Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. We were told sometime this spring. Spring is fleeting. That is why I hope we can get a date definite that it will be brought up and it can be passed. It will be particularly fruitful and beneficial to the President to have Trade Promotion Authority now as he goes to the international conference at Monterey this week. It would be nice if he had it as he is going to visit Peru; as he is going to visit El Salvador. Wherever the President is going to go, this issue always comes up. As I talked to Bob Zoellick, the U.S. Trade Representative who does our negotiations, the fact that the President does not have this authority weakens our position at the international conferences we attend, particularly now as we are beginning negotiations in Geneva, on what is called the Doha Round--it was agreed to last November, a brand new round of negotiations that hopefully will be finalized for about 3 years--for the President to be credible and his people to be credible at the negotiating table, we must have Trade Promotion Authority.

Mr. GRASSLEY. It is a very divisive issue. As Senator Lott brought up about tax benefits for COBRA insurance, there was divisiveness during the debate on economic stimulus, and it kept economic stimulus from passing. It seems to me that a bill that was voted out of committee by 18 to 3 should not be handled in any other spirit than the spirit of that vote within the Finance Committee, which is typical of the way the Senate ought to work, and also a follow-on of how our committee has always worked to produce good bills which have come out of the committee most of the time with bipartisan support. In so many other areas other than just this one, I compliment my Democrat counterpart, Senator Baucus, and his staff for trying to work through some of the disagreements that might come up on the floor of the Senate. I think there is a terrible pressure for more to be done, and that it is going to be divisive. I hope we can get past that. For instance, in the case of health insurance and incentives for the unemployed to have health insurance, that is a very worthy issue. But that ought to come up in the context of dealing with the issue, as the President has presented it, of tax credits for all of the uninsured so they will be able to buy health insurance. We should not take that issue up with the very narrow part of the unemployed because of the relationship to trade. That should come up as an issue for all of the uninsured, and we should deal with that as a separate issue.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, it is quite obvious to everybody that the United States is at war and that every effort must be made to support our men and women in uniform, particularly those who are putting their lives on the line. And who knows, that might be anybody who is in the military at a time of war. You don't go to war if you don't go to war to win. It is with some frustration that I address the Senate on a problem within the Department of Defense where it seems as if everybody is not pulling together as a team ought to pull together in order to win the war. I want to share my views on the latest results of an ongoing oversight investigation of the Department of Defense credit card use. This is a joint effort supported by the General Accounting Office. I have had the privilege of teaming up with Congressman Horn of California on this issue. What we are trying to do is put the spotlight on a very costly problem at the Department of Defense. The Pentagon is a bureaucratic place and, as most bureaucratic places, if there are problems, the glare of the public spotlight is never welcome. But shedding light is the heart and soul of one of our most important responsibilities as Members of Congress, and that is to do oversight and make sure the laws are faithfully executed and that the money is spent according to the intent of Congress. Too often, we just spend our time worrying about passing laws rather than making sure laws are followed and money is spent according to the intent of Congress. So oversight is very important. This is a way of bringing exposure to problems, and exposure is a great remedy enhancer. Every time I peer into the inner recesses of the Department of Defense credit card account, I see more abuse and fraud and that makes me ask myself: How bad can it really get? So we need to keep the spotlight on full power and the beam focused until we get to the bottom of the pit and figure out what needs to be done. Today there are 1.7 million Department of Defense credit cards in circulation that generate over $9 billion in expenditures annually. There are two types of credit cards: purchase cards and travel cards. There are 1.4 million travel cards versus only 200,500 purchase cards. Most of the dollars, however, are on purchase card transactions, albeit that there is only about 12 percent as many purchase cards as travel cards. So we have $6.1 billion per year generated versus $3 billion for the travel