Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. The majority leader yesterday finally brought to the Senate legislation that contains trade promotion authority, a second part called trade adjustment assistance, and a few other items, all very important but not getting as much attention as those two. I am pleased that the Finance Committee's bipartisan trade promotion legislation is now before the Senate. I believe strongly this legislation, more than any other, will promote America's constructive leadership of the international trading system. Nevertheless, my enthusiasm for the trade promotion authority component of the majority leader's legislation is tempered by the dismay that I have about how this process has been carried on. Even though I believe strongly trade promotion authority is badly needed, and surely it ought to be passed by the Congress and signed into law, I regret we are being forced by the Democrat leadership's unnecessary counterproductive, sort of take it or leave it approach--it is kind of a partisan attitude in the taking up of trade promotion authority and doing it in this fashion. When we passed trade promotion authority from the committee 4 months ago, the vote was 18 to 3. We did it in an open, cooperative, bipartisan spirit. I was greatly heartened by the bill itself and by the process in which we achieved a result that was good for America. But this bill before us, the one laid down by the Senate majority leader, is a much different story. I had hoped after bruising, partisan fights on economic stimulus, the Jordan trade bill, judicial nominations, and other issues, finally after those other issues that are very partisan, because we had an overwhelming vote in committee then in favor of trade promotion authority, that we would be able to show America's farmers, ranchers, agricultural producers, our workers in America's families and tens of millions of American consumers who benefit from free trade that we were beyond partisanship, able to do in a successful and short manner what the Senate has done on trade in the past, to be able to give the President the authority in this bill that Presidents since President Ford have had. I hoped the Senate could put aside partisan differences and we could move forward for the good of the country and this bipartisan spirit would carry over into the consideration of trade promotion authority. Unfortunately, because of the bill laid down last night, I am very sad to say I was wrong. Even after the Finance Committee approved trade promotion authority 18 to 3, it took 4 months before the Senate Democrat leadership would agree to bring this critically important bipartisan bill to the Senate floor. It took 4 months just to get a bill which passed out of committee by 18 to 3, to the floor, even though the President said time and again that the lack of trade negotiating authority was hurting his ability to lead at the negotiating table. When we finally seemed to be making progress in getting trade authority legislation to the floor, we were told the only way we could have this debate--a debate that the American people deserve to have, particularly the jobs created by trade--was if we agreed to partisan trade adjustment assistance legislation with which many Members on our side of the aisle disagree. I support trade adjustment assistance. I support an enhanced, updated, and fine-tuned trade adjustment assistance program. I have said that many times. In fact, the trade adjustment assistance legislation I support will more than double overall program spending because what I support will vastly increase spending on training to help the dislocated workers. My program adds health care coverage for the first time ever. It will assist so-called secondary workers for the first time ever. What I find difficult to agree to, and many Members on my side of the aisle will not agree, is the partisan, ``my way or the highway'' approach taken in the bill laid down by the Democrat leadership. The bipartisan way is the best way to get things done in Washington. Somehow the Democrat leadership is not listening to either the people on my side of the aisle or the people on his side of the aisle who I know agree that we need a bipartisan approach. Others have been ignored, even beyond this body, groups representing tens of thousands of farmers, ranchers, and hard-working American families, those workers who have jobs related to trade, those jobs that will be created because we pass this bill and have enhanced trade. I briefly quote from a letter to the majority leader printed as a full-page advertisement on April 11 in the Roll Call newspaper. This letter to the Senate majority leader was from the Agricultural Coalition for the Trade Promotion Authority, representing 80 food and agricultural groups dedicated to the passage of TPA. In part, it says: The strong bipartisanship that has historically prevailed in the Senate on trade matters must be reestablished to allow rapid action on trade promotion authority. We urge that this bipartisanship extend to work on other trade-related legislation that may need to move in tandem with trade promotion authority so that the U.S. can regain its position as world leader for free and fair trade, and in so doing open a world of opportunity for U.S. agriculture. That plea for bipartisanship on trade adjustment assistance is being ignored. My pleas for bipartisanship are being ignored, and so were those of many other Senators. We have a divisive partisan product, laid down last night, a product deliberately designed to emphasize differences, not to build bridges between Republicans and Democrats, among people of different viewpoints. It was meant not to seek common ground, not to restore the traditional nonpartisan approach to international trade and foreign policy that characterized so much of America's history but otherwise put down to simply score partisan political points. As disappointed as I am by the process that took place last night, I am still hopeful and commit myself to work for a genuine compromise. I happen to think it can still come together. I believe we can compromise and come together because America's global leadership is at stake. In other words, this is a very important bill. I don't for 1 second believe any Senator would deliberately want to diminish America's standing in the world community. Stakes are very high. But that is what will happen if we don't restore the President's credibility at the negotiating table. And this bill that came out of the committee does that--not the bill before the Senate. The merits of the Finance Committee bipartisan trade promotion authority bill are so compelling that I believe we will ultimately be able to compromise on trade adjustment assistance. I summarize the need for the Finance Committee TPA bill simply by saying the United States must be in a strong position to pursue our Nation's interests at the bargaining table. Without trade promotion authority, we are not in a strong position to accomplish that goal, it is just that simple. Already the United States has been pushed to the sidelines, pushed to a point where a great deal of activity on the trade front has taken place bilaterally, it has taken place regionally, and now globally in new trade negotiations underway through the regime of the WTO. There are many examples of how the United States is being left behind. The Andean community and Mercosur, for example, have moved closer to creating a South American free trade zone comprising 310 million people. Mercosur and the Andean community together have about $128 billion in annual exports. If they have a free trade zone, it will strengthen tremendously the economic power of Latin America and be negative towards the United States. If we fail to give our President trade promotion authority and progress on negotiations of the free trade area of the Americas slows as a result, or comes to a halt as a result--and this is now the case--then major U.S. exporters will be at a major disadvantage in these important Latin American markets compared to exporters in countries that do have such trade agreements. American suppliers seeking to sell in these Latin American countries are going to have a heck of a time to have a market for their goods that come from the United States. They will face other difficulties as well. Just one example from my State of Iowa, the Bandag company, in Muscatine, IA, makes and sells retreaded tires. That company is an enormously successful company, also in the international market. At one point in time, Bandag products went to Uruguay, Paraguay, and Argentina from our country. American workers made those products. However, when the Mercorsur agreement was put into effect between Brazil and those other three countries, it became more viable for Bandag to ship product from a plant that Bandag built in Brazil. Those jobs and that investment as well did not stay in my State of Iowa or somewhere else in the United States. In fact, out of economic necessity, it went to Brazil. That is what happens if the United States is not credible at the negotiating table. That is what happens when the United States cannot lead in opening new markets and reducing tariffs overseas. Without trade promotion authority, it is a story that will be told over and over again. This is our challenge, then. If we fail in this challenge, if we do not seize this opportunity to grant the President trade negotiating authority, I believe the process of opening global markets through bilateral, regional, and especially global negotiations--the process that has been the pattern for the last 50 years--will be set back for years. If that happens, then the future prosperity of millions of Americans and the future prosperity of many of this Nation's most competitive businesses, and our farmers as well, will be put in doubt. Even though this was a flawed process, and regrettably an unnecessarily divisive process, laying this bill down last night, it is never too late for us to do the right thing. Let us use the commitment to good faith that I believe we all share to reach a genuine and fair political compromise on trade adjustment assistance and to finally resolve the few remaining trade adjustment assistance issues--and maybe a few other issues--that are out there. We can get this done. Senator Baucus and I have shown 98 other Senators that working together we can accomplish a great deal of good. He has been doing that with me. But I think the process last night detracts from it. Maybe it was not meant to hurt what we are trying to do, but I think it has done that. I am glad that I will have the opportunity, regardless of this act, to continue to sit down with my colleague and work out differences. That is what I want all the other 98 Senators--or at least hopefully an overwhelming number, 70 or so--to do, work with us in this process. I think there are that many people in this body who know trade promotion authority is the right thing to do. I yield the floor.

Mr. GRASSLEY. Madam President, does the assistant majority leader have a statement he wishes to make?

