Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. The Assistant Democratic leader and my colleague Senator Harkin of Iowa have claimed that I withheld my consent to moving to a vote on a Sense of the Senate Resolution directing Congress to promptly address inequities in Medicare payments across states. The author of the Sense of the Senate resolution, Senator Harkin, has said ``it was my understanding the Finance Committee people had [his amendment] for some time and had looked at it.'' This was not the case, because I was not given the courtesy of knowing about or even seeing the resolution in advance. No one talked to me about it at all. In fact, my staff and I did not learn of the resolution until we saw it raised on the Senate floor. By the time my staff had the resolution in their hands, the Senate had moved on to other business, claiming that I was withholding my consent. I believe the resolution, and all legislation to improve Medicare fairness in rural areas, deserves our attention and support. And I intend to support the resolution when we vote on it next week.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, my friend and colleague from Texas, in a debate on Senator Wellstone's government contracting amendment, criticized a proposal the Finance Committee was scheduled to markup today. The Senior Senator from Texas characterized the proposal as an effort at ``passing laws that sound like they're right out of Nazi Germany.'' Senator Gramm went on to criticize: ``(t)he idea that somebody can't leave America and take their property with them, that they've got to pay a tax in order to get their property out of America.'' Mr. President, as the ranking Republican member of the Finance Committee and a participant in crafting this provision, I felt compelled to respond. First of all, I'm proud to serve on the Finance Committee. When someone characterizes a bipartisan Finance Committee proposal as something ``right out of Nazi Germany,'' I'm going to be disturbed. Tax-motivated expatriation activities are something that troubles me. All you have to do is look at the infamous case of Marc Rich. You will recall Mr. Rich's case came to light in the rush of pardon applications during the waning hours of the Clinton Administration. Mr. Rich reportedly left the U.S. to avoid U.S. taxation and sought a pardon with respect to criminal indictments on, among other things, criminal tax charges. Mr. President, there is a major principle at stake here. A key premise in our tax system is that those individuals and corporations that derive financial benefits from economic activity that is, as the tax law says, ``effectively connected'' with the United States, should be taxable on that income no matter where their domicile is. Any alternative to this concept would result in U.S. persons bearing a larger burden of Federal taxation than a foreign person earning a livelihood here. America and her major trading partners recognize this principle. It is reflected in the tax laws of our trading partners and the international tax treaty network. Let's take a look at current law. For individuals that expatriate, an income tax is imposed on appreciation in the assets of the expatriate, on a 10 year going forward basis, if the expatriate is leaving the U.S. with the ``principal purpose'' of avoiding U.S. income tax. For purposes of this current law rule, expatriates are deemed to have expatriated with a principal purpose of avoidance of U.S. income tax in two cases. In the first case, the deemed rule applies if the expatriate had, on average, $100,000 of net income, for the five years at the time of expatriating. In the second case, the deemed rule applies if net worth of the expatriate exceeds $500,000. In the case of corporations, the appreciation in assets transferred offshore is taxable at the time of transfer. So, Mr. President, it is clear that, under our current tax policy, individuals and corporations that attempt to either leave or transfer assets are taxable when they leave the U.S. Frankly, the Finance Committee views the so-called ``inversion'' transactions as a loophole that undercuts current law principles. It is on that basis, closing an insidious loophole, that the Finance Committee recently reported legislation to curtail inversion transactions. Similarly, in 1995 and 1996, the Finance Committee, and full Senate, sought to plug the loophole on the individual expatriation level. A proposal virtually identical to the one criticized by Senator Gramm today, was passed, on several occasions during those two years. That proposal did not become law because the Senate, with much reluctance, receded to the House in conference. The House proposal aimed to tighten the 10 year rule. The Chairman and Ranking Member have revived the Finance Committee expatriation proposal because of concerns about the effectiveness of current law. In fact, the Joint Committee on Taxation's estimate of this proposal appears to confirm that the long-standing tax policy with respect to individual expatriation will be better served by the Finance Committee approach. Under the Finance Committee proposal, individuals that expatriate would, as the Senator from Texas said, be taxable on gain in appreciation in U.S. assets when they leave America. This proposal would replace the current law regime described above. The Finance Committee proposal, is hardly ``right out of Nazi Germany.'' It strengthens long-standing tax policy. The Senate has spoken favorably on it on many occasions. So, Mr. President, let's keep our eye on the ball. Current law, not a putative Nazi regime, preserves the fairness of U.S. tax system. The Finance Committee proposal makes sure the fairness of the U.S. tax system is strengthened by closing loopholes.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I come to the floor today to introduce legislation that will bring more accountability to corporate officers and directors when a company goes bankrupt. This bill contains substantially the same language I had in an amendment I filed to the corporate reform bill that we passed into law a couple of months ago, but unfortunately my bankruptcy amendment was not considered. My legislation, the ``Corporate Accountability in Bankruptcy Act'', would clarify that the bonuses and other excessive compensation of corporate directors and wrongdoers can be brought back into a bankruptcy estate when a company goes bankrupt. This legislation is equitable because corporate officers and those individuals that have engaged in wrongdoing and violated the securities and accounting laws should not be able to make outrageous amounts of money off of a company which has gone bankrupt, while the company's employees, shareholders and creditors are left carrying the burden of the bankruptcy. Furthermore, corporate officers and insiders shouldn't be allowed to get bonuses and loans when a company has done so poorly to go bankrupt. They don't deserve that kind of excessive compensation. The plain fact is that corporate officers and those who engage in illegal activity should not be allowed to benefit where their actions have contributed to the downfall of the company. I don't think that's fair, and my bill would ensure that there is some equity in terms of who gets left holding the bag when a company goes bankrupt. Currently, the Bankruptcy Code permits a trustee to recover assets which a debtor has previously distributed to creditors within a certain time period prior to the filing of a bankruptcy petition. This allows a trustee to increase a debtor's assets for the fair treatment and equitable distribution of assets among all creditors, as well as to help shore up a debtor's assets during a reorganization. Section 547 of the Bankruptcy Code allows a trustee to recover assets from an insider made within a year of the filing of a bankruptcy petition. However, the Bankruptcy Code does not clearly establish that this section applies to bonuses and other extraordinary or excessive compensation of insiders, officers and directors. A cursory review of the case law by my staff and the Congressional Research Service indicates that the courts have not developed this issue, and that relevant case law is not dispositive on the matter of whether bonuses and excessive compensation are avoidable in bankruptcies of publically held companies. In addition, section 548 of the Bankruptcy Code allows a trustee to recover transfers of assets, made within one year, where there has been a fraudulent transaction or where a debtor has received less than what is reasonably equivalent in value. Here too, the Bankruptcy Code is not clear as to whether this section applies to the bonuses and other extraordinary