Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I think the Democrats have the next opportunity.

Mr. GRASSLEY. I yield the floor.

Mr. GRASSLEY. Mr. President, I yield to the Senator from Montana whatever time he might consume.

Mr. GRASSLEY. Mr. President, I yield myself such time as I consume. I have enjoyed listening to this debate. It is just like being in another world. The reason I say that is, why do you think that we tax 85 percent of Social Security income for certain Americans in the higher income tax brackets--I would say even in the middle-income tax brackets--at 85 percent? That was done in 1993. Do the people who have just spoken forget that every one of them voted that increase, to have the Social Security income be taxed at 85 percent of that income that has to be reported? Every one of the people who have spoken are responsible for that level of income reporting of 85 percent being on the tax books. Why do they want to repeal what they are responsible for passing? During the debate on the tax bill, every one of the Democratic Senators now serving in the Senate, except for Senator Bingaman from New Mexico, voted to have this money taxed. Now they are trying to take it out. On June 24, 1993, there was an amendment offered by Senator Lott to change the amendment which was in the Democrat tax increase bill at that time to not report 85 percent of Social Security income for taxation. The rollcall shows that the motion to table was agreed to 51 to 46. The 51 Members who voted at that particular time were the ones who were voting to keep the level of Social Security income that was taxed at 85 percent and which needed to be reported. Every Democrat still serving in the Senate voted to table Senator Lott's amendment. Every Republican voted not to table the Lott amendment, which meant that every Republican was voting against that. We had the support of Senator Bingaman--the only Democrat from whom we had support. They wonder why I am amused? If they think it is so bad today, why didn't they think it was bad 10 years ago? And we wouldn't even be debating this issue. It looks to me as if they want to maybe detract from the mistakes of the past. I don't know. But also, earlier this year, on an amendment by Senator Bunning to the Budget Act, the very same Members opposing this amendment voted against the very same amendment when Senator Bunning offered it. What has happened in the last month? Do they realize that maybe the vote at that time was wrong and they have to have cover? I don't know. But every one of the Members who are proposing this amendment or speaking for it voted just the opposite way on Senator Bunning's amendment. That amendment was defeated 48 to 51. But there are bigger things to worry about than how people voted in the past. I want the public to understand that there is some game playing going on here. We are talking about serious business as well. We are talking about a jobs bill before the Senate to give tax relief to American working men and women so they can have more money in their pockets. To get the cover that some people need for previous votes, they are going to take tax decreases away from middle-class Americans to pay for that. I will be a little more specific on that in just a minute. I have to repeat something I said in my opening remarks. We just heard a speech on the debt situation which might be forthcoming if we grow the economy. Reducing taxes is one way to grow the economy and will not have the debt situation we found with the growth we had in the 1990s. We paid down the national debt $550 billion. We hear about this debt situation. My friends on the other side of the aisle are worried about the debt. They said if we adopt the President's plan, we are going to have greater debt. If they are so concerned about the debt, why didn't they offer all of their amendments on the budget bill about a month ago? They wanted to take money away from the tax reduction aspect of the budget. It begins at the bottom line. They took money away from tax decreases and spent it someplace else. If they are concerned about the national debt, it seems to me-- and they believe that one more dollar coming into the Federal Treasury is going to reduce the national debt--they shouldn't have been offering amendments to spend it someplace else. But they are very consistent in doing that. Amendment after amendment after amendment took