cards. A credit card, as everybody knows, is a financial instrument. It is, in fact, a license to spend money. Every shred of evidence that I have seen says that the internal controls at the Pentagon are weak or nonexistent. Credit cards in a zero-controlled environment are very dangerous and not very good for the taxpayers of this country. That means there is an army of 1.7 million strong, authorized to spend money with no checks and balances. The potential for abuse and fraud is virtually unlimited. I understand the thinking behind the credit cards when they were first put out by the Defense Department. That thinking and the theory behind it is very good. Unfortunately, it is the execution that is so poor. We want the men and women serving in the Armed Forces to have the tools they need to carry out their duties effectively. A credit card is one of those modern devices that is supposed to make it easier for them to get the job done quickly and effectively, without a whole lot of wasteful paperwork. Who is going to argue with Government having less paperwork? But in simplifying the travel and purchase processors, each cardholder is given the authority to spend money. The authority to spend money in the name of the taxpayers is an awesome responsibility. That authority carries heavy responsibilities. Unfortunately, this awesome responsibility is not taken very seriously at the Pentagon. That criticism is not directed at Secretary Rumsfeld. He is trying hard to clean up a longstanding financial mess. My criticism is directed at the bureaucrats who are supposed to oversee the program. The Department of Defense credit cards are issued willy- nilly with no credit checks. Just think of that--credit cards to people who are not given credit checks. The results are predictable. The cards are being abused with impunity. The Department of Defense credit cards are being taken on shopping sprees and the cardholders think they are immune from punishment. The sad commentary is that they are immune from punishment. They should not be, but they are. That is the way it works out, I guess. We have zero accountability with purchase cards and zero accountability with travel cards--until recently. There is a little improvement in the area of travel cards. Now, the fact that there is zero accountability is a root cause of the problem. That is why we have to be overseeing this issue regularly--because of the lack of accountability. If there was accountability, none of this would be happening. The General Accounting Office is reporting on how bad the problem really is. The General Accounting Office has examined 300 transactions at two Navy offices in San Diego. Now, just 300 transactions might sound to be too little to draw some conclusions, but the results just from those 300 are devastating and supports the evidence of a lack of accountability. Despite such a small sample, the General Accounting Office has uncovered extensive fraud and abuse, and more is being found each day. This is the tip of the iceberg, and here is a sample of how these credit cards are abused: in bars, strip joints, and gambling casinos; for large cash withdrawals from ATM machines; clothing at upscale department stores, such as Macy's and Nordstrom; designer leather goods and expensive luggage; gift certificates, $1,500 each; $200 robots at Toys 'R Us; groceries, kitchen appliances, and home computers. Get this. They were even used for breast enlargement operations. You name it, it seems as if the people who have these credit cards do it, and it is all personal business. If they need it, they buy it with Department of Defense plastic, and they keep what they buy, no questions asked. Now, there is a proposal to raise the purchase limit from $2,500-- where it is now--to $25,000. As I see it, if that price goes up, if that purchase limit goes up, new cars and homes are next, rather than groceries and home computers. The General Accounting Office's 300-transaction sample, with just 300 people being investigated, yielded over a half million dollars in fraudulent and abusive purchases. Either the taxpayers or the bank gets stuck with the bill, depending upon which card is used. So in the case of the purchase card, when shopping is done, the Government is responsible for paying the bill, and most bills are paid promptly with no questions asked. With a purchase card, the taxpayers get shafted upfront. To my knowledge, the Government has never asked anyone to return an unauthorized purchase or repay the money, even when abuse is known to the authorities. In the case of travel cards, by comparison, the responsibility of the individual cardholder goes with the travel card expenses. The taxpayer at this point is out of the loop, at least upfront, but I will tell you how they get stuck in the end. When the cardholder of a travel card incurs legitimate travel expenses, that person is supposed to file a travel voucher, get reimbursed, and then pass the money on to the bank; in this case, the Bank of America has all these credit