or excessive compensation of officers, directors or other company employees who have violated securities laws or engaged in illegal accounting practices when their conduct, but not their compensation, has led to the company's bankruptcy. Similarly, the case law is not dispositive on this matter either. I think everyone would agree that a trustee should be able to recover these kinds of assets when a company goes bankrupt. Corporate bigwigs and wrongdoers shouldn't be able to keep their bonuses, loans or other excessive compensation when a company goes under. Corporate mismanagement and irresponsibility should not be rewarded, and the bad guys need to be held accountable. So I think that we need to clarify the Bankruptcy Code in order that bonuses, loans, and other extraordinary or excessive compensation that the company has given to the insiders and wrongdoers can be drawn back into the bankruptcy estate. My legislation is simply and straightforward. The Corporate Accountability in Bankruptcy Act would specifically provide in section 547 of the Bankruptcy Code that a trustee may recover bonuses, loans, nonqualified deferred compensation, and any other extraordinary or excessive compensation as determined by the court, made to an insider, officer or director and made within one year before the date of the filing of the bankruptcy petition. In addition, the Corporate Accountability in Bankruptcy Act would specifically provide in section 548 of the Bankruptcy Code that a trustee may recover bonuses, loans, nonqualified deferred compensation, and any other extraordinary or excessive compensation, as determined by the court, paid to an officer, director or employee who has committed securities or accounting violations, within 4 years of the filing of the bankruptcy petition. My bill extends the present one year reach- back period for fraudulent transfers in the Bankruptcy Code to 4 years, I did that because a majority of states have adopted a 4 year time period or the Uniform Fraudulent Transfer Act which allows for a 4 year time frame. I believe that these changes to section 548 are fair because they are tied to excessiveness and wrongdoing. Simply said, illegal acts should not be rewarded with a big fat paycheck. The point of this bill is that corporate officers and wrongdoers should not be able to keep bonuses, loans and other excessive compensation when the company goes under and others, employees, creditors and investors, are left holding an empty bag through no fault of their own. It's just not fair. So I hope that my colleagues will support the Corporate Accountability in Bankruptcy Act to make the Bankruptcy Code clear that corporate bigwigs and wrongdoers cannot unjustly enrich themselves and their excessive compensation and loans can and will be brought back into the bankruptcy estate. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I come to the floor today to introduce legislation that will bring more accountability to corporate officers and directors when a company goes bankrupt. This bill contains substantially the same language I had in an amendment I filed to the corporate reform bill that we passed into law a couple of months ago, but unfortunately my bankruptcy amendment was not considered. My legislation, the ``Corporate Accountability in Bankruptcy Act'', would clarify that the bonuses and other excessive compensation of corporate directors and wrongdoers can be brought back into a bankruptcy estate when a company goes bankrupt. This legislation is equitable because corporate officers and those individuals that have engaged in wrongdoing and violated the securities and accounting laws should not be able to make outrageous amounts of money off of a company which has gone bankrupt, while the company's employees, shareholders and creditors are left carrying the burden of the bankruptcy. Furthermore, corporate officers and insiders shouldn't be allowed to get bonuses and loans when a company has done so poorly to go bankrupt. They don't deserve that kind of excessive compensation. The plain fact is that corporate officers and those who engage in illegal activity should not be allowed to benefit where their actions have contributed to the downfall of the company. I don't think that's fair, and my bill would ensure that there is some equity in terms of who gets left holding the bag when a company goes bankrupt. Currently, the Bankruptcy Code permits a trustee to recover assets which a debtor has previously distributed to creditors within a certain time period prior to the filing of a bankruptcy petition. This allows a trustee to increase a debtor's assets for the fair treatment and equitable distribution of assets among all creditors, as well as to help shore up a debtor's assets during a reorganization. Section 547 of the Bankruptcy Code allows a trustee to recover assets from an insider made within a year of the filing of a bankruptcy petition. However, the Bankruptcy Code does not clearly establish that this section applies to bonuses and other extraordinary or excessive compensation of insiders, officers and directors. A cursory review of the case law by my staff and the Congressional Research Service indicates that the courts have not developed this issue, and that relevant case law is not dispositive on the matter of whether bonuses and excessive compensation are avoidable in bankruptcies of publically held companies. In addition, section 548 of the Bankruptcy Code allows a trustee to recover transfers of assets, made within one year, where there has been a fraudulent transaction or where a debtor has received less than what is reasonably equivalent in value. Here too, the Bankruptcy Code is not clear as to whether this section applies to the bonuses and other extraordinary or excessive compensation of officers, directors or other company employees who have violated securities laws or engaged in illegal accounting practices when their conduct, but not their compensation, has led to the company's bankruptcy. Similarly, the case law is not dispositive on this matter either. I think everyone would agree that a trustee should be able to recover these kinds of assets when a company goes bankrupt. Corporate bigwigs and wrongdoers shouldn't be able to keep their bonuses, loans or other excessive compensation when a company goes under. Corporate mismanagement and irresponsibility should not be rewarded, and the bad guys need to be held accountable. So I think that we need to clarify the Bankruptcy Code in order that bonuses, loans, and other extraordinary or excessive compensation that the company has given to the insiders and wrongdoers can be drawn back into the bankruptcy estate. My legislation is simply and straightforward. The Corporate Accountability in Bankruptcy Act would specifically provide in section 547 of the Bankruptcy Code that a trustee may recover bonuses, loans, nonqualified deferred compensation, and any other extraordinary or excessive compensation as determined by the court, made to an insider, officer or director and made within one year before the date of the filing of the bankruptcy petition. In addition, the Corporate Accountability in Bankruptcy Act would specifically provide in section 548 of the Bankruptcy Code that a trustee may recover bonuses, loans, nonqualified deferred compensation, and any other extraordinary or excessive compensation, as determined by the court, paid to an officer, director or employee who has committed securities or accounting violations, within 4 years of the filing of the bankruptcy petition. My bill extends the present one year reach- back period for fraudulent transfers in the Bankruptcy Code to 4 years, I did that because a majority of states have adopted a 4 year time period or the Uniform Fraudulent Transfer Act which allows for a 4 year time frame. I believe that these changes to section 548 are fair because they are tied to excessiveness and wrongdoing. Simply said, illegal acts should not be rewarded with a big fat paycheck. The point of this bill is that corporate officers and wrongdoers should not be able to keep bonuses, loans and other excessive compensation when the company goes under and others, employees, creditors and investors, are left holding an empty bag through no fault of their own. It's just not fair. So I hope that my colleagues will support the Corporate Accountability in Bankruptcy Act to make the Bankruptcy Code clear that corporate bigwigs and wrongdoers cannot unjustly enrich themselves and their excessive compensation and loans can and will be brought back into the bankruptcy estate. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. I yield the remainder of the time to Senator Nickles.