Mr. GRASSLEY. Yes.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I will speak on the bill, but I first want to make a comment not for or against the amendment of the Senator from North Dakota but to put it in context. The reason I cannot make a comment for or against the amendment of the Senator from North Dakota is at this point I have not read it or studied it. I do think he has brought up an issue of transparency, and it deals with NAFTA. On all agreements, particularly WTO agreements, there has been a big concern about the process not being transparent enough. Senator Baucus and I, in the Finance Committee, have spoken about the necessity for doing this in several different venues. We have spoken with people from the European Community about it. We believe the process of the WTO, for instance, should be very much more transparent than it has been in the past. So the issue of transparency is one that does fall on acceptable ears in a very general sense, not necessarily related to the amendment of the Senator from North Dakota but in a very general sense with most of us in the Congress of the United States. Where we have run into most of the opposition is from the European Community. We have also had a lot of the developing nations of the world that are members of the World Trade Organization be highly in favor of more transparency. The issue of transparency was the basis for a lot of the protests in Seattle, and since then there has been a real determined look at the process. A lot of us have come to the conclusion that whatever we can do to promote more transparency we should. Speaking now on the bill and where we are at this point, particularly now that we do have a substitute amendment before us laid down by the Senate majority leader, I am encouraged on the one hand, dismayed on the other, by the action taken today in the laying down of this amendment. I am encouraged because, after months of delays, we are moving forward on trade promotion authority. The House passed TPA last year. Unfortunately, TPA has languished much too long in the Senate. So I definitely am glad we are moving forward. In a minute I will talk about being dismayed. In regard to moving forward, the fact is, while we were sitting on the sidelines for the last 5 or 6 years that our President has not had trade promotion authority, the United States is a party to only 3 agreements out of some 130 free trade agreements negotiated worldwide. That means other countries get better access to foreign markets than we do. That is unfair. Let me give some examples. Today, the average U.S. tariff is 4.8 percent. In contrast, Brazil's tariff averages 14.6 percent; Thailand, 45.6 percent. That is much too high. We need to correct the imbalance, and the best way to do that is by providing our President with the tools he needs to tear down these barriers to our exports. The most important tool we have to accomplish that is through trade promotion authority. Let me go through those figures once more to emphasize the point. The United States has an average tariff of 4.8 percent. We have Brazil much higher at 14.6 percent and Thailand at 45.6 percent. So if anybody in this body ever wonders whether it is a benefit to the United States to be involved in regimes of negotiating down barriers to trade, and particularly tariffs, they ought to understand that for the United States, at 4.8 percent compared to 14.6 percent, and 45 percent for Thailand, they must be brought down, even if they are not brought down to where we are. That is a win-win situation for the American worker, as jobs that are created in international trade are good jobs that pay 15 percent above the national average. So the President then needs trade promotion authority to represent the interests of American workers in international trade negotiations. He has not been there for 127 of the agreements reached in the last few years. He has not been there because Congress has not given him the authority to be there. So I am committed to helping the President get these tools. Without trade agreements, the United States will lose its role as world leader in setting global trade policies and standards. That means other nations, in no way committed to U.S. interests, will set the world's future trading rules. They will do it, and it is going to affect us. I can guarantee those nations are not looking out for the best interests of our workers. TPA will help us and our President get back into the game where we were practically full time from 1947 to 1994. It has only been since 1994 that the President has not had this authority. This is why I am glad we have this bill before us. Now I wish to state why I am dismayed about the process thus far, and that is the insistence on linking trade promotion authority, which has strong bipartisan support as per the 18-to-3 vote out of the Senate Finance Committee, but they want to link it to the controversial expansion of trade adjustment assistance. I am dismayed not because there is a linkage between trade promotion authority and trade adjustment assistance because these two bills have often been linked in the past; I am dismayed that trade adjustment assistance is being brought up in a partisan way. Ever since President Kennedy first designed the Trade Adjustment Assistance Program in the early 1960s, the program has garnered strong bipartisan support. That is the way it has been. That is the way it should be this year. Unfortunately, the way in which this bill is being brought forward falls far short of that bipartisanship. As the ranking member of the Senate Finance Committee, which is the committee responsible for drafting both trade promotion authority legislation and trade adjustment assistance, perhaps I can shed some light on how we got to where we are today. First, Chairman Max Baucus and I worked for months crafting a bipartisan trade promotion bill, and we did it in a very good way or it would not have gotten a 18-to-3 vote. The end result was supported by the White House, by Majority Leader Tom Daschle because he is a member of the committee, by Republican Minority Leader Trent Lott because he is also a member of the committee, and it sailed through the Finance Committee. In contrast to trade promotion authority, we have this other bill, S. 1209, the trade adjustment assistance bill, that I talked about. It was not a product of the committee process or bipartisan compromise. In fact, days before the bill was brought before the Finance Committee, Democrats inserted a provision and legislation requiring large Government subsidies for company-based health care coverage for the first time in the history of trade adjustment assistance. This new and unprecedented provision shattered what would otherwise have been strong bipartisan support for trade adjustment assistance. At the time, the chairman of the Finance Committee assured Members that the health care provision was simply a place hold that would be replaced by whatever bipartisan approach results from the debate over providing health care to uninsured workers which was then taking place in the economic stimulus package. As we all know now, a bipartisan consensus could not be achieved and ultimately the stimulus bill passed Congress without a health care provision. Now the health care fight has moved from stimulus to trade promotion authority. Still, no bipartisan consensus. I hope by tomorrow morning I can say that there is such a bipartisan consensus. It is a shame that to this point there is not. We should be able to do better. The trade adjustment assistance bill currently before the Senate also risks jeopardizing strong public support that trade adjustment assistance has always had because it expands the program too far, opening the program to possible abuse. In my view, we need to be sure that the scope of the program--and I am talking beyond the health provisions suggested--is limited to those people who are truly impacted by negative aspects of international trade, we also need to be sure the program is fiscally prudent, and we need to be sure the administration can actually administer the program we might outline in the bill. If the administration cannot so administer, we will only have more worker frustration as they try to use the Trade Adjustment Assistance Program. American workers are too important to be reckless. We need to maintain confidence in the Trade Adjustment Assistance Program. We need to do that through this legislation, getting this legislation just exactly right. This may take a little longer, but it is the right thing to do. We can provide expanded and improved trade adjustment assistance to America's workers with strong bipartisan support. We can also devise ways to provide temporary health insurance assistance for trade adjustment assistance workers, even though doing so would constitute a fundamental unfairness to the 39 million other Americans living without health insurance. So all my colleagues can hear me, I know we are going to end up with health insurance provisions in the Trade Adjustment Assistance Act. As long as that doesn't become a pattern for what this Congress has not responsibly done up to this point--and maybe we all share in that problem; we have not tackled the problem of all the millions--it is probably 39 to 40 million Americans--who do not have health insurance-- it is my view we should tackle the health provision vis-a-vis trade adjustment assistance workers with a pool of uninsured workers in America and not do it piecemeal. I am not going to prevail in that point of view. Or if I prevail in that point of view, we will not have trade promotion authority. So I am giving on it. But I think it is wrong because it detracts, that we don't think 40 million uninsured Americans is a problem. We have to deal with that. The President of the United States recognizes that. He has $81 billion in his budget for programs for the 42 million uninsured Americans. How we achieve these goals is a debate I and my Republican colleagues are ready and willing to undertake. We are starting now with the Senate majority leader laying down this trade adjustment assistance bill and other items related to trade promotion authority.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent the privilege of the floor be granted to Tiffany McCullen, a Department of Commerce employee detailed to my staff on the Finance Committee, and to Elliott Langer, an intern from the Finance Committee for the duration of the Senate consideration of trade bills.