cards. All too often, the cardholder simply pockets the money, the tax dollars, and then the bank, when the cardholder does not pay the bill, is left holding the bag. When the travel card is used to cover personal expenses, which happens with alarming regularity, those bills are paid late, very late, sometimes never, and in this case the military personnel or the Department of Defense employees have no interest charges, so the abuser gets an interest-free loan. The bank has equipped the Pentagon with an antifraud detection device. It is called EAGLS. It gives agency program coordinators an online capability to detect unauthorized transactions on any account, and it only takes a second to determine if a trooper is getting cash at a local ATM machine without orders, but it does not work because no one is minding the store. As I said at a hearing last July when I first brought this up, if the Pentagon knows this is happening and if the Pentagon does nothing, it seems to me that makes the Department of Defense party to this bank robbery, and the robbery is still in progress. We have a bank upfront sustaining unacceptable losses and all consumers doing business with that bank pay higher prices, and in the end the taxpayers get shafted, too, because when the bank has to write off this bad debt, it is written off as a business expense and that bank pays less corporate taxes to the Federal Treasury. The only difference with the purchase card is the taxpayers get shafted upfront. In the case of Bank of America being shafted first, if they have to write this off as bad debt--and there is a lot of bad debt--they do not pay as much taxes, and so the taxpayers pay anyway. The bank has reached a breaking point. Remember, this is the Bank of America. It is losing too much money. So on February 11, 2001, the bank fired a warning shot across the bow. The bank is turning up the pressure. It declared its intent to cancel the U.S. Army account, 413,029 of these cards at midnight, this month, this year. That got somebody's attention in a hurry, and negotiations are underway between the Bank of America and the Department of Defense. Mr. President, you might say there is a glimmer of hope on the horizon, and the reason for hope comes from a brandnew Department of Defense policy called salary offsets. One might call it garnishment of salary. Before I explain this new policy, it is important to understand why the Department of Defense travel card program is teetering on the brink of disaster. As of November last year, 46,572 Department of Defense personnel had defaulted on more than $62 million in official travel expenses, and the bad debt was growing at the rate of $1 million per month, making the Department of Defense default rate six times the industry average. Here is a government, which is supposed to be setting a good example, having a default rate six times what the bank would normally expect from anybody else using credit cards. For a business that is interested in profit, a pile of bad debt, like what I am talking about, with no accountability makes for an intolerable situation. Something had to give. In October of last year, the bank and Department of Defense agreed to take action. The salary offset program was born. There are now 31,579 accounts enrolled in the offset program; in other words, a garnishment of wages. So far, the offset payments total $5.2 million. Salary offsets provide some measure of accountability, but there are limitations. For one, the money was taken from the bank in big chunks, but it is repaid in little dribbles here and there over a long period of time. There are loopholes. Ten percent of the unpaid accounts will slip right through the net due to retirements, bankruptcies, and dollar offset limits. The bank still expects about $2 million to $4 million a year to fall through the cracks and be written off as bad debt, but that is considered somewhat better because that is consistent with the industry average. In addition, most of the older accounts in default will never be captured by offsets. The bank will still have to eat $40 million of unrecoverable debt. Even though there is not any hard data yet, the bank expects salary offsets to reduce the default rate, in their words, to negligible levels. That is the good news, but there is still bad news. Salary offsets are having little or no effect on the high delinquency rates. Delinquencies have actually risen since the salary offset policy has been put in place. That is because offsets do not kick in for 120- plus days, 4 months past billing. Payments are due within 30 days of billing. Today the Department of Defense has outstanding balances of $370 million. About 30 percent of the dollars owed for official travel expenses are more than 30 days past due, and 15 percent are 60 days past due. One in five Department of Defense accounts is overdue for payment. That is four to five times the industry average. The 3-month gap between the payment due date and offsets means the bank has to float a loan--it is a free loan for