Mr. GRASSLEY. Mr. President, I yield myself such time as I might consume, but I would like to be informed if I have reached the 7-minute mark. Mr. President, I hope people on the other side of the aisle will take into consideration the statements of the previous President of the United States, President Clinton, on the importance of trade. President Clinton rightly bragged about one-third of the new jobs during his administration being directly related to trade emphasizing the importance of trade. John Deere, Waterloo, IA--one-fifth of the jobs there are related to trade: 3M in Oakville, IA--40 percent of production is related to trade. We want to remember that trade creates jobs. It creates jobs that pay 15 percent above the national average. According to President Clinton, and according to the economic facts of life, trade is good for American workers--creation of jobs, and creation of good jobs. I would also like to say that those who have been criticizing President Bush saying he does not have a strong economic team must, in fact, have their heads in the sand. Compare that criticism to what I just said about the importance of trade as emphasized by President Clinton. Then you will see the strong economic leadership of Ambassador Zoellick and Secretary Evans as they have worked on trade issues generally, and particularly their leadership on trade promotion authority. Two things about the economic policy of this administration: They have strong leaders in place to talk about the importance of the economy and to carry out policy important to the economy. And particularly they are considering continuing the trend that President Clinton emphasized--the importance of trade to creating jobs, and good jobs. I think it is bunk that this administration has no strong economic voice, particularly if you look at the strong leadership of Ambassador Zoellick and Secretary Evans on promoting good trade policy, and their very successful work on bringing this legislation to where it is now. Make no doubt in anybody's mind that I rise in strong support of the conference report accompanying H.R. 3009, the Trade Act of 2002, and urge my colleagues to support cloture and final passage. This bill is the product of over a year and a half of intense negotiations, discussion, and debate from both Republicans and Democrats in both Houses of Congress--and particularly strong bipartisan support here in the Senate. Because of these efforts, the Trade Act strikes a solid and balanced compromise among a number of key issues and competing priorities in the tradition of bipartisanship in the Senate. It is a product that should receive broad support here in the Senate today. The Trade Act of 2002 renews trade promotion authority for the President for the first time in almost a decade. Through a spirit of compromise, Democrats and Republicans were able to break the deadlock on trade promotion authority that was the environment during the last term of President Clinton, and we were able to reach a balanced compromise on a number of key issues. At the same time, we were able to provide the President with the flexibility that he needs to negotiate strong international trade agreements while maintaining Congress's constitutional role over U.S. trade policy. It represents a thoughtful approach to addressing the complex relationships between international trade, workers' rights, and the environment. And it does so without undermining the fundamental purpose and proven effectiveness of this process now called trade promotion authority. It is an extremely solid bill. The Trade Act also reauthorizes and improves trade adjustment assistance for America's workers whose jobs may be displaced by trade. I think the trade adjustment provisions in the act are a vast improvement over the legislation that passed the Senate. Our provisions--which I voted for but wasn't entirely in tune with-- would have completely rewritten existing law of trade adjustment assistance. In doing so, the Senate bill added a number of new, costly definitions, time lines, and ambiguous administrative obligations. This conference report removes these burdensome and ill-advised changes. Unlike the Senate bill, the conference report simply amends and builds upon existing trade adjustment assistance law. It adds new provisions which help to actually improve trade adjustment assistance while maintaining a linkage to trade. In short, the Trade Act improves the Senate-passed trade adjustment bill and represents a balanced approach to ensuring that workers displaced by trade will get the necessary assistance in trading to reenter the workplace. I also mention the good provisions of the Andean pact because this will help create new employment opportunities in the countries of Bolivia, Ecuador, Colombia, and Peru. It will help us, too, in our efforts there to fight drug trafficking. I will be the first to admit that this bill is not a perfect piece of legislation. But, all in all, it is fair and balanced. It deserves strong support. International trade has long been one of our most important foreign policy and economic tools. It was a key component for the last 50 years for enhancing international economic strategy. This bill will make a difference. Nations around the world are waiting for our call and the usual U.S. leadership of the last 50 years. Trade ministers and cabinets all over the world are looking to the Senate now for the United States to reestablish its leadership that we haven't had for 9 years. I hope we will not let them down. I urge support for the conference report, vote for cloture and passage of the bill. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, during the conference on the farm bill, the conferees threw out my bipartisan amendment on reasonable payment limits. I was extremely disappointed the provision was dropped. Reasonable, legitimate payment limits were a top priority to Iowa's family farmers. It is important to the farmers of Iowa that we fix this shortcoming of the new farm bill. American's recognize the importance of the family farmer to our Nation, and the need to provide any adequate safety net for family farmers. In recent years, however, assistance to farmers has come under increasing scrutiny. Critics of farm payments have argued that the largest corporate farms reap most of the benefits of these payments. The reality is, 60 percent of the payments have gone to only 10 percent of our Nation's farmers. What's more, the payments that have been designed to benefit small and medium-sized family famers have contributed to their own demise. Unlimited farm payments have placed upward pressure on land prices and have contributed to overproduction and lower commodity prices, driving many families off the farm. The new farm bill fails to address the use of generic commodity certificates which allow large farming entities to circumvent payment limitations. The supposed ``reform'' in the farm bill is worthless due to the lack of generic certificate reform. In recent years, we have heard news reports about large corporate farms receiving millions of dollars in payments through the use of generic certificates. Generic certificates do not benefit family farmers but allow the largest farmers to receive unlimited payments. Legitimate, reasonable payment limits are critical to family farmers in Iowa. I feel strongly the farm bill failed Iowa's farmers when it failed to effectively address the issue of payment limitations. Hopefully, the proposal I am introducing with Senator Enzi and Senator Hagel will help to restore public respectability for Federal farm assistance by targeting this assistance to those who need it the most, while providing the much needed disaster assistance for livestock producers. This new proposal allow for a total of $35,000 for direct payments, $65,000 for counter-cyclinal payments, $150,000 for LDP/MLA payments, and $30,000 over the LDP limit for generic certificates. This new proposal allows for a total of $35,000 for direct payments, $65,000 for counter-cyclical payments, $150,000 for LDP/MLA payments, and $30,000 over the LDP limit for generic certificates. This new farm bill establishes an $80,000 limitation on direct payments, $130,000 on counter-cyclical payments, $150,000 on LDP/MLA payments, and no limitation on generic certificates. The grand total for the new farm bill payments is $360,000 with unlimited payments through the use of generic certificates. The cumulative payment limit under the Enzi-Grassley legislation is $250,000 plus $30,000 for generic certificates. There is no ``active participation'' requirement in this proposal, as compared to my farm bill payment limit proposal. This legislation does not eliminate the three entity rule, but it does eliminate the need for multiple entities by allowing farmers who choose not to participate in multiple entities to participate at an equal level as those that choose to receive the same benefits from up to three entities. This legislation finally establishes tangible transparency regarding the fourth payment that only the largest farming entities utilize. That payment is the generic commodity certificate payment. While I believe generic certificates should be eliminated, I understand the importance in developing a fourth payment limitation so that my colleagues realize there is another payment. Currently, generic certificates are an endless stream of funding only limited by the maximum extent of commodity production by the entity receiving payments. This legislation would help offset the cost of the much needed livestock disaster assistance and help small and medium-size producers nationwide who are tired of the Government subsidizing large farm entities which drive land rent expenses to unreasonable margins due to economics of scale.