a strong believer in free trade. I fought hard for passage of the NAFTA. I did so because I know free trade benefits farmers in Iowa and other states. U.S. agriculture certainly benefits from the NAFTA, as does Mexican agriculture. But Mexico has engaged in a blatantly illegal act against U.S. agriculture for too long. Mexico's action is having a particularly negative impact on my State of Iowa. If we are to maintain support for free trade in this country, we must ensure that our trading partners live up to their obligations. If they do not, we must take action. I hope the introduction of this bill sends a strong message to my Mexican counterparts that we are ready and willing to stand up for U.S. agriculture. I sincerely hope that they will do the right thing and repeal their illegal tax on high fructose corn syrup. I hope they repeal their illegal tax to demonstrate their commitment to living up to the letter and spirit of Mexico's promises under NAFTA and the WTO. I hope they repeal their illegal tax to improve relations between the United States and Mexico and to bring the benefits of free trade to consumers and producers in both countries. And, Mr. President, I hope they repeal their illegal tax so the Mexican Agricultural Trade Compliance act is no longer needed. But, if that's what it takes, then that's what we should do.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I would like to make a unanimous consent request for Senator Baucus. He asked consent that John Colleran, Jill Davidsaver, Mandon Lovett, Justin Bonsey, Brittany Dalton, and Diana Birkett be granted the privilege of the floor for the duration of the floor debate on Medicare.

Mr. GRASSLEY

Mr. GRASSLEY. I yield 5 minutes to the Senator from Arkansas. If there is no one on the other side to speak, I can give the Senator a little bit more.

Mr. GRASSLEY. Mr. President, could I make an inquiry?

Mr. GRASSLEY. I yield myself 30 seconds, before I yield to the Senator from Maine 7 minutes, for just a little bit of history and to applaud the Senator from Maine. She was active in this issue of Medicare prescription drugs a long time before I was. But on July 25, 2001, we held our first meeting of what was called the tripartisan group. She was obviously part of that tripartisan group along with Senators Hatch, Jeffords, Breaux, and Grassley. I remember that meeting we had. The AARP sent us a birthday cake with a pie-shaped piece cut out of it. Their admonition to the tripartisan group was: Fill in the missing piece. The missing piece of Medicare was prescription drugs. The Senator from Maine has been very aggressive since July 25 in various ways, helping us fill in that piece of the pie. On August 1 of that year, we held a news conference, all five of us, announcing our plans for doing that. We have not exactly come out where we were a year ago. We probably have come out a lot better with the legislation we have before us. But regardless, the Senator from Maine was in on the ground floor, a long time before I was, on that issue. I yield to the Senator from Maine 7 minutes.

Mr. GRASSLEY. Thank you very much.

Mr. GRASSLEY. Mr. President, let me inquire of the Democrats. Could we have a Democrat speak?

Mr. GRASSLEY. Mr. President, it is my privilege to give 5 minutes to the Senator from Montana, Mr. Baucus, whose cooperation with me and, hopefully, my cooperation with him has made this bipartisan agreement on Medicare possible to bring about what we need to do for seniors.

Mr. GRASSLEY. Mr. President, I yield 15 minutes to the Senator from New Hampshire.

Mr. GRASSLEY. That is the point I wanted to make.

Mr. GRASSLEY. I thank my friend from Montana for that explanation. And as he and the Senators from Washington and North Dakota know, we have a demonstration program in this bill that covers, until the Part D drug benefit starts in 2006, self-injectable and oral anti-cancer drugs. This demonstration program is in the statutory language. That is good news. However, the report language is clearly in error and refers to an entirely different provision, not the one we negotiated.

Mr. GRASSLEY. I thank the Senator from Montana and my Democratic partner in this legislation, Senator Baucus, for seeking to clarify this issue. I would be pleased to engage in a colloquy.

Mr. GRASSLEY. I thank the Senator.