Mr. GRASSLEY

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

Mr. GRASSLEY. Mr. President, I wish to address my fellow Senators as in morning business for about 7 minutes.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to express my appreciation to President Bush for his commitment to bringing insurance parity to people with mental illness. As a long time supporter of mental health parity legislation in the Senate, I found his statement today in New Mexico to be a breath of fresh air in a debate that has languished for too long here in Washington. I will always believe that when it comes to health insurance coverage, mental illness should be treated like any physical ailment. Unfortunately, those suffering from mental health disorders have for years suffered undue discrimination at the hands of insurers who force them to pay higher costs than patients suffering from physical ailments. I believe there simply is no scientific, clinical, fiscal or ethical reason for this discrimination. I applaud President Bush for his commitment to ending it and leveling the health care playing field to require equal access to psychiatric treatment and care. As President Bush pointed out today in New Mexico, people suffering from severe and persistent mental problems don't suffer alone. Their illness affects their families and loved ones, and even our country It is incredibly painful to watch someone you love struggle with an illness that affects their mind, their feelings and their relationships with others, and that difficulty is only exacerbated when care and treatment options are denied or placed out of reach due to high costs. Remarkable treatments exist, yet many people--too many people in my view--remain untreated because insurance discrimination limits their access. I am glad the President has asked all Americans for a commitment to bridge the insurance divide between people who are physically and mentally ill. Americans with mental illness deserve our attention. I believe we can and should this year act on mental health parity legislation that bridges those coverage chasms and also controls new health care costs. For my part, I intend to continue working with my friend and colleague, Senator Domenici, on this important issue to ensure that nondiscrimination is the law of the land. We can do this in a bipartisan, fiscally responsible way, and I look forward to getting it done this year. I yield the floor. Mr. President, I suggest the absence of a quorum.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, President Clinton used to brag--and I think correctly--during the years he was President that some 20 million jobs were created during his Presidency. Those are statistics that speak for themselves. In regard to this debate before the Senate, President Clinton said about one-third of the jobs were created because of international trade. Quite obviously, the last Democrat President talked about the importance of trade. Jobs are created by trade. Those are jobs that pay very good wages--13 to 18 percent higher than the national average. It is estimated 1 in 10 Americans, 12 million people, are employed in jobs related to goods and services. The important issue of trade promotion authority is before the Senate. It has worked, as has already been correctly stated. Presidents since President Ford have periodically have had trade promotion authority. It has led to trade agreements passed by Congress. They are now the law of the land. When it was pointed out--correctly--that Congress has the power to regulate interstate and foreign commerce, that is very true. But remember that Congress does not have the ability to negotiate with other countries--particularly 144 countries in the World Trade Organization--in a way that could be considered an expeditious way of reaching an agreement. We form a sort of contract with the President of the United States. This is not just for Republicans and Republican Presidents. Republicans in this body tried to form such a contract with President Clinton in the last administration, but his own party would not let him have this authority. Trade promotion authority is a type of contract between the Congress and the President of the United States in which the President, in very precise ways, is given the authority by Congress to agree, on the part of Congress, with goals that will be pursued at the negotiating table. This legislation will help achieve those goals. It establishes a format for Congress to be consulted by the President of the United States in every step of that process. Congress reviews the agreement that the President brings it back. We have the last say. If we do not pass it, it does not become law, and there is no agreement, no matter how much the President negotiated with 143 other countries to bring that agreement back to Congress. We in Congress do not see trade promotion authority as Congress giving away all its power over international trade to the President of the United States. Not at all. We cannot do that without amending the Constitution. We don't intend to amend the Constitution to do that. However, trade promotion authority is a type of contract with the President of the United States to negotiate for us because the Congress of the United States, as the legislative arm of our Government, is not capable, with 535 men and women, of negotiating with 144 other countries in the World Trade Organization, or with another 30-some countries in the Western Hemisphere if you are talking about regional FTAA trade negotiations, or even on a bilateral basis negotiating with Chile or with Singapore, which are in process now. We want our President to be credible at the negotiating table. When the President has Trade Promotion Authority, other countries, negotiating with the United States, know the President is a credible negotiator. We have been told the United States loses so much when we negotiate. We don't lose anything when the rest of the world's tariffs are way up here and ours are much lower; we cannot go much lower. When we bring foreign tariffs down, even if we bring them just partway down and not down to our low level, it is a win-win situation for the United States. I quote Harvard economist Jeff Frankel, estimating that the economic benefits of a successfully completed new round of WTO trade negotiations would mean $7,000 per individual or, as we measure in this country, the unit of the family, about $28,000 for a family of four. This estimate was even backed up by Chairman of the Federal Reserve Board, Alan Greenspan. He said before the Senate Finance Committee when he testified last year on the importance of trade promotion authority to the President, that the estimates made by Jeff Frankel, were very credible estimates. As just one example of the advantage of a trade agreement to the United States, look at Caterpillar, located in several countries around the world, but with its main operation in the United States. The corporate headquarters is in the United States. I have an example of a $187,000 Caterpillar, model 140H, a motor grader tractor, made in America. If shipped to Chile, it is slapped with $13,090 in tariffs and duties, or 7 percent of the tractor's cost because we do not have a free trade agreement with Chile. That same tractor can be made in Brazil by a Caterpillar plant in Brazil and shipped to Chile with only a $3,740 tariff because Brazil has some trade agreements with Chile. Obviously, not a free trade agreement but some agreements that reduce the tariff from 7 percent on a tractor made in the United States to 2 percent. If that same tractor is made in Canada, because Canada has a free trade agreement with Chile, there are no tariffs whatsoever on that Caterpillar motor grader tractor made in Canada. We have to ask ourselves, as Senators for the entire United States, would you not rather have the Caterpillar tractor made in America and shipped to Chile than have it made in Canada or have it made in Brazil and shipped to Chile? This decision is a no-brainer, Mr. President. We have seen so much advancement in the rural economy since the process of reducing tariffs worldwide. Originally called GATT, now called the World Trade Organization process, WTO for short, that process has been going on since 1947. We ought to be satisfied with what world trade has done for America, that it is good for America, it is good for the world, and that if we are going to be in this business of having America's leadership continue as it is in the war against terrorism, but more based upon our military prowess than anything else, but backed up by economic strength, it seems to me if the President of the United States can have trade promotion authority and continue to be the leader in reduction of world tariff trade barriers and nontariff trade barriers, as the United States has been between 1947 and 1994 when the authority ran out, we are going to have an additional advantage--an additional tool for world leadership to use in pursuing peace sooner. The other side of the coin is that if you are going to have an expanding world population--which we all know is underway and is going to be underway for decades to come--you cannot have stagnant world economic growth. More people with less material goods are only going to lead to social instability, political instability, and the opposite of world peace. An expanding world economic pie can only come through the reduction of trade barriers, and that only comes through this process of global trade liberalization that in the WTO. That is the only way we are going to have an expanding world population with more people having more material goods, more prosperity, and more social stability and political stability as well, and the peace that will come with it. Even though during these weeks of debate on trade promotion authority we are going to be talking about its economic benefits, and some other people will be talking about the economic harm they see coming from trade promotion authority, from my perspective it is not just an economic issue. It is also an issue of expanding the world economic pie for social stability, political stability, and eventually world peace. Mr. President, I support cloture on the motion to proceed on one of the four trade bills that will be before the Senate in the next several weeks. The one before us is the Andean Trade Act. This vote is far more than a vote on cloture on the motion to proceed on the Andean bill. In the next few days, starting with and moving beyond this vote, we may finally take up other trade bills: trade promotion authority, trade adjustment assistance, the Generalized System of Preferences, or GSP, and trade adjustment assistance. This vote is in reality a referendum on the future leadership of U.S. trade policy. After months of delay, it is finally a long overdue acknowledgment of the Senate's important constitutional and political responsibility for U.S. trade policy. As such, today is the start of the most important legislative period on the Senate floor for America's trade policy since trade negotiating authority for the President lapsed in April 1994. It was in 1994 when a critical ingredient of American global leadership in trade policy was lost, trade promotion authority. As a result, in the last 8 years the United States has been severely handicapped in its ability to conduct major trade negotiations. Yes, we recently concluded a free trade agreement with Jordan and we have started Free Trade Area of the Americas negotiations. That is the Western Hemisphere regional free trade zone. We also have bilateral free trade negotiation going on with Singapore and with Chile right now. We have been involved with three agreements in the last 6 years. The rest of the world has adopted 130 or more preferential trade agreements; 127 of which we were not a party to. That damages America's trade interests. The European Union has 27 preferential or special customs agreements with other countries and is negotiating 15 more. Our international competitors, then, are clearly not waiting for the United States of America while they negotiate and while we get our act together. We have been, for about 6 years now, maybe 8 years, trying to get our act together. The lack of trade promotion authority is already affecting our effectiveness at the negotiating table in the Western Hemisphere negotiations called the Free Trade Area of the Americas. I recently commissioned a General Accounting Office study on the status of the Free Trade Area of the Americas negotiations. They found the Western Hemisphere participants believed that the absence of the President's trade promotion authority has thwarted the negotiations to the extent that some countries are not willing to make the necessary concessions to move negotiations forward. This lack of progress of the Free Trade Area of the Americas has enormous economic consequences for the United States. We currently sell less than 8 percent of our exported goods south of Mexico's southern border--meaning Central and South America. In terms of competitiveness in exports, we are underperforming in our own hemisphere. A successful conclusion to the Free Trade Area of the Americas talks will help us catch up, but the President needs trade promotion authority to make that happen. The United States is currently pursuing new World Trade Organization negotiations with 143 other nations in Geneva. These negotiations are, right now, underway. Our negotiators are meeting with their counterparts in Geneva almost as we speak to try to hammer out procedures for addressing the major issues in these important negotiations, issues such as market access for America's farmers and ranchers for all of our agricultural products. They are all on the table, but without trade promotion authority, our negotiators have one hand tied behind their backs. That is something that before this debate is over I hope I can convince the Senator from North Dakota of--who spoke previous to me--that it is very important not to negotiate from a position of disadvantage. Right now, without trade promotion authority, do not have credibility at the negotiating table. We need credibility to set the agenda and to influence the scope and timing of these talks. Without trade promotion authority, our foreign competitors will have the upper hand. They will determine the scope and the timing of the World Trade Organization negotiations to their advantage--obviously not to the advantage of the United States. Last Friday the Agriculture Coalition for Trade Promotion Authority, which represents more than 80 food and agricultural groups, sent a letter to congressional leaders. It was signed by 29 university agricultural economists. I will read from a portion of that letter: . . . There is an important political dimension in all trade negotiations, and without trade promotion authority, the ability of the United States negotiators to press for agreements on our terms and our agenda will be fatally weakened. . . . Trade Promotion Authority is an indispensable tool that U.S. trade officials need now to keep U.S. agriculture on the path of prosperity and long-term economic growth. The individuals who signed that letter are some of the most distinguished agricultural economists in our country. I am sure some of my colleagues would recognize their names. I hope we hear their message very clearly. I am suggesting it is wrong not to act on their advice. I ask unanimous consent that entire letter be printed in the Record.