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise in strong support of the conference report to accompany H.R. 3009, the Trade Act of 2002 and urge my colleagues to support cloture and final passage of the bill. This bill is the product of over a year and a half of intense negotiations, discussion, and debate among Republican and Democrats in both Houses of Congress. Because of these efforts, the Trade Act strikes a solid and balanced compromise among a number of key issues and competing priorities. It is a product which should receive broad support here in the Senate today. The Trade Act of 2002 renews Trade Promotion Authority for the President for the first time in almost a decade. Through a spirit of compromise, Democrats and Republicans were able to break the deadlock of TPA and reach a balanced compromise on a number of key issues. For example, for the first time TPA contains a negotiating objective on labor and the environment. Negotiators are directed to seek provisions in trade agreements requiring countries to enforce their own labor and environmental laws. These negotiating objectives also recognize a country's right to exercise discretion and establish its own labor and environmental standards without being subject to retaliation. The bipartisan TPA provisions also contain carefully balanced provisions on investment, which preserve the fundamental purpose of the investor-state dispute settlement procedures while ensuring that they are not subject to abuse. The TPA provisions preserve the ability of the United States to enforce our trade remedy laws which help combat unfair trade practices. Finally, they contain unprecedented consultation procedures which ensure meaningful and timely consultations with Congress every step of the way, without curtailing the President's ability to negotiate good agreements. In short, the Bipartisan TPA bill provides the President with the flexibility he needs to negotiate strong international trade agreements while maintaining Congress' constitutional role over U.S. trade policy. It represents a thoughtful approach to addressing the complex relationship between international trade, worker rights, and the environment. And it does so without undermining the fundamental purpose and proven effectiveness of Trade Promotion Authority procedures. It is an extremely solid bill which I am proud to support. I would like to include some material for the Record which provides some background on how we got to where we are today. Today we are on the verge of passing this critical bill and sending it to the President's desk for his signature. I want to recognize Chairman Baucus' strong efforts during the recent House-Senate conference on the Trade Act. I think they were key to our success. I would now like to briefly outline two other provisions in the bill--Trade Adjustment Assistance and the Andean Trade Promotion Act. First on TAA. The Trade Act reauthorizes and improves Trade Adjustment Assistance for America's workers whose jobs may be displaced by trade. I think the TAA provisions in the Trade Act are a vast improvement over the legislation that passed the Senate. The Senate TAA bill would have entirely rewritten existing law. In doing so, the Senate bill added a number of new, costly definitions, time-lines and ambiguous administrative obligations. The Trade Act removes these burdensome and ill-advised changes. Unlike the Senate bill, the Conference Report simply amends and builds upon existing law. It adds new provisions which help to actually improve the TAA program while maintaining its linkage to trade. The TAA provisions in the Trade Act consolidate the TAA and NAFTA-TAA programs, thereby establishing a uniform set of requirements. It triggers immediate provisions of rapid response and basic adjustment services and streamlines the petition approval process. The act also reduces by one-third the time period in which the Secretary must review a petition. At the same time, the TAA provisions drastically scale back the number of workers who can be eligible for TAA, thereby ensuring that only those workers who are truly impacted by trade and in need of retraining are eligible for assistance. The Trade Act includes a 65 percent health insurance tax credit, and presents a firm, clear alternative to expanding Medicaid and over government run health insurance coverage. In short, the Trade Act improves the Senate passed TAA bill and represents a more balanced approach to ensuring that workers displaced by trade get the assistance and training they need to quickly re-enter the workforce and compete in the international environment. There is another extremely important provision in the Trade Act that I would like to briefly mention, and that is the Andean Trade Promotion and Drug Eradication Act. This provision will help eradicate drug trafficking in the Andean nations by helping to create new employment opportunities for the citizens of Bolivia, Ecuador, Colombia and Peru. It is a vital piece of legislation for our Andean neighbors and a critical tool in our effort to fight drug trafficking. The intent of the Andean Trade Preference Act, from the beginning, was to advance our efforts to combat illegal drug production and trafficking. It was then and is now not so much a trade initiative as it is an effort to assist important allies in a critical fight. The nations of Latin America expect us to continue to stand by their side as we fight the scourge of drugs. They have paid a high price to aid us in this effort. It is a battle we cannot afford to lose. So we cannot fail to do our duties as legislators and provide them with the support they need with this important legislation. Before I conclude, I want us to step back and take a look at the big picture. I will be the first to admit that this bill is not perfect. There are provisions in this bill which I do not support and there are many items I wish were in the bill that are not. But all in all it is a good, fair, and balanced package. It deserves our strong support, especially in this changing international environment. International trade has long been one of the most important foreign policy and economic tools in our arsenal. It was a key component of our post-World War II international economic strategy. For over fifty years international trade contributed to stability and economic growth throughout the world. It helped to lift the nations of Europe and Asia out of the ashes of World War II. And it helped America experience unprecedented prosperity here at home. International trade can play a similar role at the beginning of the twenty-first century. But our nation must have the tools to lead. This bill will make a difference. Nations around the world are waiting for our call and our leadership. Today, the eyes of the world are on the Senate. We cannot let them down. I urge my colleagues to support the conference report, vote for cloture and final passage of the bill. I ask unanimous consent to print the information I earlier referenced in the Record.

Mr. GRASSLEY. I appreciate the clarification. tuna certification of origin in the andean trade preference act

Mr. GRASSLEY. A related question concerns the increase in the quantitative cap, provided for in Section 3108(b) of the conference report. As I understand it, the cap increases represent an approximate doubling of the percentages used in setting the caps under current law, except the increase can only be used for garments containing regional or a mixture of regional and U.S. inputs.

Mr. GRASSLEY. As I understand it, section 112(b)(3) of AGOA, as amended by the conference report, would also cover garments made from regional fabrics that also incorporate U.S. formed fabrics made from U.S. yarns, U.S. formed yarns, or U.S. formed fabrics not made from yarns that are classifiable under heading 5602 or 5603 of the Harmonized Tariff Schedule of the United States. An example of this might be a tailored coat made from African wool, that incorporates U.S. fabrics, linings, interlinings, or pocketing material. As you understand it, would such a garment be eligible for benefits under this provision?

Mr. GRASSLEY. Section 3108(a)(3) of the conference report amends section 112(b)(3) of AGOA, which provides for duty-free access for apparel made from regional fabrics, subject to a quantitative cap.

Mr. GRASSLEY. I would like to ask the chairman of the Finance Committee to engage in a colloquy for the purposes of clarifying several provisions in this conference report as they relate to the African Growth and Opportunity Act, known as AGOA.