money away from the tax reduction figure in the budget, which this bill is a result of, and spent it someplace else. Do you know why? I think there is a difference in philosophy between my party and the other party. That difference in philosophy is very basic to this debate going on today. I just think people ought to realize that this is not a Republican-Democrat fight, or some little cat fight over some little bill in the Senate. There is the difference between one party that believes money in the pockets of 110 million taxpayers is going to do more economic good if the 110 million taxpayers spend it or invest it than if I, Senator Grassley, and 534 others here in DC are going to make that decision. We have to believe that if the money is in the pockets of 110 million taxpayers and they spend it or invest it, it is going to do more economic good. It is going to turn over more times in the economy. It will respond to the dynamics of our free market economy rather than a political decision being made about what to do with it. Obviously, I believe people on the other side of the aisle have the attitude that we in Congress know better than they do how to spend the taxpayers' money. If we are going to have a tax reduction, that will mean less money for us to spend. But it ignores the economic good that comes from private sector investment and private sector spending as opposed to public sector spending. I think there is very much an inconsistency here. What we are talking about is a $430 billion tax reduction package--net $350 billion. As we have been told, we have been led to believe that this is responsible for doubling the national debt. This tax package is only one-half of 1 percent of all the dollars that are going to be collected by the Federal Government under existing tax law over the next decade. That is going to be $24.7 trillion. Tell me things are so tight here in Washington, DC, that somehow one-half of 1 cent on the dollar left in the taxpayers' pockets is going to be responsible for doubling the national debt. No. What is going to be responsible for doubling the national debt--if it were to happen; I don't think it is going to happen--is not because the people of this country are undertaxed; it is because this Congress overspends. There again I would remind the Senator from North Dakota, the distinguished ranking member of the Budget Committee, the President's plan does not follow the pattern of the last few years, where back to back we had 9-percent increases in domestic discretionary spending each of those years. But the President's program, plus the budget of this Congress, has domestic discretionary expenditures not at 9 percent but at 4 percent. Now, yes, that is an increase. That is an increase, but that is an increase that is sustainable over the long haul. Nine- percent budget increases are not sustainable. We are in a situation where nothing around here surprises me anymore. The very people offering this amendment are the same ones who created this tax increase back in 1993. As I indicated, they even voted against repealing the tax just 2 months ago on the budget resolution. I think this is an amendment that is trying to fool the American people. Just about every Member on the Republican side has vehemently opposed the Democrats' 1993 tax increase on Social Security. Except for Senator Bingaman, every Democrat in the Senate today voted for that back in 1993. Now they want to try to cover up their votes supporting this tax, and they want to do it by destroying the underlying jobs and growth bill. This is how they destroy it: The Dorgan amendment strikes our efforts to reduce all marginal tax rates above 10 percent. The efforts to reduce marginal tax rates for the middle class are eliminated by this amendment. As a result, a single mom making $40,000 in taxable income will see no reduction in the tax on her small pay increase. A family with taxable income of $70,000 will see no reduction in their marginal tax rate. The Dorgan amendment takes away our bill's tax cuts for middle-income Americans. The Senator from North Dakota says this isn't a tax increase. I would like to have you tell that to the single mom, who is one of the targets of this amendment, who, on her pay raise, will not see a reduction in her tax. A vote for this amendment is, in fact, a tax increase, no matter how the authors want to try to dress it up. I yield the floor.