Department of Defense abusers--that costs the bank $4 million to $5 million a year. Wouldn't you like to get an interest-free loan this way by using a Government credit card? A prime driver behind delinquencies is the use of the card to cover personal expenses. Mr. President, you may remember I mentioned several cases in a speech last year about egregious abuse of the Department of Defense credit cards. There is the case of Marine Sgt. A. Lopez who ran up a $19,581 bill for personal expenses and then left the service and the unpaid bill when his enlistment was up. We have a person by the name of P. Falcon, Army, with an unpaid bill of $9,847, including $3,100 spent at a nightclub. We have a dead sailor named T. Hayes who spent $3,521; Q. Rivera, Army Reserve, whose wife spent $13,011 on a shopping spree in Puerto Rico. And we have R. Walker, Air National Guard, with an unpaid balance of $7,428, including his wife's gambling debts. Now, in the past 8 months, since this was exposed, only one of these accounts has been paid off, and that was P. Falcon, who had the bill for $9,847, including $3,100 spent at the nightclub. He has paid his bill. Every expense posted to his account was personal. However, he is under investigation. The others have the same large, unpaid balances that I told my colleagues about last July. Some are under investigation. More aggressive offsets and late fees might help to bring this kind of abuse to a screeching halt. I hope the Defense Department proceeds down that course. Some real leadership at the top would also help. One of the most powerful elements of leadership is a setting of examples of excellence. Setting a good example should include paying credit card bills on time. Officers in our military branches should always set the example. Unfortunately, the bad news is there are 713 commissioned officers who have defaulted on $1.1 million in charges. All of these accounts are in chargeoff status or unpaid for 7 months or more. The rank of these officers ranges from junior lieutenants up to senior colonels and a Navy captain. Individual unpaid balances top out at $8,000. Some of the charges on these accounts look suspicious and need investigation. Commissioned officers who run up $1.1 million in bad debts set a terrible example for the rank and file. Somebody over in the Pentagon needs to come down hard on officer scofflaws. Credit card abuse in the military will never stop until officers clean up their act. I have provided a list of these 713 commissioned officers who defaulted on their accounts, along with the unpaid balance for each officer. I have also sent a letter to Secretary Rumsfeld because I want him to see the list and determine what action should be taken in this matter because officers should be setting an example, although anybody who commits this sort of action is doing wrong, particularly in time of war when every resource we have in the Defense Department and elsewhere ought to go towards winning that war. One last example: The General Accounting Office has uncovered a disturbing case involving alleged purchase and travel card fraud by one person, Ms. Tanya Mays. She was assigned to the Navy Public Works Department San Diego. Ms. Mays took her purchase card on a Christmas shopping spree, and in a few short days ran up a bill of $11,551 at Macy's, Nordstrom, and Circuit City. She bought gift certificates worth $7,500, a Compaq computer, Amana range, groceries, and clothing, all at taxpayer expense. She presented the bill to her Navy supervisor who signed and certified for payment, and it was paid in full. She also used her travel card to buy airline tickets for her son that cost another $722. When Ms. Mays left the Public Works Department, she was allowed to keep her purchase card. I guess they figured she might need it again, and they were right. She did, this time for a personal car rental, and Public Works gladly paid the bill. I find this Mays case very troublesome. She has allegedly made a number of fraudulent purchases. Yet there seems to be a total disregard for accountability. Ms. Mays has not been asked to repay the money she allegedly stole. No disciplinary action has been taken. In fact, she was moved to a bigger job and given a promotion in October 2001. She is now assigned to the Army's top level financial management office in the Pentagon, and I am told she is in charge of cash integration. When one of these cases is put under a microscope, it seems as if the whole problem comes into sharper focus. Her case is not unique. There is another one. I am going to call him Nick. His last name is Fungcharoen. I am not going to repeat that, obviously. He used his travel card exclusively for personal expenses. Over a period of 2 years, he charged nearly $35,000, including medical expenses of $4,000. On the surface, it appears as if he spent most of the money romancing a waitress he met at the Hooter's Bar and Grill in Jacksonville, FL. Her name was Jennifer Gilpin. After they got to know each other, she asked him for money