Mr. GRASSLEY. Mr. President, this is a historic day. I am very proud of what we have accomplished. The Trade Act of 2002 will soon be sent to the President's desk for his signature, and America will once again take a leadership role in promoting international trade in the world economy. Let me briefly highlight the important provisions in this bill. First and most momentous, we restored the President's ability to negotiate strong trade deals, and send them back to Congress for an up or down vote. This authority has been absent for far too long, and I see this as one of the greatest successes of this Congress. Second, we renewed and expanded preferences for our important allies in the Andean region, which will help to eradicate the drug trade that threatens their stability, and our health and safety. Next, we reauthorized both the Generalized System of Preferences, which expired last year, and the Customs Service. And last of all, we renewed and expanded the Trade Adjustment Assistance program for workers who become displaced by trade. Thank you to my colleagues who helped make this happen. I would like to commend my colleague and friend, Senator Baucus for his leadership and keeping his word that we would get this done. Thank you also to Senator Hatch who has been an instrumental ally in the Conference Committee as well as on the Finance Committee, and thank you to Senator Hatch's staff members Bruce Artim and Chris Campbell for their hard work. Senator Phil Gramm was also a great help in getting us to this point, along with Amy Dunathan from his trade staff. They were key in helping to negotiate a deal when this legislation was first brought to the Senate floor. Next, I would like to thank my staff, who have been dedicated and focused on passing TPA for the past couple of years. This is a great success, and I am happy to share it with them. I would like to thank the Staff Director of my Finance Committee staff, Kolan Davis, Chief Trade Counsel Everett Eissenstat, and Trade Counsel Richard Chriss. This would not have happened if it were not for their incredible work ethic and knowledge, along with the hard work and support of trade staff members Carrie Clark and Tiffany McCullen Atwell. My Finance Committee health and pension staff also played an important role in this process. Thank you to Ted Totman, Colin Roskey and Diann Howland for helping us navigate through the complex health and pension issues in the Trade Adjustment Assistance section of the bill. Senator Baucus had a good staff helping him as well. And I would like to thank them for their hard work and long nights that went into making this happen. Senator Baucus' staff was led by John Angell and Mike Evans, and his trade staff was led by Greg Mastel, along with Angela Marshall Hofmann, Tim Punke, Ted Posner, Shara Aranoff and Andy Harig. A sincere thank you also must be given to Polly Craighill from the office of the Senate Legislative Counsel, for her patience and expertise in drafting this legislation. We can all be proud of this accomplishment, and I look forward to the President signing it into law.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, as everyone knows, I pushed the packer ban because I want more competition in the marketplace. While I don't think packers should be in the same business as independent livestock producers, it's not the fact that the packers own the livestock that bothers me as much as the fact that the packers' livestock competes for shackle space and adversely impacts the price independent producers receive. My support of the packer ban is based in the belief that independent producers should have the opportunity to receive a fair price for their livestock. The last few years have led to widespread consolidation and concentration in the packing industry. Add on the trend toward vertical integration among packers and there is no question why independent producers are losing the opportunity to market their own livestock during profitable cycles in the live meat markets. The past CEO of IBP in 1994 explained that the reason packers own livestock is that when the price is high the packers use their own livestock for the lines and when the price is low the packers buy livestock. This means that independent producers are most likely being limited from participating in the most profitable ranges of the live market. This is not good for the survival of the independent producer. My new legislative concept would guarantee that independent producers have a share in the marketplace while assisting the mandatory price reporting system. The proposal would require that 25 percent of a packer's daily kill comes from the spot market. By requiring a 25 percent spot market purchase daily, the mandatory price reporting system which has been criticized due to reporting and accuracy problems would have consistent, reliable numbers being purchased from the spot market, improving the accuracy and transparency of daily prices. In addition, independent livestock producers would be guaranteed a competitive position due to the packers need to fill the daily 25 percent spot/cash market requirement. This isn't the packer ban. The intent of this piece is to improve price transparency and hopefully the accuracy of the daily mandatory price reporting data. I feel strongly that packers should NOT be able to own or feed livestock, but this approach is not intended to address my concern with packer ownership. The packs required to comply would be the same packs required to report under the mandatory price reporting system. Those are packs that kill either 125,000 head of cattle, 100,000 head of hogs, or 75,000 lambs annually, over a 5 year average. Packers are arguing that this will hurt their ability to offer contracts to producers, but the fact of the matter is that the majority of livestock contracts pay out on a calculation incorporating mandatory price reporting data. If the mandatory price reporting data is not accurate, or open to possible manipulation because of low numbers on the spot market, contracts are not beneficial tools for producers to manage their risk. This legislative proposal will hopefully give confidence to independent livestock producers by improving the accuracy and viability of the mandatory price reporting system and secure fair prices for contracts based on that data. It's just common sense, when there aren't a lot of cattle and pigs being purchased on the cash market, it's easier for the mandatory price reporting data to be inaccurate or manipulated. The majority of livestock production contracts are based on that data, so if that information is wrong the contract producers suffer. That's why the Iowa Pork Producers, Iowa Cattlemen, Iowa Farm Bureau, R-CALF, the Organization for Competitive Markets, and the Center for Rural Affairs have all endorsed this proposal. Mr. President, this legislation will guarantee independent livestock producers market access and a fair price. It will accomplish these goals by making it more difficult for the mandatory price reporting system to be manipulated because of low numbers being reported by the packs. I ask consent the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I ask unanimous consent that Heather Marshall Byers and Norman A. MacLean be allowed on the Senate floor for today, the first day of August.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, as everyone knows, I pushed the packer ban because I want more competition in the marketplace. While I don't think packers should be in the same business as independent livestock producers, it's not the fact that the packers own the livestock that bothers me as much as the fact that the packers' livestock competes for shackle space and adversely impacts the price independent producers receive. My support of the packer ban is based in the belief that independent producers should have the opportunity to receive a fair price for their livestock. The last few years have led to widespread consolidation and concentration in the packing industry. Add on the trend toward vertical integration among packers and there is no question why independent producers are losing the opportunity to market their own livestock during profitable cycles in the live meat markets. The past CEO of IBP in 1994 explained that the reason packers own livestock is that when the price is high the packers use their own livestock for the lines and when the price is low the packers buy livestock. This means that independent producers are most likely being limited from participating in the most profitable ranges of the live market. This is not good for the survival of the independent producer. My new legislative concept would guarantee that independent producers have a share in the marketplace while assisting the mandatory price reporting system. The proposal would require that 25 percent of a packer's daily kill comes from the spot market. By requiring a 25 percent spot market purchase daily, the mandatory price reporting system which has been criticized due to reporting and accuracy problems would have consistent, reliable numbers being purchased from the spot market, improving the accuracy and transparency of daily prices. In addition, independent