Mr. GRASSLEY. On the subject of another trade bill coming before us, I want people to know I strongly support what we have had since 1963, called trade adjustment assistance. It is coming up for reauthorization. It has been an integral part of our trade policy for about 40 years. We need to update trade adjustment assistance and make it more effective for people whom it is designed to serve. Finally, I would like to say a few words about the Andean trade bill. That is the bill which the cloture motion we are debating is on. The Andean trade bill will enable the United States to constructively engage with our Latin American neighbors at a time when many of them face enormous economic and political challenges. There is political instability and the social instability in some of those countries because they face severe economic challenges. There are more people with less growth and fewer material goods for the people. What the Andean pact comes down to is that we need--and the Andean nations need--a trade policy that will positively affect trade between our countries. Where I come from--the little town of New Hartford, IA--when your neighbor down the road has an emergency, or needs a hand, in that Midwestern spirit we reach out to help. The United States pretty much has adopted the same policy as part of our responsibility of world leadership since World War II. It happens all over America. Neighbors help and support each other. When our Andean neighbors--Colombia, Peru, Bolivia, and Ecuador-- found themselves under siege by narco-terrorists, we reached out to help these hemispheric neighbors. Through the Andean Trade Preference Act, we designed a plan that is based on trade--not aid--following the advice of President Kennedy 40 years ago that focuses upon people's self-help. That is what trade is all about. Aid is all about doing something for somebody instead of helping themselves. But trade is about helping people to help themselves so they eventually develop to a point--such as Korea, Japan, Taiwan, and Thailand have in the last 40 years--where they don't need our help. The Andean pact uses trade to promote economic development through a diversified export base as an alternative to the allure of the drug trade. I also support the Andean trade bill because it recognizes that trade and prosperity go hand in hand. Trade is not just for rich countries such as the United States, it is also for countries that aspire to be rich. What country looking at the United States wouldn't like to have the prosperity the United States has developed in the last hundred years and become the richest nation in the world? Countries want better and more secure lives for their people. Countries want better health care, better education, and a better future for their children. Through the Andean Trade Preference Act and complementary trading initiatives, such as the free trade areas of the Americas, we can help achieve a new era of hemispheric economic cooperation that will not only benefit those countries to the south of us but it will benefit us as well. The Andean nations know that trade--not aid--is the best way to overcome the fragmentation of Latin American economies and build self-sustaining growth that nourishes democratic institutions. The United States must get off the sidelines. We need to get back into the middle of the negotiating circle and back into our customary role as leader of the world economy in trade, as we have been generally since at least 1947. But we haven't been there in the last few years. The rest of the world is not going to stand around and wait for us. They are negotiating over 100 agreements, and we have negotiated 3. The longer we wait, without credibility at the negotiating table, the more harm will be done to our political and economic interests. By not leading the world, we are not going to help the world economy grow as large as that world economy can grow. It is very important to get this debate started. To get this debate started, we have to have a yes vote on cloture on this bill so we can overcome a few Members of the Senate who believe the United States ought to be more parochial and a little more isolated. That is not a place where America has been since 1947. I yield the floor. I suggest the absence of a quorum.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent for interns on the floor from the Senate Finance Committee, Darius Marzec, Stephen Seale, and Elliott Langer, be granted floor privileges during the duration of the energy bill.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I had the good fortune of listening to the exchange between the junior Senator from California and the senior Senator from New York. The senior Senator from New York is not in the Chamber now. But I would like to point out that there is a lack of understanding of this legislation, particularly as it relates to that exchange they had over whether or not you can sue with regard to MTBE. For all the pollution we have had from that product, there is nothing in this legislation that is going to restrict any lawsuits in regard to MTBE. So when there was an implication that if we did not adopt the amendment before us, that people who have been harmed would not be able to seek legal redress, that is totally false. It is misleading if anybody says that for MTBE, and damage done from it, there cannot be legal redress. It is very important we make that clear because the water of California, the water of New York, and other States--there is even a little bit in my State--has been damaged because of this product, MTBE. If you drink MTBE, it will kill you. If you drink ethanol, it will not. For the future--and this legislation is prospective--if there is any violation of the Clean Water Act, the Clean Air Act, if there is any violation by any product, the Environmental Protection Agency has the power to make that determination. If that determination is made, then there is not a safe harbor under this legislation. So I think, as the distinguished Democratic whip has stated, there is ample opportunity for redress in this legislation. I also point out another misstatement from the other side: that somehow you are not going to be able to hold big oil companies responsible involving anything to do with ethanol. You do not have to worry about holding them responsible anyway. The big oil companies are not producing ethanol. Then, I remind the junior Senator from California, as I have said, I think on two other occasions during this debate over the last week, that we were proud of her and willing to work with her on a resolution in 1999 that she authored, to declare MTBE as something that should be outlawed, and that the reason it should be outlawed is the Clean Air Act requirements could be met because the oxygenate requirements of that act could be fulfilled because of the availability of ethanol. Well, it is the same ethanol in the year 2002 as we were mixing with gasoline in 1999, or for the last 20 years, as far as that is concerned. The Senator from California, at that particular time, was giving accolades to ethanol as a substitute for MTBE. Then, lastly, since I am a Republican, I might be suspect from the other side of the aisle, but about 6, 7 years ago, Senator Harkin, my colleague from Iowa, had a hearing on ethanol versus MTBE in relation to its safety, its use, et cetera, and Senator Harkin gave a demonstration for all of the Senate that was involved in that committee. He had a small glass of ethanol, and he drank it. You can talk all you want about the dangers of ethanol, but Senator Harkin is very much alive and well, years after he took that small amount of ethanol. He also had some MTBE there with the skull and crossbones on the can that said how poisonous it was. So I think we need to get the facts straight before this Senate. Again, the exchange that went on a few minutes ago from the senior Senator from New York to the junior Senator from California was misleading in relation to people not having legal redress in this law against damage from MTBE. I yield the floor.

Mr. GRASSLEY. Madam President, I oppose Senator Kyl's amendment to strike the wind energy tax credit extension provisions in this bill. It is unwise from an energy policy standpoint and would be harmful to American agriculture. Therefore, I oppose it vigorously.