Mr. GRASSLEY. Forty-five minutes on my side?

Mr. GRASSLEY. Mr. President, I ask how much time remains on the Dorgan amendment on both sides.

Mr. GRASSLEY. Yes.

Mr. GRASSLEY. Mr. President, I am going to yield to the Senator from Oklahoma what time he might consume either on amendments or on the bill.

Mr. GRASSLEY. Madam President, first of all, I think it is pretty unanimous in this body about the need for the R&D tax credit, and I think it enjoys pretty broad support. I suppose it is not a case of ``if'' we will do it; it is a case of ``when'' and exactly how. I would say there is probably not much disagreement within this body yet. I have visited with my colleagues so much during this debate about the purposes of the legislation and the balance that we brought to this between investment and enhancing consumer spending, and between those things that are tax reductions versus tax expenditures, it is this balance that I want to preserve in this legislation. Every attempt we have had, as well intended as it is, obviously, takes away from the job creation aspects of our tax reduction. It is to do something special and, in many cases, is worthy, but it detracts from the overall approach to our legislation. So this is another example where I must rise in opposition to an amendment, but not because of the good intent or because I have a disagreement with the amendment, but because of how it is accomplished. And most of that is on the side of where they take the money to pay for the proposal in this amendment, or any other amendment that we have had before us. I am very confident that we will extend the R&D credit this year. I call the attention of my colleagues to the fact that the President has proposed extending it in his budget. I note that the extension is paid for in this amendment by eliminating partial exclusion of dividends, and this exclusion of dividends is meant to encourage the investment we are talking about here. Obviously, the amendment on R&D is a tax incentive to encourage R&D, and it takes a lot of R&D to get jobs, but it is a very indirect way of creating jobs, whereas we believe the dividend exclusion, at least if it were fully implemented the way the President proposed, and I know our underlying legislation does not do that, but at least the way the President proposed, according to economists, would create 400,000 new jobs, besides making our capital costs for our industry much more competitive with those of our competition internationally because our cost of capital is as high as that of any nation with which we compete. If we were to adopt the President's program, it would put us in the middle of the advanced nations for cost of capital and make us much more competitive. This detracts from the investment efforts in our legislation which is where the money is being taken to pay for the R&D amendment. I say to the Senator from Washington that I look forward to working with her at another time--not this time--to extend the R&D credit down the road. There is another point that should be made about the R&D credit, and that is that it does not benefit all businesses and taxpayers equally or apply as broadly as do the provisions of this underlying growth bill that I have been trying to demonstrate is a well-balanced bill to create jobs. It is well balanced between larger businesses and smaller businesses, particularly where it brings equity between a corporation form of business and individual proprietorship form of business. It does that by eliminating the bias in favor of corporations that is in our present tax system. I look at R&D credit as not benefiting all businesses equally as our underlying bill does. The R&D credit provides a benefit to a limited number of large corporations in certain industrial sectors. While the purpose of the R&D credit is very important, as it encourages higher levels of technology development and innovation which brings about greater productivity, it does not help small businesses that will provide so many new jobs for the economy under our underlying legislation. I ask the Senator from Washington to think about whether or not she has checked with organizations or their tax representatives that support R&D credits. I think the last thing they would want to happen is for the extension to lose at this time. If they want their extension--and I am sure they do, and I have indicated a willingness to work on this--they should be working with the Finance Committee and not against it as we try to accomplish this goal. Right now, I have to consider this amendment counterproductive in that it slashes job-creating provisions to give generous tax breaks to large corporations to do research and development. Many may ask: Why do rich corporations need a tax break to do something that is essential to their business anyway? As I indicated, I do support the R&D tax credit, but I also support, more importantly and more eminently, the provisions of this bill which are more broad based in helping to create jobs and doing it in a balanced way, not in the targeted way of this amendment. There is nothing wrong with the amendment. It is just the wrong time and wrong place. I ask my colleagues to vote against it.

Mr. GRASSLEY. Would the Senator from Massachusetts yield? I do not intend to object, but we have always been promised copies of amendments. I assume the Senator is going to offer an amendment. Amendment No. 544 (Purpose: To provide for additional weeks of temporary extended unemployment compensation, to provide for a program of temporary enhanced regular unemployment compensation, and for other purposes)

Mr. GRASSLEY. Madam President, I yield such time as the Senator from Utah might consume.

Mr. GRASSLEY. I ask Senator Kennedy, would he speak without our consenting to the hour so we could look at the amendment for a while?

Mr. GRASSLEY. I yield to the Senator from Texas what time he might consume.

Mr. GRASSLEY. Mr. President, I ask unanimous consent that further reading of the amendment be dispensed with. (The amendment is printed in today's Record under ``Text of Amendments.'')