livestock producers would be guaranteed a competitive position due to the packers need to fill the daily 25 percent spot/cash market requirement. This isn't the packer ban. The intent of this piece is to improve price transparency and hopefully the accuracy of the daily mandatory price reporting data. I feel strongly that packers should NOT be able to own or feed livestock, but this approach is not intended to address my concern with packer ownership. The packs required to comply would be the same packs required to report under the mandatory price reporting system. Those are packs that kill either 125,000 head of cattle, 100,000 head of hogs, or 75,000 lambs annually, over a 5 year average. Packers are arguing that this will hurt their ability to offer contracts to producers, but the fact of the matter is that the majority of livestock contracts pay out on a calculation incorporating mandatory price reporting data. If the mandatory price reporting data is not accurate, or open to possible manipulation because of low numbers on the spot market, contracts are not beneficial tools for producers to manage their risk. This legislative proposal will hopefully give confidence to independent livestock producers by improving the accuracy and viability of the mandatory price reporting system and secure fair prices for contracts based on that data. It's just common sense, when there aren't a lot of cattle and pigs being purchased on the cash market, it's easier for the mandatory price reporting data to be inaccurate or manipulated. The majority of livestock production contracts are based on that data, so if that information is wrong the contract producers suffer. That's why the Iowa Pork Producers, Iowa Cattlemen, Iowa Farm Bureau, R-CALF, the Organization for Competitive Markets, and the Center for Rural Affairs have all endorsed this proposal. Mr. President, this legislation will guarantee independent livestock producers market access and a fair price. It will accomplish these goals by making it more difficult for the mandatory price reporting system to be manipulated because of low numbers being reported by the packs. I ask consent the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. I thank the Senator from Tennessee. Mr. President, obviously, as you might expect, I rise in opposition to the latest amendment by Senator Graham--whether it is Graham 2, 3, or 4, I am not sure, but it is another Graham idea on drugs. First of all, I would like to address an argument that some Senators have been making on behalf of this amendment. They have argued that this is the Senate's very last chance to deal with the drug issue this year. Even though this amendment is terribly flawed, they say that somehow Senators should be encouraged to vote for it anyway. Mr. President, I am second to none in my frustration with the Senate's failure on this issue at this point. The Democratic leadership has abandoned any pretense of a fair process. And fair process is what the Senate is all about. Instead of leading, the Democratic leader has been content to cook up his own proposals or have members of his party cook up their own proposals and try to somehow just ram them through the Senate. For those of us who believe things in this body must be done in a bipartisan way, and through the committee process, and, in the end, get things done, this process in which we have been involved has been extremely frustrating. The good news is that this vote is not the last vote. Fortunately, the Senate still has time and the ability to act. Speaking for my colleagues in the tripartisan group, we are ready to move on and begin work in the Finance Committee on a truly bipartisan compromise. I wish Senator Daschle had the confidence in Senator Baucus I have to move a bipartisan bill on Medicare prescription drugs out of committee. No one should vote for this amendment in the misguided belief that it is their last chance because it is not their last chance. Now I would like to address the substance of the amendment before us. The sponsors chose to spring the text of this amendment on the Senate yesterday for the first time. Perhaps they thought they could slip in something new that we would not catch. Well, we caught it, and you know we have caught it by the speeches of the Senator from Maine. We actually have had a chance, and we have studied the Graham amendment. The Graham amendment imposes a massive new burden on States just when State treasuries are in terrible shape. What does it do? Well, it mandates--do you like mandates?--that State Medicaid Programs provide cost-sharing assistance to an entirely new universe of seniors who have incomes up to 150 percent of the Federal poverty level. If that is not bad enough, it also socks the States with administrative costs of enrolling seniors with incomes up to 200 percent of poverty. Even beyond those costs, this enrollment burden is going to be an administrative nightmare for the respective States because of all the different populations involved. At a time--and we know this is true in at least 45 of the 50 States-- when they are experiencing tremendous budget pressures, massive new burdens of this type are the last thing the States need to have imposed upon them by the Federal Government. In fact, last week we heard of the problems of the State budgets and the problems States are having with their Medicare Program, because we voted for additional fiscal relief just last week. How ironic it would be if now we were going to add yet another burden. Let me point out another problem with the amendment before us, and that is the low-income benefit, focusing on the beneficiaries that it serves. If you earn $1 too much to qualify for coverage, you get nothing. That is a cliff, we call it. We try to avoid cliffs. If we do policy right, we do avoid cliffs. But this amendment isn't about policy that makes sense, this amendment is about a political statement. So seniors can find themselves in a situation where, if they earn $17,720, they qualify. If they earn an extra $1, $17,721, they lose drug coverage. So the Graham amendment sets up disincentives for beneficiaries to work at the same time as Congress has been trying to remove the wrong incentives from the law, and here we are considering a new disincentive. Once again, the policy just doesn't make sense. Everything I have said so far pertains to the benefit for the 30 percent or so of low-income beneficiaries who get solid coverage under the Graham amendment. Unfortunately, there are another 70 percent out there who get very little coverage at all. Those 70 percent, in fact, are the biggest losers of all under this alternative. Just how bad is this benefit in the amendment before us? A senior above 200 percent of poverty with average drug spending will receive approximately $6 of assistance every month--only $6 towards their prescription drug expenses. For me, $6 a month is hardly a benefit at all. I would be embarrassed to go home to Iowans and tell them I voted for an amendment that provided only $6 a month to average beneficiaries. Why is there so little benefit? Because for 70 percent of the seniors, there is no coverage from zero to $3,300 in out-of-pocket spending. A week ago, the author of this amendment complained about a proposal I put forward because we had a $250 deductible. Now we are seeing a $3,300 deductible. Benefits paid by private insurance don't even count towards that. Another problem: Retirees with decent coverage from a union or an employer do not incur actual drug costs out of their own pocket above $3,300, so the Graham benefit provides almost nothing for them. I have to sound a sobering note: You don't pull the wool over the eyes of Americans--and seniors in particular. They don't appreciate false promises. I fear Senators who vote for the Graham amendment will have a lot to answer for down the road. I won't be one of them. I urge my colleagues not to be one of them either. We are facing another mostly partisan vote on a mostly partisan bill, another vote that will fail to get 60 votes and will fail to help our seniors. Had regular order been followed, had the Finance Committee been given the right to work its bipartisan will, we could be completing action on this issue. Instead, we are still at a beginning. The sponsors of the tripartisan bill, the only bipartisan bill in all of Washington, DC, to provide comprehensive, universal coverage, have always been ready and willing to talk to anyone about compromises, and we are still in this mode. We are ready to meet people any place, any time, anywhere to discuss this, including members and leaders of the AARP, who somehow got sucked in today to supporting something that a week ago they said they abhorred. This situation is going to continue to be the case for us in this group, even after this morning's vote. So this vote is an ongoing, evolving process to get us a successful product. I have promised my constituents I will not give up on this issue. Adding a drug benefit to Medicare is business that simply cannot wait another year to cost $100 billion. Just as the need for prescription drug coverage in Medicare is not going to go away, we in the tripartisan group are not going to go away.