to have her breast enlargement operation. He agreed and took her to a surgeon. Dr. John J. Obi, M.D., performed the operation, and Nick used his Department of Defense credit card to pay the bill. When the relationship soured, the case ended up in small claims court. Nick had retired on disability and wanted his money back. The judge became alarmed that Nick testified proudly he had used his government-issued credit card to pay the doctor. Nick whipped out the card in the courtroom and showed it to the judge. The judge examined the card and read the inscription that says, ``for official government travel only.'' The judge stated in total disbelief, ``You paid for this breast enlargement with a government credit card?'' After the revelation, the judge simply said, ``Let's not go there.'' That case is unique. It is unique because the cardholder paid his bill, though not always on time. So I have two problems with all of that. The point is, we have to get this stopped. We have to make sure all of the resources of the Defense Department are not used for playing games with government credit cards but are used to make sure we win the war on terrorism. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, as all of my colleagues know, I strongly support the production of renewable domestic fuels, particularly ethanol and biodiesel. As domestic, renewable sources of energy, ethanol and biodiesel can increase fuel supplies, reduce our dependence on foreign oil, and increase our national and economic security. Historically, Congress and the administration have asked the Federal Government to lead by example when moving this country to new standards. Since we are talking about the future of energy in this country, we as a Federal Government must lead by example. The Dayton- Grassley amendment is largely symbolic and it will codify what many administrations have already directed the Federal Government to do: to use renewable fuels where practicable. For instance, the last administration issued an Executive order directing the Federal Government to exercise leadership in the use of alternative fuel vehicles, to develop and implement aggressive plans to fulfill the alternative fueled vehicle acquisition requirements of the Energy Policy Act of 1992, which required 25 percent in 1996, 33 percent in 1997, 50 percent in 1998, and 75 percent in 1999 and thereafter. The Executive order was never adhered to because it was not generally practicable, but the Dayton-Grassley amendment is much easier to implement, because we are talking about setting a standard using normally blended renewable fuels. The Federal Government should be using as much renewable fuels as is practicably available. This amendment would require just that--where available, Federal fleet vehicles should be using ethanol and biodiesel, the two most practicably available renewable fuels. I support this amendment, because it makes good sense for the Federal fleet to use as much ethanol and biodiesel as it possibly can. The requirements for ethanol and biodiesel usage under this amendment are easily attainable and does not require the Federal fleet to comply if the blended fuel is not readily available. I am pleased to offer this amendment with Senator Dayton.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I yield myself such time as I might consume.

Mr. GRASSLEY. Mr. President, I wish to speak on the issue of ethanol and the renewable fuel standard, but before I do, I compliment the Senator from Arkansas for the simple reason that she was the sponsor of the amendment in the Senate Finance Committee in which we adopted this as part of our tax incentives for renewable fuels. She led the way in that committee. I was happy to join her as the Republican leader of that effort because not only will Arkansas benefit but half of our States raise some soybeans and they will benefit as well. So I compliment Senator Lincoln. I am pleased to join my colleagues in support of the renewable fuel standard, which is an example of true bipartisan cooperation in this body. It was a bipartisan effort that made this possible. Obviously, Senator Nelson has already been applauded by my colleagues. I would say that as well. Not only since he has been in the Senate but as Governor of the State of Nebraska he helped, through the Governors' Conference, cochairing issues of ethanol for that conference. So he has been a leader in this area for a long time. So I give my heartfelt thanks to him and to others who were instrumental, both directly and indirectly. Even though President Bush is not a member of this body, I think he needs to be complimented in the first instance for denying California's request for a waiver out of the Clean Air Act's oxygenation requirements. Upon taking office, President Bush quickly recognized that there was no scientific or legal justification for the waiver. He, in fact, had the courage to take that action. It could have been possible 2 years before, if President Clinton had done likewise. During that period of lost