Mr. GRASSLEY. Mr. President, I put before you not a tax amendment, but I am addressing a funding crisis that affects rural America. I am talking about the issue of Medicare. We have heard a lot about relief to States and about Medicaid during this debate, and legitimately so. But there has been no discussion of the role Medicare plays in keeping our health care infrastructure strong in rural States like mine. Today, our rural health infrastructure is falling apart. Hospitals and home health agencies in rural areas lose money on every Medicare patient they see. Services are being slashed and staff are being cut, all to make ends meet and keep the facility open--but not to keep it open with the quality of care that ought to be there, or to meet necessarily all the needs of the community. Medicare formulas penalize rural physicians in 30 States by reducing their payments below those of their urban counterparts for the very same service. Small physician clinics, and especially solo practitioners, who are facing rising malpractice premiums on top of the Medicare formula inequities are on the verge of closing up shop. My amendment takes important steps toward correcting geographic disparities that penalize rural health care providers. I will summarize some of the key provisions of the amendment. On hospitals, we eliminate the disparity between large urban hospitals and small urban and rural hospitals by equalizing inpatient-based payment. The hospitals in my State and in other rural areas are paid 1.6 percent less on every discharge. That is a $14 million loss every year in my State. We received bipartisan support to temporarily end this inequity in the fiscal year 2003 omnibus appropriations bill, but it is time to end this inequity in a permanent way. We also revise the labor share of the wage index for inpatient hospitals. The wage index calculation is killing our hospitals in rural areas. They have to compete with larger hospitals in the big cities for the same small pool of nurses and physicians. But because of the inequity in the wage index, these hospitals are not able to offer the kinds of salaries and benefits that attract health care workers. This amendment would reduce the labor share of the wage index from 71 percent to 62 percent. We strengthen and improve the Critical Access Hospital Program which has been so successful in keeping open the doors of some of our most remote hospitals. We also create a low volume adjustment for those small rural hospitals that are not able to benefit from the Critical Access Hospital Program. These hospital corrections are not partisan rhetoric. They are supported by the nonpartisan Medicare Payment Advisory Committee, by the CMS administrator in a recent letter to the House Ways and Means Committee, and by 31 bipartisan Members of the Senate rural health caucus. For doctors, my amendment ends once and for all the penalty Medicare imposes on doctors who choose to practice in rural areas of our country. Medicare adjusts payments to doctors downward based on where they live, but, in fact, the value of a physician's service is the same in Brooklyn, IA, as it is in Brooklyn, NY, but the Medicare formula does not think so. My amendment changes that and sets a floor for all physician payments that will end the negative adjustment doctors in Iowa and 30 other States currently face. My bill also provides assistance to other rural health care providers, such as ambulance services and home health agencies which millions of seniors in rural areas rely on every day. Providers in rural States, such as Iowa, practice some of the lowest cost, highest quality medicine in the country. This is widely understood by researchers, academics, and citizens of those States, but it is not recognized by the impersonal formulas of Medicare. Medicare instead rewards providers in high-cost, inefficient States with bigger payments that have the perverse effect of incentivizing overutilization of services and also poor quality. My legislation is paid for not by taking resources away from our growth and jobs package, nor by taking money away from those high-cost States that I mentioned, but by other modifications to the Medicare Program that make good policy sense. I want to emphasize that because every other amendment we have had before the Senate today has taken money out of the tax package to spend someplace else. My amendment does not affect the tax provisions of this legislation. This amendment represents a fair and balanced approach to improving equity in rural America. I urge my colleagues to support its adoption today. For those of us from rural States, our doctors, hospitals, and whole communities are counting on us. I yield the floor.

Mr. GRASSLEY. I yield such time as the Senator from Maine may consume.

Mr. GRASSLEY. The Senator from Maine suggested the absence of a quorum.