Mr. GRASSLEY. Mr. President, there is an issue that my colleague from Iowa brought up that I don't want to take exception to or argue with him about. He finds fault with something on page 53 of this bill called noninterference. That is perfectly legitimate for him to take that point of view. But I want to point out something that Senator Santorum had pointed out earlier in the day's debate, in which a very similar noninterference provision was in a Democrat prescription drug proposal introduced May 10, 2000. I don't mind intellectual arguments against this, but when Republicans take a Democrat idea and put it in our bill, I don't think it is fair for colleagues on the other side of the aisle to find fault with what we are doing. I only want to make that point. I don't want to argue with my friend from Iowa. I think everybody ought to know that this is something that has had broad bipartisan support. I yield the floor.

Mr. GRASSLEY. Mr. President, I would like to state the plan for today. Under the previous order, the cloture vote will occur today at 12:30. The debate time until that vote is limited, and Members will only be allocated short debate times. The cloture vote on the conference report will be the first vote of the day. It is the leader's hope and expectation that cloture will be successful. Once cloture is invoked, the leader hopes we will be able to proceed to a vote on the passage of the Medicare prescription drug bill in very short order after that. On our side, we are obviously going to start with the Senator from New Hampshire. But since the time is very tight, probably most Members would be limited to 5 minutes or less, beyond that of Senator Gregg. I would like to make sure people are very orderly as they come over here and ask me for time. I cannot speak for the Democratic side, but for the Republican side, it is very essential for people to be here and be ready to speak. Does the Democratic whip wish to be recognized?

Mr. GRASSLEY. Mr. President, I yield 5 minutes to the Senator from Wyoming. I urge people who are proponents of this bill and want me to yield them time to be here. When there is not anybody here, I will use some of that time, but I am very glad to quit and put my statements in the Record to accommodate my colleagues. It is just a case of if we don't want to waste any of this valuable time, get over here.

Mr. GRASSLEY. Mr. President, I yield the Senator 3 more minutes.

Mr. GRASSLEY. I yield whatever time he might consume, up to 5 minutes, to the Senator from Oklahoma.

Mr. GRASSLEY. That is correct.

Mr. GRASSLEY. Yes, that is right.