Mr. GRASSLEY. Madam President, obviously, I am against this amendment. The rest of the country is trying to help California get through their oxygenate standards and to get over the business of polluting water with MTBE which their oil companies wanted to use and got a mandate for in the last Clean Air Act. Somehow, notwithstanding all this help, the Senators from California do not realize how good the agricultural States and even other States are trying to be to California to get through this problem. For example, a lot of farmer cooperatives have helped invest $1.4 billion in small ethanol plants and ethanol expansion in order to provide the product needed to help California to meet the requirements of the Clean Air Act. We already have the Governor of California sticking it to the farmers--particularly the farmers who have created the small co-ops to produce ethanol--by delaying one year, the MTBE ban that he said 3 years ago would take effect at the end of this year. So now farmers have to wait through 2003 before they get the market created by the MTBE ban. It is putting the investment of these small co-ops in danger. The Senators from California can talk all they want about helping ADM. ADM will survive. The financial investments of the small co-ops will be harmed. So now, in addition to the damage the Governor of California has been done by delaying the MTBE ban by 1 year, now the Senators want to delay another year. The Senators will help ADM and hurt the farmers who have been trying to build the smaller plants so there is more competition in ethanol and also more value-added benefits of ethanol go to the individual family farmer, instead of ADM. So I make it clear, this 1 more year delay, in addition to the year delay caused by the Governor of California, is doing damage to the people that Senators say they want to help. Senators say they do not want dependence upon ADM, but they will make themselves more dependent on ADM. And now to clear up something about the mixture of ethanol with gasoline. The senior Senator from California said you bring ethanol to the refinery and it is injected. Let me tell how simple it is to mix ethanol and gasoline together. In the tanker, you put the 10-percent mix of ethanol in the tanker and add the other 90 percent of gasoline. This can be done at the terminal, not at the refinery. You go down the road and it is splash blended. It is not a technologically complicated process of mixing ethanol with gasoline to create what we call gasohol. The other thing I think the Senate should be reminded of regarding not having refinery capacity, how long has it been since you built a refinery in California? It has been decades. That is not our problem; that is your problem that you don't have this refinery capacity because of the attitude ``not in my backyard.'' Now, key points regarding this amendment: The bill before the Senate provides for a gradual phase-in of the use of renewable fuels beginning with 2.3 billion gallons in the year 2004 and growing to 5 billion gallons over an additional 8-year-period of time. So there is plenty of time to meet the needs under this legislation. The gradual phase-in of the renewable fuels standard provides a very orderly transition allowing ethanol capacity and infrastructure modifications to expand to meet market demand. Nevertheless, we have this delaying tactic before the Senate. It is being presented out of fear of disruptions of supply and price. The facts show there is no need to delay our fuel standard and there is no fear of disruptions. The original agreement implemented the renewable fuels provisions beginning 2003 in an effort to assure all parties that ethanol capacity expansion and infrastructure modifications needed to meet demand would be completed, and we made the renewable portfolio standards delayed by 1 year, until the year 2004. The U.S. ethanol industry has the capacity to produce 2.3 billion gallons of ethanol per year. Right now we produce 1.8 billion gallons per year. Plants currently under construction will increase capacity to 2.7 billion gallons by the end of this year. Clearly, there is more than enough ethanol capacity to meet the needs of the first year of the program, beginning 2 years from now. Ethanol producers have expanded capacity to meet demands. In response to State calls for the removal of MTBE from gasoline, America's farmers responded, investing in ethanol plants and adding 1 billion gallons of new capacity in just these 2 years. Delaying the renewable fuels provision will result in significant oversupply in the ethanol market, harming new entrants in the ethanol market. Predominantly, these are farmer-owns facilities, likely resulting in some plant shutdown. A delay will wreak havoc on the fuel supply markets as ethanol plants shut down as a result of delay. The petroleum industry will lose potential sources of supply necessary to meet renewable fuel requirements the following year when the program begins, disrupting markets and actually raising the potential for price increases to consumers. By the way, I want to respond to the so-called tax on consumers. There is not any place I have been in my State that you have to pay one penny more for gasoline with ethanol in it. Most times you get it for 2 cents cheaper, sometimes 3 cents cheaper. Most of the time it is priced exactly the same. Don't talk to me about a tax on consumers because ethanol is in gasoline. Today, oil refineries are operating at near full capacity, leaving no room in the system for unexpected shutdowns, fires, or pipeline disruptions. Delaying the renewable fuels provision by a year will further constrain domestic supply, leaving consumers vulnerable to price hikes. Last, I think we also have to remember there is a certain amount of camaraderie around this body that has to be respected. That is that we do have some very basic agreements put together in regard to getting a bipartisan energy bill through this body. The historic bipartisan compromise on fuels issues in this bill represents a carefully crafted agreement among oil industry, ethanol producers, agricultural groups, environmental and public health interest groups, including the American Lung Association, the Union of Concerned Scientists, and Northeast States for Coordinated Air Use Management, among others. So let's keep this carefully crafted agreement together so we can get a bill passed and maintain a bipartisan approach to the energy problems of this country. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. I thank my Chairman, and I appreciate the opportunity to speak on this topic. I am pleased to be a cosponsor of Senator Rockefeller's bill, and I think it is important legislation. As you probably know, I have spent a fair number of hours on a farm in my life, and I can tell you that telecommunications are absolutely a crucial lifeline to rural areas, and we must ensure that rural areas of the country are not left behind as the state of the art evolves. I think that is what is happening now--the state of the art is evolving, and rural areas are being left behind. In urban areas, we have wonderful broadband systems where you can type at your computer and have a little TV screen going up in one corner. A lot of people here watch the Senate floor right from their computers as they work, which makes our work easier and more productive. In rural areas that kind of capability generally doesn't exist. And we just can't allow two different telecom standards for urban and rural areas. That would be like urban areas having telephones and rural areas not having telephones. What kind of country would we be if that were the case? So I think this legislation is very important. I want to point out one provision in this bill which will be extremely important to rural areas, and that is one involving telephone cooperatives. Anybody from a rural State knows the importance that coops play in making sure no one goes unserved. There are some places that are so scarcely populated that the big publicly-owned companies can't justify the investment to their shareholders. So who gets the job done in those places? By and large, it's the telephone coops. And they do a great job, and we need to make sure we support them in their effort. But, of course, telephone coops are tax exempt organizations. So the question arises, if they don't pay taxes, how will they benefit from a tax credit? But this bill has found a way to let them take advantage of the benefit. How so? Through the so-called, ``85-15'' rule. The tax code requires that at least 85 percent of a telephone coops' income be used to pay losses and expenses. So this bill exempts from income the amount of broadband credit a coop would get if it were a taxable company. That encourages coops to make broadband investments because, if they do, then they will get help meeting the 85 percent rule. I think that makes a lot of sense and is good tax policy. It both encourages a crucial infrastructure investment, and simplifies the tax law for coops, which is an importannt thing to do anytime we can. So with that, just let me say again that I support this legislation, and I will work with Chairman Baucus and Senator Rockefeller and the other members here today to pass it.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, this year marks the 76th year of operations for the U.S. International Trade Commission, ITC. Throughout that time, the Commission has played an essential role in the administration of U.S. trade remedy laws. Today, I would like to emphasize two aspects of the ITC that I believe are critical to their ability to effectively administer U.S. trade remedy laws in the future. First, it is important to remember that the ITC is an independent, impartial arbiter in international trade disputes under U.S. trade law. This independent stature was established and is guaranteed by the Congress. Inevitably, by deciding the cases on the merits, the Commission has made decisions that may be unpopular with certain industry sectors or individual Senators and Representatives--including me--and will doubtless to so again. But, despite disagreements the Congress continues to defend the Commission's independence. The fact that the Commission and Commissioners can rule on the merits, without fear of political pressure or retribution, is crucial to America's economy at home and our trade negotiations abroad. As other nations begin to implement their own trade remedy laws, they often look to U.S. law and institutions for guidance. It is important the U.S. institutions serve as good models for other nations. One way to do that is for Congress to ensure that the independent nature of the ITC is preserved, regardless of the outcome of any particular case, just as we would any other quasi-judicial agency. It is our duty as elected representatives. There is one other issue related to the ITC I would like to highlight, and that is the importance of having ITC Commissioners with an agriculture background. As the number of agricultural cases before the ITC increases, the appointment of a Commissioner with a substantive agricultural background is crucial to American agriculture. There are currently a number of antidumping orders and pending investigations affecting agricultural products. The ITC's commissioners must determine whether U.S. producers have suffered injury from unfairly traded products. A background in agriculture would assist the Commission in deciding these cases on the merits. I hope that the Administration will consider nominees with a background in agriculture, as current Commissioners' terms expire.