Mr. GRASSLEY. Madam President, before we move on with the next amendment, I think it would be accurate for me to say that the speech by my good colleague from the State of Iowa emphasizes the difference of philosophy I have tried to emphasize that our bill tries versus other approaches. These are honest, faithfully held ideas about the role of the Government in our society. The alternatives my colleague from Iowa has given--tax cuts on the one hand, or spending money on the other hand--is exactly the point I have been trying to make of whether or not the resources of this country should go through the Federal Treasury and have 535 Members of Congress divide them up, keep taxes high in the process, or whether it is better to reduce taxes to create jobs and create the jobs by leaving the money in the hands of 110 million taxpayers making their own individual decisions; the dynamics of our free market system respond very well to that. Money that is spent by individuals or invested by individuals turns over in the economy many more times than it does if I make a decision on how that is spent. Some believe, as evidenced by the recent speech, it is better to have higher levels of taxation, bring the money through the Federal Treasury and decide how to spend it. The other approach is that we will, as we do through this bill, give tax reduction with the taxpayers of this country deciding on investing and spending, or both, and enhancing the economy that way and creating jobs. Another goal of this bill is to bring taxation of the people of this country within the band that it has been for about 50 or 60 years, of about 17 percent or 19 percent of the resources of this Nation coming to the Federal Government for us to finance programs and to make decisions on how that will be spent. About 17 to 19 percent of the gross domestic product has generally, over 40 years, been taxed. In recent years that has gotten as high as 21 percent, as high as it was in World War II, so the highest in peacetime history. This tax bill, besides the motive of creating jobs, is to bring the level of taxation down so it falls within that historic band, based on two propositions. One is it is a level of taxation that has not been so high to be harmful to our economy and to our people, because our country has advanced tremendously well with the Federal Government operating within that band of deciding how to allocate 17 percent to 19 percent of our resources. The other is it is a level of taxation that has been accepted by the people of the United States. Some of them would say it is still too high, but I guess I would have to say over the long haul I have not heard too much complaint about the level of taxation that has existed over that long period of time of 17 percent to 19 percent. So I do not find fault with anything my colleague from Iowa said. He is expressing one very legitimate philosophy of government and the financing of that government and the distribution of resources and having that done by political decision. I am expressing another philosophy of government shared by some Democrats and hopefully by a lot of Republicans, that a level of taxation can get so high it hurts the economy, and the way to enhance the economy and grow the economy is to let people have a lower level of taxation. Another way to say it is if we have any budget problems and any deficit problems, they are not related to the undertaxation of the American people. They are related to the overspending by the Congress. Now we move on to another issue. But before I yield whatever time she might consume to the Senator from Maine, we are adopting policy with her amendment, in a bipartisan way, that is unrelated to the policy that is in the bill. That is because as chairman of the committee, responding to the people in my committee, both Republicans and Democrats, as well as responding to people outside the committee as represented by Senator Collins and Senator Nelson of Nebraska, there was a desire to have more people involved with the policy of how to meet the needs of the States through some State aid. So we have deliberately left kind of a vacuum in this legislation that is now going to be filled by the good work of Senator Collins and Senator Nelson off the committee, and by Senator Rockefeller and others on my committee. I commend them for their hard work. There is an awful lot of compromise that has gone into this product and I am proud to be affiliated with this product. But the product is not mine, because it was my determined effort to leave it to people who have worked on this issue for about 2 years now. For about 2 years people have been promoting this concept. I compliment them for their stick-to-it-iveness. Tonight proves that hard work pays off.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that when the Senate completes its business today, it stand in adjournment until 9:15 a.m., Thursday, May 15. I further ask that following the prayer and the pledge, the morning hour be deemed expired, the Journal of proceedings be approved to date, the time of the two leaders be reserved for their use later in the day, and that the Senate then resume consideration of Calendar No. 97, S. 1054, the jobs and economic growth bill, as provided under the previous order; provided further that no second- degree amendments be in order to the amendments offered during Wednesday's session, prior to a vote in relationship to the amendment. Finally, I ask unanimous consent that following the first vote, all succeeding votes in sequence be limited to 10 minutes each.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Committee on Health, Education, Labor, and Pensions be authorized to meet in executive session during the session of the Senate on Wednesday May 14, 2003. The following agenda will be considered: Agenda S. 754, Improved Vaccine Affordability and Availability Act. S. , Genetics Non-Discrimination Act. S. 888, Reauthorization of the Museum and Libraries Services Act. S. 1015, The Mosquito Abatement for Safety and Health Act (MASH). S. 686, The Poison Control Center Enhancement and Awareness Act Amendments. S. 504, American History and Civics Education Act of 2003. Nominations: John E. Buchanan, Jr., of Oregon, to be a Member of the National Museum Services Board; Mary Lucille Jordan, of Maryland, to be a Member of the Federal Mine Safety and Health Review Commission; Michael Schwartz, of Illinois, to be a Member of the Railroad Retirement Board; and Stanley Suboleski, of Virginia, to be a Member of the Federal Mine Safety and Health Review Commission.