Mr. GRASSLEY. Mr. President, I say to my colleague from Wyoming that Medicare drug plans and MedicareAdvantage organizations should not force seniors or the disabled to choose a mail-order house when they would prefer to patronize their local community pharmacy. The Senator from Wyoming is correct in noting that the conference report permits plans to set a different charge to the beneficiary for a mail-order prescription versus a retail prescription. However, it is my expectation that any differential in charge be reasonable and based on the actual cost of providing the service in or through the setting in which it is provided. I also would expect that the Secretary of Health and Human Services would disapprove of any plan that would impose a differential charge that was intended primarily to steer Medicare beneficiaries to mail-order pharmacies versus retail pharmacies.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to co-sponsor legislation, the ``Tax Shelter Transparency and Enforcement Act"to address the continuing proliferation of tax shelters. This bill reflects tax shelter measures that have been passed by the Senate Finance Committee in the Jobs and Growth Tax Relief Act of 2003, the CARE Act, the JOBS Act, and the Energy bill. The full Senate has passed these shelters provisions twice this year. We have known for many years that abusive tax shelters, which are structured to exploit unintended consequences of our complicated Federal income tax system, erode the federal tax base and the public's confidence in the tax system. Such transactions are patently unfair to the vast majority of taxpayers who do their best to comply with the letter and spirit of the tax law. The Finance Committee produced its first draft of tax shelter legislation in 1999, and has produced several subsequent bills, each of which were enhanced to attack new developments in abusive tax shelters. The most recent Finance Committee bill was the Tax Shelter Transparency Act in May 2002. Today's bill builds on that 2002 legislation by adding certain corporate governance provisions, the recommendations from the Finance Committee's tax shelter investigation of Enron, and a proposal to clarify the judicial economic substance doctrine. The Finance Committee has worked exceedingly hard over many several years to develop a legislative response to tax shelters, and the bill we offer today may not be the final word in that response. Thoughtful and well-considered comments on the provisions in this bill have been greatly appreciated by the staff and members of the Finance Committee, and will be considered in further refining today's bill, particularly with respect to clarification of the economic substance doctrine. In our ongoing efforts to end tax shelters, we have attacked the issue on several fronts. We have introduced numerous measures to end specific shelter abuses as they are discovered. We have offered legislation attacking corporate inversions, individual expatiations, and corporate deductions for phony leases of tax-payer funded subways, bridges, and water lines. I have pursued public disclosure of the differences in the income on financial statements reported by public companies to their shareholders, and the income the company reports to the IRS on its tax return. I have written to the President, Treasury and SEC to encourage them to consider this idea. During the Senate's 2002 deliberation of the Sarbanes-Oxley bill, I attempted to add an amendment that would have prohibited auditors from opining on the financial statement results of tax shelters that they had sold to an audit client. I was blocked in my attempt to offer that amendment, with several members expressing skepticism about the need for such a measure. I suspect that today, however, few members would have such reservations. On October 21st, 2003, the Senate Finance Committee conducted a hearing to determine if tax shelters were a continuing problem. Not only are they continuing, they are now expanding to mid-level companies and wealthy individuals, many of whom have been duped into engaging in shelter transactions. During our hearing, we heard testimony from taxpayers who relied on reputable tax professionals and accounting firms for sound tax advice, but unknowingly purchased tax shelters that were peddled by those trusted professionals through a web of collusion and deception. We also heard from employees of large accounting firms and major corporations who testified regarding the pressure exerted on them to bless transactions that, in their professional opinions, would constitute abusive tax shelters. The price for their integrity was the loss of their jobs and the ruin of their career. Tax shelter abuse must be stopped for the sake of fairness, the integrity of our tax system, and the protection of honest tax professionals. Our years of work on this issue was recently reaffirmed in a hearing before the Permanent Subcommittee on Investigations, which explored abusive shelters that were promoted by purportedly reputable tax lawyers and accounting firms. Following that hearing, there has been considerable discussion of promoting an amendment similar to the one I offered in 2002 during the Sarbanes-Oxley debate, and I am appreciative of that effort. I hope we are able to construct a measure that can be readily enforced by the Public Accounting Oversight Board and the SEC, even though that agency lacks expertise in, or jurisdiction over, federal tax matters. At its core, however, the problem is not an SEC matter, but is a problem of ongoing abuse of the tax code by very smart people doing some very ugly business. The only way to end this problem is to put it out in the open. Even the most cynical tax advisor does not want their dirty laundry in the public eye, particularly if that public includes the IRS. That is why disclosure of abusive or potentially abusive transactions is so important in solving this problem. The Tax Shelter Transparency and Enforcement Act requires taxpayer disclosure of potentially abusive tax avoidance transactions. It is surprising and unfortunate that taxpayers, though required to disclose tax shelter transactions under present law, have refused to comply. The Tax Shelter Transparency and Enforcement Act will curb non-compliance by providing clearer and more objective rules for the reporting of potential tax shelters and by providing strong penalties for anyone who refuses to comply with the revised disclosure requirements. The legislation has been carefully structured to reward those who are forthcoming with disclosure. I wholeheartedly agree with the remarks offered by a former Treasury Assistant Secretary for Tax Policy, that ``if a taxpayer is comfortable entering into a transaction, a promoter is comfortable selling it, and an advisor is comfortable blessing it, they all should be comfortable disclosing it to the IRS.'' Transparency is essential to an evaluation by the IRS and ultimately by the Congress of the United States as to whether the tax benefits generated by complex business transactions are appropriate interpretations of existing tax law. It is time to get this bill done. The Finance Committee has worked on rooting out tax shelters for nearly five years, and we have debated the issue long enough. The time to act is now. I will vigorously pursue enactment of an anti-tax shelters bill in the upcoming year. I think we can all take pride in the Senate's consistent action of passing the measures in today's bill. We must press forward to put a final end to the seemingly endless abuse of tax shelters.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I was told we should report the bill first, and then I will make my statement.