Mr. GRASSLEY. Mr. President, I'd like to say a few words about the Hatch-Waxman provisions that were contained in S. 812 that passed this morning. Ensuring access to affordable prescription drugs is a top priority for me. The challenge is to strike the right balance so consumers have timely access to medicine that's affordable and so that new, groundbreaking pharmaceuticals continue to be developed. I voted for S. 812 because I want Iowans and all Americans to benefit as much as possible from the competition and lower prices that generic drugs bring about in the marketplace. This bill starts to close loopholes in the current Hatch-Waxman law and stop abuses that may have contributed to the delay in market entry to generic drugs and kept drug prices high. I believe that this is a good first step toward recognizing and addressing concerns about abuses in the current system. However, I still have concerns about the drafting of a few of the provisions in this legislation. For example, I'm concerned abut the new private right of action created by S. 812. The current Hatch-Waxman law does not allow for such a remedy, and this could cause unnecessary and increased litigation. I also share the concerns that Senator Frist expressed regarding the bioequivalency provision. I think that we need to clarify that this provision should in no way adversely impact or lessen public safety. Further, I think that we should clarify that the provision dealing with the 45 day paragraph IV notice does not eliminate all legal avenues with respect to a company being able to protect it's rights with respect to a patent. There might be a few other changes that would be beneficial to the bill. Nevertheless, I'm hopeful that we can improve on this legislation. We need to be able to close the loopholes, but also ensure that we keep the proper balance between promoting timely access to affordable generic drugs and giving brand-name companies reasonable intellectual property protections so they will continue to innovate and find new cures and drugs. I was disappointed that the Senate was not able to consider an amendment I wanted to offer with Senator Leahy which would have required brand-name and generic companies to file with the Federal Trade Commission and Justice Department any agreements that deal with the 180 day exclusivity provision of the Hatch-Waxman law. The language of our amendment is exactly the language contained in S. 754, as reported out of the Judiciary Committee last November. So everyone knows, this legislation is fully supported by the Federal Trade Commission report that came out just yesterday. In fact, the Federal Trade Commission report said ``we believe that notification of such agreements to the Federal Trade Commission and the U.S. Department of Justice is warranted. We support the Drug Competition Act of 2001, S. 754, introduced by Senator Leahy, as reported by the Committee on the Judiciary.'' I'm putting my colleagues on notice that I will work to get this legislation passed to ensure that lower price drugs get to market as soon as possible. I want Iowans to benefit from new scientific research and innovative drug products. Patent protections help provide incentives for these developments. With the practice of medicine today being so dependent on prescription drugs and with a new, taxpayer-financed prescription drug benefit on the horizon, I'll continue to work to make sure Congress maintains the right balance between patent protection and access to generic drugs. Mr. McCain. I would like to take the opportunity to talk about the underlying bill, S. 812, which, until now, has been largely treated in this two week debate as little more than a vehicle for a grander, more politically salient, but also more elusive, prescription drug benefit. If the Senate fails to pass the underlying bill, the Greater Access to Affordable Pharmaceuticals Act, GAAP, will lose a real opportunity to benefit all consumers of prescription drugs. In a recently concluded study of the abuses of the Hatch-Waxman act, the Federal Trade Commission concluded that there is a need for Congress to act and to act quickly to put an end to the anti-competitive abuses that have delayed the entry of generic drugs into the market. S. 812 would allow consumers earlier access to generic versions of drugs while protecting the intellectual property rights of the brand name drug innovators, a protection that's necessary for their continued investment in research and development of new and improved pharmaceuticals. While the brand name drug manufacturers have decried this bill, which has been portrayed by some as a boon to generic drug makers, I assure you that these portrayals are not accurate. The consumer is the intended beneficiary of this legislation, plain and simple. S. 812 would accomplish five important objectives. First, the bill would limits the ability of brand name drug companies to delay the marketing of generic competitors. It does this by limiting brand name drug companies to only one automatic 30-month stay on the marketing of generic drugs. Under current law, brand name drug companies can prevent generic substitutes from coming to market by suing the generic for patent infringement and in so doing, stop the FDA, for up to 30 months, from approving the cheaper substitute. By bringing successive patent infringement suits, brand name drug companies have obtained sequential 30-month stays, and kept generics off the market much longer than 30 months. Allowing for only one automatic delay is consistent with the recommendation the Federal Trade Commission made recently in its comprehensive study of anticompetitive abuses of current law by brand name and generic drug companies. In its report, the FTC recommended that only one stay be allowed, and noted that ``prior to 1998, only 1 out of 9 blockbuster drug products involved at least three patent lawsuits, whereas after 1998, 5 of the 8 blockbuster products involved at least three lawsuits.'' ``[C]ases involving multiple patents take longer than those involving fewer patents [to resolve]'' the FTC wrote, and the Commission found that the multiple stacking of 30-month stays prevented the FDA from approving generic ANDAs from 4 to 40 months beyond the initial 30-month stay. There is no doubt that these stays have prevented or delayed generic drugs from entering the marketplace and increased the price of prescription drugs. Allowing for one 30-month stay, as S. 812 does, strikes a balance between the rights of brand name drug companies seeking to protect their legitimate patents, and the rights of consumers to access generic drugs without unreasonable delay due to ``gaming'' of the system. I understand that there is disagreement regarding which patents should be afforded protection under the automatic stay, however, I believe we can all acknowledge that allowing for one, and only one stay, is the most effective way to prevent frivolous lawsuits that delay consumers' access to less expensive pharmaceuticals. Second, the GAAP Act would modify the provision in current law that allows the first-to-file generic drug manufacturer an exclusive 180-day period to market its generic drug without competition from other generic manufacturers. The 180-exclusivity period was intended to provide a needed impetus for generic companies to challenge dubious patents. Like the automatic 30-month stay, however, this 180-day exclusivity has been abused. Brand name and generic drug companies have colluded in deals in which the brand name manufacturer effectively extends its own period of exclusivity by paying the generic drug manufacturer to stay out of the market for the six months during which the generic would otherwise be able to compete. When this occurs, the brand name manufacturer wins, and the generic manufacturer wins, but consumers lose. To prevent this type of abuse, S. 812 modifies current law so that first-to-file generic manufacturers that engage in anticompetitive conduct and do not go to market, lose the privilege of 6-month exclusivity in the generic market, and, in certain circumstances, that exclusivity ``rolls'' over to the next generic competitor. Third, the legislation would require generic drug applicants to the FDA to provide a more detailed ``paragraph IV'' filing. This means that the patent holder will not only receive a general notice that its patent is being challenged, but the generic drug applicant will be required to provide a more detailed legal basis for its assertions regarding the original patent's validity. This is an important protection for the brand name manufacturers because they will receive more information about the nature of the patent challenge as opposed to a simple notice that a generic application has been filed. Fourth, S. 812 would clarify that the FDA's existing regulations as they pertain to bio-equivalence have the affect of law. Currently, bio- equivalence is demonstrated through blood level studies, and only in some circumstances has the FDA allowed for limited human data to be submitted for products where blood studies are inapplicable. S. 812 would allow the FDA to amend their regulations as necessary and clarify their authority over biological products under the Federal Food, Drug and Cosmetic Act. The fifth significant change to current law relates to how to clean up abuses of the ``Orange Book'', the manual in which the FDA lists all patents on pharmaceutical drugs. The provision in the current bill, allows generic manufacturers in certain instances to bring a cause of action to ``de-list'' or ``re-name'' a drug patent. Current law provides no means for ``delisting'' a patent, although doing so can speed the marketing