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Committee on Indian Affairs be authorized to meet on Wednesday, May 14, 2003, at 9:30 a.m., in room 216 of the Hart Senate Office Building to conduct a business meeting on S. 285, the Native American Alcohol and Substance Abuse Program Consolidation Act of 2003; S. 555, the Native American Health and Wellness Foundation Act of 2003; S. 558, a bill to elevate the position of Director of the Indian Health Service to Assistant Secretary; S. 344, a bill to express the policy of the United States regarding the United States relationship with Native Hawaiians and to provide a process for the recognition by the United States of the Native Hawaiian governing entity; and S. 702, a bill to reauthorize the Native Hawaiian Health Care Improvement Act, to be followed immediately by an oversight hearing on the ``Role and Funding of the Federal National Indian Gaming Commission, NIGC.''

Mr. GRASSLEY

Mr. GRASSLEY. I yield such time as he might consume to the Senator from Nevada.

Mr. GRASSLEY. I agree that an additional advance refunding opportunity would be helpful and practical in your situation and in others. I will work with you in conference to see if there is an opportunity to accommodate you.

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

Mr. GRASSLEY. Mr. President, a number of misleading and just flat out wrong statements have been made by the proponents of this amendment. They said this package does not help the military. I wonder where they have been the last few months. We have already passed the military tax cut bill in the Senate and we are trying to work it out with the House. That is the situation. So do not tell me we have not dealt with the problems of the people in the military. They argue we do not deal with unemployment benefits. I guess they were not paying much attention when just a few hours ago we were talking about extending unemployment benefits. I offered a unanimous consent agreement at that time, but what happened? The other side, which is now complaining, rejected my offer to make that the top priority just as soon as we are done with this bill. We also put together a strong bipartisan State aid package, which the other side has cried crocodile tears over. So I hope no one is misled by some of the previous rhetoric we have heard. The amendment is nongermane and violates the Budget Act. So obviously later on there will be a point of order made on it. To relieve any concern that the underlying bill is only concerned about giving more money to corporations, I want to point out how this legislation helps families. I will make a couple of points regarding the distribution of tax benefits in our package. As I stated repeatedly, the package fairly balances investment and consumption incentives within the plan and benefits families at all levels of income. Now, this is quite contrary to much of the rhetoric we have heard on the proposal's distributional benefits. I have heard repeatedly that the typical family receives only $217 of benefits under the bill, while millionaires receive tens of thousands of dollars of such tax breaks. One response to this is to note the progressivity of our system. A simple example, however, is an effective way to demonstrate the bill does in fact provide benefits to families at all income levels. For illustrative purposes, I have analyzed the tax benefits of accelerating the $400 increase in the child tax credit combined with the increased refundability for single mothers of two children at various income levels under the bill. The example does not account for additional benefits that are also provided in this bill with expanding the 10 percent bracket. The charts I have with me demonstrate the tax benefits to that single mother with $15,000, single mother with $20,000, single mother with $30,000 of wage income during the 2003 tax year. As we can see, the first chart demonstrates a single mother of two with $15,000 of wage income will receive an additional $250 of refundable tax credits under this bill. This increased $250 comes from a combination of increasing the tax credit amount and reducing the limits on refundability. With her refundable earned income credit of $3,823, her total refundable tax credits would increase by $250 all the way up to $4,573. The second chart is for a family of $20,000 wage income, which demonstrates a significant increase in benefit to the same single mother. At a slightly higher income level, she receives an additional $710 of benefits under the Finance Committee plan for a total refundable credit of $4,270. Finally, at $30,000, we can see this single mother receives the entire benefit of $800 increased child tax credit in the form of refundable payments. I ask my colleagues to consider these examples as further evidence of the impact this bill will make on hard-working families in this country at different income levels, and I might say at all income levels. I hope the informed judgment will be made based upon fact and not upon the statements previously given about this bill. I yield the floor.