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I am glad to be able to work with my colleague from Iowa on this amendment. He is being transparent, and I would like to be transparent on it. There are jobs affected in our State. For the Senator from Michigan, the Presiding Officer, it is my understanding there is a company in her State called Heat Controller, Inc., that would not be able to meet these SEER 13 standards, and that there would be jobs in jeopardy at Heat Controller. You may want to check that out, but that is what my information tells me. If I am wrong, I would like to be corrected. So I compliment the Energy Committee because, generally, in this legislation they have had suggestions that push industry to do things that are more energy efficient. In most cases, those initiatives by this legislation and by the Energy Committee are not only good for saving energy, but they are also very good for the consumer. Now, Senator Harkin has touched on this, that if we go to what is called SEER 13, 75 percent of the country, according to a map I have here, will not, through the life of the use of SEER 13 appliances, be able to get a payback. In other words, there is no benefit to the consumer. So this is one of the rare instances in which the Senate Energy Committee has a suggestion in their legislation that might save energy, but is very costly to the consumer. We want to promote things that are energy efficient, but we also want to promote things that are good for the consumer. Most of the time, you buy energy-efficient appliances. Recently-- maybe 3 years ago--I had an opportunity, and a necessity, to buy a new furnace for my farmhouse in Iowa. In looking at what to buy, they could very quickly say, well, if you buy our furnace, within 5 or 7--I am not sure how long, but it was a relatively short period of time--you will save enough on LP gas to pay for it. Buy one of these thermostats that is automatically controlled to go up and down with the heat, and in a certain period of time it is paid for. In this particular instance, the Senate Energy Committee has offered us a proposal that will save energy, yes; but for people in 75 percent of the country, geographically--I don't know how that is population- wise--there is not a payback. So that is why I ask this body to look at the wisdom of this particular provision in this bill. Obviously, I am asking you to look at the wisdom that is behind the amendment offered by the Senator, my colleague from Iowa. The Department of Energy has authority, through the rulemaking process, to set these standards. The Department of Energy is required by statute, under the National Appliance Energy Conservation Act, to set these standards and to do it in a way ``that is economically justified and technologically feasible.'' So I think the underlying legislation--which we can obviously change if we want to, and I think it is unwise to change--the underlying statute calls for it to be economically justified. This is one that is technologically feasible; it saves energy, but it doesn't appear to be economically justified by going from 12 to 13. What we are trying to do is overturn precisely what the bill does in the first place. The Department of Energy is considering a rule based on information and based on analysis from several years' worth of submission during the rulemaking process. Unfortunately, this bill seeks to take action that would raise the standard--a 30-percent increase in efficiency--and to do it clearly, without consideration of information collected by the Department of Energy. Had the authors of this bill considered the evidence regarding the economic impact of a 30-percent increase, they would have soon realized it is contrary to the statutory criterion imposed on the Department of Energy which requires that it be economically justified. Economically, a 13 SEER standard just doesn't make sense. For example, 75 percent of the consumers purchasing 13 SEER units will incur a net cost. At the end of the lifetime of the product, the savings in operating costs won't be sufficient to offset the additional up-front costs of that particular product--besides the fact that some companies, as I have implied to the Senator from Michigan, are not able to make SEER 13 and maybe it would really harm those jobs as a result of that additional complication. This is particularly true for consumers in the middle and northern tiers of the United States. Critics claim that the additional cost of the 13 SEER product is insignificant. However, the Energy Information Administration conducted an independent review of the economic impact of imposing either a 30-percent increase in SEER, which this bill proposes, and a 20-percent increase. The Energy Information Administration concluded that a 20-percent increase would result in savings of $2.3 billion in energy costs for consumers while a 30- percent increase would actually cost consumers $600 million. So based on that evidence, it is contrary to the best interest of the consumer. There is not a payback. The difference between the savings of $2.3 billion compared to a loss of $600 million is certainly significant and clearly does not justify a 30-percent increase. The supporters of the 13 SEER standard also disregard the concerns expressed by the Department of Justice. A number of equipment manufacturers selling air-conditioners in the United States today don't offer products at 13 SEER. Which I mentioned to the Senator from Michigan. For that reason, the Department of Justice opposes a 13 SEER standard based on anti-competitive implications for the industry. It is also important for my colleagues to understand exactly what the amendment offered by Senator Harkin and my colleague, Senator Cochran, would do. This amendment won't impose a lower standard for air- conditioners and heat pumps. It simply eliminates the 13 SEER mandate of the bill and requires the Department of Energy to determine an appropriate standard and set that standard within 60 days. In conclusion, I urge my colleagues to oppose the 13 SEER standard in the bill that is not economically justified as the underlying, present law requires. I urge my colleagues to support this amendment, which will allow the Department of Energy to complete the rulemaking process within a standard that is not only good for saving energy and technologically feasible, but also good for the consumer. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I appreciate the efforts by Chairman Baucus for correcting an oversight by Congress when it failed to shift from the general fund to the highway trust fund, 2.5 cents per gallon collected from sales of gasohol. Similar adjustments for other fuels were made by a previous Congress, but not for gasohol. I also want to thank the chairman for refraining from offering an amendment at this time that would require the general fund to contribute 5.3 cents to the highway trust fund for every gallon of gasohol sold. It is wise to wait until next Congress when we can look at the big picture. Next year, we need to analyze all revenue sources for the highway trust fund to determine if adjustments are appropriate. We also need to determine if adjustments are appropriate in the way we spend the Highway Trust Funds that are collected. For instance, we may determine that it makes better sense for mass transit subsidies to come from general funds instead of from the highway trust fund. We may find that the subsidies for special motor fuels such as propane, methanol, and liquified natural gas should be paid from the general fund instead of the highway trust fund. These three fuels are not paying the full 18.3 cents per gallon. Propane receives a 4.7 cent subsidy, liquified natural gas receives a 6.4 cent subsidy, and methanol receives a 9.15 cent subsidy. Much needs to be addressed as we reauthorize the highway bill, and approaching this very important matter in a piecemeal fashion would be a mistake. Aviation Emissions

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, today I rise in recognition of the steadfast service and commitment of a principled man of God, Reverend Kenneth Dykstra of Pella, IA. Reverend Dykstra served in the capacity as Senior Pastor of Third Reformed Church in Pella from 1969 to 1979. During this period he was involved and actively participated in two extremely consequential missionary trips, one to India and the other to Mexico--both with the Reformed Churches of America. Kenneth Dykstra devoted the next 8 years of his admirable career to prison inmates through a Bible study ministry as the Senior Pastor with the Worthington Reformed Church in Worthington, MN. Reverend Dykstra returned home to the beautiful state of Iowa in 1987 to retire in the Dutch community of historic Pella. Knowing ``true'' retirement for a pastor is rarely an option, he served in a variety of roles including mentor for a church's new pastor and as a Minister of Calling with focused attention on visitations to shut-ins and nursing home residents. Kenneth Dykstra's significant contribution to not only those his ministry touched, but also the entire State of Iowa, in no way goes unnoticed. I thank and commend him today for all of his dedication, commitment and positive influence on those fortunate enough to know him.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, today, Senator Thomas has introduced a bill to establish a medicare subvention demonstration project for veterans and I would like to take this opportunity to say a few words about the issue of medicare subvention for Department of Veterans Affairs (VA) health care. I have heard from many Iowa veterans who are frustrated that Medicare does not reimburse for medical care provided by the VA. While veterans who have a disability connected to military service have their health care paid for in whole or in part by the VA, veterans who do not have a service connected disability are listed as ``priority 7'' and are required to pay co-payments for the receipt of VA health care. Many of these priority 7 veterans are Medicare eligible, yet they cannot use their Medicare benefits to pay for VA health care. The number of priority 7 veterans enrolled in VA health care has increased greatly in recent years, especially in my state of Iowa. This is only the tip of the iceberg in terms of the number of veterans eligible to enroll in the VA health system as priority 7. However, the current VA funding formula does not allocate resources to pay for the care of priority 7 veterans. These costs are intended to be recouped by billing private insurance or through out-of-pocket co-pays charged to the veteran, which in fact fall far short of covering the additional costs to the VA system of serving priority 7 veterans. Allowing Medicare to reimburse for health care provided in VA facilities would help alleviate this funding short-fall in the VA system while giving Medicare eligible veterans greater choice and flexibilty in meeting their health care needs. Medicare subvention for VA health care would be a win-win situation for veterans, which is why I strongly support the concept of Medicare subvention for VA health care. Questions remain about what effect Medicare subvention for VA health care could have on the Medicare trust fund. It is possible that Medicare outlays will increase if Medicare begins to pay for health care at VA facilities for Medicare eligible veterans currently using the VA. However, if veterans who are covered by Medicare begin to use the VA in lieu of private health care and the VA is able to provide those services at a lower cost, Medicare could actually see savings. In the 106th Congress, the Senate Finance Committee reported a bill, S. 1928, which included a Medicare subvention demonstration program similar to the one introduced by Senator Thomas today. The CBO scored the Medicare subvention portion of this bill as costing Medicare $70 million over five years. This is a matter that should be studied further and is an issue that would be closely examined in a demonstration program such as the one Senator Thomas has proposed. At the end of the day, Medicare subvention for VA health care is a good idea. I believe that Senator Thomas is on the right track with his proposed Medicare subvention demonstration program and I look forward to working with him and other members of the Senate Finance Committee to move forward on this important issue.