of generic drugs, particularly in cases involving patents that are patently frivolous and for which the brand name manufacturers clearly would not win a patent infringement suit. The cause of action for generic manufacturers to ``delist'' patents was a provision that was added to S. 812 late in the process, and it is controversial. Opponents argue that doing so will significantly increase and complicate litigation without clearly making generic drugs available to consumers more quickly. How the cause of action in S. 812 will work is yet unclear. I hope that during conference on this legislation, we can consider not only the provision in the Senate bill, but also the proposal mentioned in the FTC's recent report to permit a claim for ``delisting'' to be brought, not as an original and separate action, but as a counterclaim in the context of a patent infringement lawsuit. Such an approach may be more appropriate in that it could reduce the number of lawsuits, but still allow generic manufacturers a way to ``delist'' frivolous patents through summary judgments or other motions that can be raised in the context of patent infringement litigation. Over twenty years ago, Hatch-Waxman establishes the procedures for bringing generic drugs to consumers and set out to strike a balance in the pharmaceutical industry that would allow brand name manufacturers to protect their innovations, while allowing generic brands easier access into the market. In large part, Hatch-Waxman succeeded in bringing new lower-cost alternatives to consumers, and encouraging more investment in U.S. pharmaceutical research and development. This has been evident in the 15 years since the enactment of Hatch-Waxman, where research and development has increased from $3 billion to $21 billion. Loopholes in the law, however, have delayed benefits to consumers. It is time to correct this. The Congressional Budget Office, CBO, recently released results of its estimate of S. 812 finding that total drug expenditures in this country over the next ten years (2003 to 2012) will be roughly $4.7 trillion. If the delays resulting from numerous lawsuits and agreements were eliminated, the CBO estimates that S. 812 would result in a savings of up to 7 percent or $320 billion. For consumers, particularly seniors, the uninsured, and those on Medicare, this is a tremendous savings. Congress will improve the lives of many Americans by passing the underlying language of S. 812. I urge my colleagues to do this now.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise in support of the Byrd-Grassley Amendment regarding Department of Defense credit cards. Many of my colleagues will be aware of the ongoing oversight investigation that I have been involved with for over 2 years now looking into abuses of government purchase cards and travel cards issued by the Department of Defense. Working with the GAO, Chairman Horn's subcommittee in the House, and others, we have been able to uncover a disturbing number of instances where DoD issued credit cards have been abused. We're not just talking about little abuses either. These cards have been used to purchase everything from cars to Caribbean cruises. They have been used for mortgage payments and for cash in adult entertainment establishments. The horror stories go on and on. It is unfortunate that we are just now finding out about many of these instances of fraud and abuse, but I am pleased that Secretary Rumsfeld appears to be taking this problem seriously. The Office of Management and Budget has announced a crackdown on credit card abusers and salary offsets and other tools are being used to recover funds from unauthorized charges. However, the question remains, ``How were these abuses allowed to occur in the first place?'' The answer is ineffective internal controls. Receipts are not always matched with statements and inventory is not checked to make sure that DoD got what it paid for. We also know that the Army doesn't always ask for the credit cards back when individuals leave the service. If you leave the cookie jar unguarded with the lid off, people are going to reach in and help themselves when no one is looking. Perhaps most alarming is the lack of credit checks. It seems obvious that credit checks should be done on individuals before issuing them a government credit card, but this is not currently the case. Not only is no one double checking to make sure these credit cards are used appropriately, but no one is checking to see if the individuals they are issued to are up to the responsibility. A little diligence up front could prevent millions of dollars in fraudulent purchases that leave the bank or the taxpayer holding the bill. It is also true that once credit card abuses have been discovered, not enough is done to follow up. I am glad that DoD is finally recovering money that has been misspent, but this shouldn't be the end of the story. Those who abuse the trust that has been placed with them should not get off scott-free. There have been individuals who have been court marshaled for fraudulent transactions, while others with similar misdeeds have been promoted. In fact, many individuals with a record of questionable purchases continue to hold a security clearance. Under existing DoD rules, a person's level of financial responsibility is a key factor in determining whether that person holds a security clearance. Beyond simply requiring repayment, DoD needs to review the positions these people hold and consider disciplinary action. Failure to do so could even put our national security at risk. The Byrd-Grassley Amendment requires the Department of Defense to take the initial steps necessary to address many of these problems that have been uncovered in our ongoing investigation. I commend Senator Byrd for his initiative and leadership in this area and I am pleased to associate myself with this amendment. First, the Byrd-Grassley Amendment stems the tide of DoD credit cards, which are apparently being handed out willy-nilly to just about everyone, by limiting the number of government charge card accounts that may be issued in fiscal year 2003 to 1,500,000. The amendment also requires that DoD must evaluate the creditworthiness of an individual before issuing a government charge card and prohibits DoD from issuing a card to anyone found not credit worthy. Finally, the Byrd-Grassley amendment requires DoD to establish guidelines and procedures for disciplinary actions against DoD personnel for improper, fraudulent, or abusive use of government charge cards, including reviewing and possibly modifying or revoking security clearances. The Secretary of Defense would then be required to report to the congressional defense committees on the implementation of these requirements by June 30, 2003. The requirements in the Byrd-Grassley Amendment are all well founded based on what I and others have been able to uncover regarding DoD credit card abuses. They are all measures that should be put in place by DoD without delay as a starting point toward getting this credit card debacle under control and preventing future abuses. This amendment shouldn't be needed as one would think all of the provisions would be implemented by DoD out of simple common sense. However, I assure you that it is needed, and I urge my colleagues to join Senator Byrd and me in this important initiative.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I want to make a few comments about Senator Wellstone's amendment. Ironically, I agree with Senator Wellstone's amendment, but also agree with some of the points made by my distinguished friends from Oklahoma and Texas. First of all, I want to be clear that I agree with Senator Wellstone's purpose. As I have said repeatedly in public, companies should have their hearts in America. If they don't have their hearts in America, they ought to get their rear ends out of America. In my mind, this notion applies especially to Government contracts. Mr. President, when the Finance Committee marked up legislation to shutdown corporate expatriation, I considered adding this Government contracting ban to the tax legislation. However, out of deference to the Governmental Affairs Committee, the committee with jurisdiction over Government contracts, I withheld. So, let's be clear that this matter is not a Finance Committee matter. Chairman Baucus and I moved legislation on this matter out of committee. If Government contracting were within Finance Committee jurisdiction, we would've addressed it. Now, let me say that my friends from Oklahoma and Texas are correct in one respect. That is, the problem of corporate expatriation springs from our flawed international tax code. It needs to be reformed. I am committed to reform. In the meantime, we need to stop the bleeding of the U.S. tax base and not reward expatriate companies with Government contracts.

Mr. GRASSLEY

Mr. GRASSLEY. I yield the floor.

Mr. GRASSLEY. Madam President I rise today to discuss the one year anniversary of the bipartisan tax relief package. On June 7, 2001, President Bush signed the legislation. On Friday, June 7 of this year, the President marked the first anniversary of that event in Des Moines, Iowa. I was pleased to join the President for that anniversary celebration. One year ago this week, the Treasury Department started sending out rebate checks to every American taxpayer. I ask unanimous consent to have printed in the Record an announcement from the Treasury Department dated July 26, 2001.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, it is my understanding staff arranged for me to have 20 minutes of that 45 minutes.

Mr. GRASSLEY

Mr. GRASSLEY. How much time is the Senator going to use?