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, these draft reports produced by the U.S. Department of Energy's Office of Transportation Technologies will further expose inaccuracies of these contentions that renewable fuel standard will increase the cost of motor fuel. As these reports conclude, the opposite is the truth. The first draft is entitled ``Oil Price Benefits of Increasing Replacement/Alternative Fuel Market Share.'' The second draft is entitled ``The Impacts of Alternative and Replacement Fuel Use on Oil Prices.'' Allow me to read excerpts for my colleagues. The very first sentence of the first draft states: Increasing the market share of alternative and replacement transportation fuels would have significant energy security and oil market benefits for the United States. This Department of Energy analysis states further: First, by reducing the quantity of petroleum consumed and imported, they reduce the vulnerability of the economy to oil price shocks. The economic analysis continues with a second point. By increasing the price responsiveness of oil demand, they reduce the market power of the OPEC cartel, making it more difficult for OPEC to raise prices and to sustain these prices. It is very obvious that should be our goal--that is our goal. Do we not want to reduce the market power of OPEC? Do we not want to make it more difficult for OPEC to raise prices? Is not the object of our energy legislation to reduce the quantity of petroleum consumed and imported and to reduce the vulnerability of the economy to oil price shocks, particularly those caused by OPEC withdrawal of oil from the market? If the Senate approves these killer amendments that are offered by our New York and California colleagues, OPEC will win; America will lose. When the Department of Energy did this analysis, the market share for alternative replacement fuels amounted to only 3.6 percent of our motor fuel supply. About 2.6 percent was MTBE, about .7 was ethanol, and the remaining .3 came from propane, compressed natural gas, electricity, and others. That mere 3.6 percent, according to the Department of Energy analysis, leveraged a reduction of the cost of oil by $1 per barrel. The Department of Energy study concluded that by using a mere 3.6 percent, alternative fuels saved Americans $7 billion a year. The study also pointed out: If the United States were to achieve the 10 percent replacement fuel goal of the Energy Policy Act of 1992, oil prices could be reduced by approximately $3 per barrel . . . (with) savings of approximately $20 billion on an annual basis. The second draft offered more conservative estimates of consumer savings but nevertheless stated that current alternative motor fuel use reduced total U.S. petroleum costs by $1.3 billion per year, and if we increased usage to 10 percent by 2010, we would save $6 billion a year. Whether it is $20 billion a year or $6 billion a year, it is saving an awful lot of money for the consumers of America. I appreciate the support of President Bush, as well as the Republican and Democrat leaderships in the Senate, in supporting and promoting renewable fuels. In addition to bipartisan unity, however, Congress needs to exhibit leadership that puts regional differences aside, for the sake of all Americans. I will never understand why some people are more worried about the farmers and ethanol producers of the American Middle West than they are about oil and MTBE produced from the Middle East. I will never understand why people use MTBE-industry-generated misinformation about price spikes that, if taken to its logical conclusion, would argue that MTBE should not be banned, that drinking water contamination is no big deal in California or New York. It is very baffling to me. I firmly believe the renewable fuel standard benefits all Americans, particularly including consumers in California. But even if California and New York do not get special treatment under this bill, would not my colleagues rather do something to benefit America's Midwest instead of doing things that continue to benefit the world's Middle East? The opponents of ethanol suggest it costs too much or that it should be taxed at a higher level. That is their complaint. They think a gallon of gasohol should be taxed at around 18 cents a gallon instead of 13 cents a gallon. They want to raise taxes on the consumer who uses ethanol. For some reason, however, they choose to ignore the costs of the status quo: Our ever-increasing vulnerability on imported oil. They choose to ignore the real cost of imported oil. Ten years ago, during debate on the Energy Policy Act of 1992, then- Energy Committee Chairman Senator Johnston of Louisiana reported that the United States was subsidizing imported oil to the tune of $200 per barrel. Former Navy Secretary Lehman estimated the defense cost of protecting Middle East supply lines at around $40 billion a year, and we all know what the Persian Gulf war was about. It has been pointed out by numerous energy experts, including the ranking Republican of the Senate Energy Committee, that the Persian Gulf war was about oil. So I hope my colleagues from California and New York will ponder on this truth: Not one of our sons or daughters who have proudly donned the military uniforms of the United States has ever lost his or her life or limb. None of our children has ever shed their blood to protect ethanol supply lines and the production of ethanol. What value might my colleagues place on that, that there has been no loss of life in this country and that there has been loss of life elsewhere protecting our oil lines? I will be in shock if we cannot all agree that reducing the risks to our sons and daughters, the risk of them losing life and limb trying to protect Middle East oil supply lines, is worth far more than the few cents a gallon that was mentioned, albeit incorrectly, as the increased cost of using renewable fuels. My New York and California colleagues used the term ``mandate'' much during the debate. None of us likes mandates. I, for one, did not like mandating sending our sons and daughters to defend Middle East oil supply lines. I heard one talk about market principles. What market principles are involved when supply must be protected by military escort to the tune of what Secretary Lehman said, $40 billion a year? We also hear complaints about the highway trust fund, that it does not collect enough revenue because gasohol is not taxed highly enough. One has to wonder why my colleagues are not equally upset by the fact that billions of dollars from the highway trust fund are diverted away from highway construction and instead used for mass transit subsidies of California and New York. Before we increase taxes on motorists, I suggest it makes more sense to first put a stop to this transfer of wealth from highway users to subsidize cities' mass transit users. At the same time, I wonder if our colleagues have ever considered that mass transit subsidies are justified for the same reason as charging lower taxes on gasohol. Are we not in both cases trying to reduce our dependence upon foreign oil imports? Why are subsidies to encourage mass transit ridership in New York and California OK, but subsidies to encourage all Americans to use gasohol somehow not okay? Ten years have passed since we took up and enacted the Energy Policy Act of 1992. Given the fact that our dependence upon foreign imports has increased substantially, I think we can agree that the Energy Policy Act was a dismal failure. Part of the reason we failed was that we let regional bickering get in the way of pulling together a comprehensive energy plan that is good for every American. We do not dare fail again, as we did in 1992, and that is why I urge my colleagues to defeat these anti-renewable-fuel-standard amendments that are before us.

Mr. GRASSLEY. Mr. President, before I speak about the volume of misinformation we have on the renewable fuel standard, there were a couple statements made in the debate by the Senator from Oklahoma that I want to address. No. 1, don't assume ethanol is going to increase the cost of gasoline. At least in my State, you find in most cases ethanol in gasoline will sell for 2 cents a gallon cheaper than gasoline without ethanol. If that is not the case, it is the same price. Very rarely do you find anytime that ethanol in gasoline causes the price of that gasoline to be higher than gasoline without ethanol. The other misinformation we ought to clear up is the use of the word ``subsidy.'' Because of the consumer tax on gasoline not being as high if it has ethanol in it as without ethanol, that is a lower rate of taxation. The subsidy, as we use it in this body, refers to money coming from the Federal Treasury to benefit somebody. When a consumer pays less tax on a gallon of gasoline because it has some ethanol in it, that is less tax. Do the proponents of this bill suggest we ought to raise the tax on gasoline because there is ethanol in it? Some of these Members I hear abhor the idea that there ought to be any increase in any tax, let alone an increase in the gasoline tax. Those are two things I wanted to clear up. Now, about this misinformation, I know my colleagues who are supporting this amendment are very intelligent people. I don't think they are purposely misleading us. There has been some propaganda spread by some industries in this country, and it has been picked up by some Members of Congress. They have lent their credibility and voice to this antireformulated fuels standard in a way that, quite frankly, does not do anybody any good. This misinformation campaign can help only two interests: It can help producers of MTBE, which production contaminates our drinking water supplies--and it does this in the States of California and New York; that has been very well documented; secondly, Middle East producers of both oil and MTBE that seek to tighten a very dangerous grip they have upon America's energy security. How does this misinformation campaign help MTBE producers? That is because the reformulated fuel standard includes an MTBE ban. The MTBE producers know that the entire reformulated fuel standard will unravel if they can chip away at it with some amendments. A broad coalition of interests helped produce this balanced compromise we have before us. This coalition may very well be unprecedented. The coalition consists of farm groups, petroleum and renewable fuel producers, environmental groups, and State environmental agencies. I had an opportunity to address a group where the American Petroleum Institute had one of their employees. I had to tell him, when I heard of their supporting this compromise, it is a good thing I had a good heart. Otherwise, I would have passed out as a result of it because they have never been with this group of people in the past. Here they see the need for renewable fuels as well. They all agreed to a compromise proposal embodied within the renewable fuel standard that in the past seemed impossible to accomplish. What do MTBE producers do? They get their consultant, Hart/IRI, to cook numbers to make it look as if requiring ethanol usage will cause motor fuel prices to go up by almost 10 cents a gallon. This is blatantly false. The truth is, according to the Energy Information Administration, requiring ethanol under the renewable fuel standard will increase motor fuel costs, if at all, by one-half a cent to a penny per gallon. So we have had a couple Senators address this issue in a Dear Colleague letter. I will quote from the letter, ``MTBE Consultant Misleads Members on Ethanol Debate.'' Let me share with you the letter from Senators Johnson and Hagel. I quote: Senators from New York and California have distributed charts and spoken on the floor, claiming that the renewable fuels standard will increase consumer costs by 4-9.75 cents per gallon. The source of this data is the MTBE consulting firm, Hart/IRI, which claims it based its cost estimates on data from the Energy Information Administration. Further quoting: [The Energy Information Administration] has completed two analyses. . . . The first, found that the MTBE ban would increase gasoline costs 4-10.5 cents per gallon, while the renewable fuels standard could increase gasoline costs by 1 cent per gallon in reformulated gasoline areas, and .05 per gallon overall. I want my colleagues to listen very carefully to the next sentence from this letter: Hart/IRI lumped these costs together and attributed . . . them to the renewable fuels standard, making that provision appear to be roughly ten times more expensive than it is. Continuing to quote: Since the fuels compromise bans MTBE, Hart/IRI has every incentive to exaggerate and misrepresent the cost impacts on the legislation. It is ironic and unfortunate that some members--whose states have already banned MTBE, because it has poisoned their drinking water--chose to use this MTBE consulting firm's analysis rather than relying upon the objective EIA numbers. We ought to repeat that sentence: It is unfortunate and ironic that some members--whose states have already banned MTBE, because it has poisoned their drinking water--chose to use this MTBE consulting firm's analysis rather than relying upon the objective EIA numbers. We proponents of this renewable fuels standard are trying to help consumers in California and New York. We are trying to reduce their dependence upon MTBE, because it poisons the groundwater, and oil, and both of those come from the Middle East. In fact, we are trying to do so in a manner directly advocated in 1999 by the two California Senators and the senior Senator from New York when the Senate approved Senator Boxer's resolution calling for the ban of MTBE and replacing the MTBE with renewable ethanol. That is what the resolution said. Yet today our efforts are opposed because our legislation would increase the use of ethanol made by farmers and ethanol producers in America's Middle West as opposed to getting our energy from the Middle East. Our opponents claim they are worried about supply shortages and price spikes. Yet how can any Member of this body be more worried about ethanol from the Midwest than they are about MTBE and oil from the Middle East? How can anyone oppose America's farmers and ethanol by using bogus information from an MTBE consultant. It is unbelievable, isn't it? Mr. President, what the MTBE consultant did was distort an analysis of banning MTBE included in an earlier proposal, not the proposal pending before the Senate. The Energy Information Administration did two analyses. The outdated one concluded that an MTBE ban under the old proposal would increase consumer costs by 4 to 10 cents a gallon. Requiring the use of ethanol under the old analysis would cost at most a penny a gallon. A second Energy Information Administration analysis was conducted, but this time it focused on the pending legislation. The Energy Information Administration concluded that banning MTBE would increase the cost of motor fuel by about 2 to 4 cents per gallon, and again it found that requiring ethanol would increase consumers' cost by less than one penny a gallon. Again, who are we to believe, the MTBE industry, which will lose if MTBE is banned, or the Energy Information Administration? Let me critique this for my colleagues with a closer look. Those who are offering killer amendments to this renewable fuel standard point out in detail, State by State, the price increases consumers will supposedly suffer if the renewable fuel standard is adopted. The bogus Hart/IRI analysis concluded, for instance, Arizona consumers would pay 7.6 cents more per gallon; Maryland, 9.1 cents; Texas, 5.7 cents; Pennsylvania, 9.1 cents; New York, 7.1 cents; California, 9.6 cents, and I can go through the 50 States. When one looks slightly below the surface and gives the Hart/IRI study even a moment's attention, one will see but half a cent or a penny of these predicted price hikes are related to the ban of MTBE and not the cost of requiring ethanol. Our renewable fuel standard opponents want us to fear price hikes, but they do not want us to figure out that the price hikes are driven by banning MTBE. Instead, the aim is to mislead us into thinking ethanol causes the price hikes, but by using this pro-MTBE consulting firm study and by subtracting the half cent or penny-cost increase supposedly relating to ethanol, we find that what our New York and California colleagues are really arguing is that if we ban MTBE, the cost of gasoline will go up by 8.6 cents per gallon in California and by 6.1 cents per gallon in New York. What is the logical conclusion? Isn't that simple? If we are to believe the studies used by our colleagues from New York and California, the only conclusion we can draw is they do not want to ban MTBE because the price of gas will go up. The opponents of the renewable fuel standard cannot have it both ways. They have to make up their minds. Either they want to ban MTBE to protect drinking water or they want to keep using MTBE so prices do not spike. The bed was made with Hart/IRI; now lay in it. Mr. President, surely we can put a little more care into debate so important as our energy security. Some of our colleagues who are opposing the renewable fuel standard mentioned in passing that there is cleaner fuel at less cost and that we do not need to use oxygenates. Really. In 1991, the California Energy Commission compared the cost of ethanol-blended motor fuel with motor fuel that included no oxygenates, neither ethanol nor MTBE. In short, the California Energy Commission found that nonoxygenated fuels could cost more per gallon than ethanol- blended motor fuels. I note that the California Energy Commission analysis was done when annual ethanol production capacity stood at less than 1.7 billion gallons, and it was when skeptics said there would not be enough ethanol to replace MTBE. Today ethanol production capacity stands at 2.3 billion gallons per year. I hope that settles some of the fears the Senator from Oklahoma had about whether we have the capacity to do it. We have unused capacity right now. We also have new plants coming online, and production capacity will increase to 2.7 billion gallons per year by the end of December and climb to between 3.5 billion and 4 billion gallons by the end of 2003. I suggest that given the large increase in ethanol capacity, ethanol- blended motor fuel would be even cheaper than estimated by the California Energy Commission. Moreover, even the recent Energy Information Administration study concluding motor fuel could go up a penny if ethanol is required may be too high because it does not take into consideration the efficiencies of the credit trading program. Our California and New York colleagues argue that nonoxygenated motor fuel is cheaper than ethanol-blended fuel, but that contention is just the opposite of what the California Energy Commission reported. Our colleagues choose not to take their information from the California Energy Commission and they choose not to take their information from the U.S. Energy Information Administration. They would rather take their information from an MTBE consultant. Why would they do this? I wish I knew. I want to share another independent source of energy analysis produced by the Department of Energy's Office of Transportation Technologies. These two draft studies underscore the extreme importance of expanding renewable fuel use, particularly now that we aim to ban MTBE because it poisons our water. In short, these analyses conclude that alternative and replacement fuels leverage lower prices for consumers and reduce the impact of OPEC oil-producing nations. Mr. President, I ask unanimous consent that these two economic analyses of the benefits of replacing gasoline with alternative fuels be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, today, Senator Thomas has introduced a bill to establish a medicare subvention demonstration project for veterans and I would like to take this opportunity to say a few words about the issue of medicare subvention for Department of Veterans Affairs (VA) health care. I have heard from many Iowa veterans who are frustrated that Medicare does not reimburse for medical care provided by the VA. While veterans who have a disability connected to military service have their health care paid for in whole or in part by the VA, veterans who do not have a service connected disability are listed as ``priority 7'' and are required to pay co-payments for the receipt of VA health care. Many of these priority 7 veterans are Medicare eligible, yet they cannot use their Medicare benefits to pay for VA health care. The number of priority 7 veterans enrolled in VA health care has increased greatly in recent years, especially in my state of Iowa. This is only the tip of the iceberg in terms of the number of veterans eligible to enroll in the VA health system as priority 7. However, the current VA funding formula does not allocate resources to pay for the care of priority 7 veterans. These costs are intended to be recouped by billing private insurance or through out-of-pocket co-pays charged to the veteran, which in fact fall far short of covering the additional costs to the VA system of serving priority 7 veterans. Allowing Medicare to reimburse for health care provided in VA facilities would help alleviate this funding short-fall in the VA system while giving Medicare eligible veterans greater choice and flexibilty in meeting their health care needs. Medicare subvention for VA health care would be a win-win situation for veterans, which is why I strongly support the concept of Medicare subvention for VA health care. Questions remain about what effect Medicare subvention for VA health care could have on the Medicare trust fund. It is possible that Medicare outlays will increase if Medicare begins to pay for health care at VA facilities for Medicare eligible veterans currently using the VA. However, if veterans who are covered by Medicare begin to use the VA in lieu of private health care and the VA is able to provide those services at a lower cost, Medicare could actually see savings. In the 106th Congress, the Senate Finance Committee reported a bill, S. 1928, which included a Medicare subvention demonstration program similar to the one introduced by Senator Thomas today. The CBO scored the Medicare subvention portion of this bill as costing Medicare $70 million over five years. This is a matter that should be studied further and is an issue that would be closely examined in a demonstration program such as the one Senator Thomas has proposed. At the end of the day, Medicare subvention for VA health care is a good idea. I believe that Senator Thomas is on the right track with his proposed Medicare subvention demonstration program and I look forward to working with him and other members of the Senate Finance Committee to move forward on this important issue.

Mr. GRASSLEY

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

Mr. GRASSLEY. Mr. President, I ask unanimous consent to speak for 15 minutes as in morning business