time, we had a dampening and a delaying of efforts, such as we are having today, to successfully help our national security and our farm economy because these all benefit from the increased ethanol use as an oxygenate. President Bush, has turned out to be the most pro-ethanol President we have ever had, and because he refused to let the Clean Air Act unravel, he gave us the leverage necessary for this process, the negotiation of a new renewable fuel standard. Now we are back on track. I thank Senator Nelson. I also thank the senior Senator from Nebraska, Mr. Hagel, because he provided persuasive leadership last fall in securing support for his Senate Energy Committee Republican colleagues to get behind this renewable fuel standard. I also have said this has been a very bipartisan effort. Obviously, our majority leader, Senator Daschle, has been involved in a very helpful way. During the negotiations conducted by Senator Hagel, he provided constant assurances that he would be supportive of this final product. I compliment our Republican leader, who comes from an oil-producing State and who has been behind ethanol for several years, Senator Lott, and also Senator Murkowski, the ranking member of the Energy Committee. Last fall, they gave Senator Hagel, myself, and other Senators their commitment, at least for the Republican side, that they would support this renewable standard. Today, our Nation produces just 1.8 billion gallons of ethanol a year. The renewable fuel standard will require that we use 2.3 billion. That is a one-half-billion increase in gallons by the year 2004. Then it steadily increases up the ladder until it is a mandated use of 5 billion gallons by the year 2012. This sounds like just more and cheaper gas to burn. But it also will improve air quality. It strengthens our national security, and it reduces our trade deficit. One-third of our trade deficit is caused by the import of oil. It will decrease our independence upon oil from dictators who aren't reliable--Saddam Hussein. It will extend markets for agricultural products in a way that we all want--value added. It creates jobs in cities. A 1997 study by the Midwestern Governors' Conference--I would bet Senator Nelson had something to do with this when he was Governor-- determined that ethanol demand was responsible for over 195,000 jobs throughout the economy. Forty-two thousand of those jobs were located in Iowa. With the passage of the renewable fuel standard, 214,000 new jobs are anticipated. I expect a large portion of those would be in my State of Iowa. Just last week, for instance, Quad County Corn Processors, a cooperative in the small town of Galva, IA, began production at their new 18-million-gallon ethanol facility. Iowa now has nine ethanol plants and five more are under construction. The Iowa Corn Growers Association provided me an analysis of the economic impact of seven new Iowa farmer-owned ethanol plants in our State, two of which have been completed and five are under construction. Over 4,000 farmers have invested in these facilities. These are farmers helping themselves in a cooperative way. The facilities will create 170 new jobs. While Iowa currently produces 500 million gallons of ethanol each year, these new facilities will add 150 million gallons more. According to the Iowa Corn Growers, corn prices will increase 5 cents per bushel for every 100 million bushels of corn processed. Therefore, these seven new farmer-owned ethanol facilities alone will increase corn prices by 3.5 cents. Every year, about 175 million bushels of Iowa corn are processed into ethanol. This in turn adds about $730 million per year to the income of Iowa farm families. It adds up to $1.7 billion of increased economic activity in our State. As I mentioned today, we produce nationwide about 1.8 million gallons of ethanol. When fully implemented, the bipartisan compromise in this bill--the renewable fuel standard--will almost triple production. Economic analysis by A-U-S Consultants found that this legislation will displace over 1.6 billion barrels of oil, increase farm income by almost $6 billion annually, increase household income by $52 billion per year, and create over 214,000 new jobs nationwide. I also would like to share with my colleagues the finding of a study produced 2 years ago by the Department of Energy entitled ``The Impacts of Alternative and Replacement Fuel Use On Oil Prices.'' The study found that ``current use of alternative and replacement fuels is estimated to reduce total U.S. petroleum costs by about $1.3 billion per year.'' It is very important to understand that these alternative fuels-- primarily MTBE as well as ethanol--made up only 2.71 percent of our total motor fuel use. I want to say to naysayers who criticize efforts to expand alternative sources of motor fuels that the evidence proves that even small amounts of alternative motor fuels can generate huge savings to consumers. The Department of Energy study went on to estimate that if we increase our alternative motor fuels use by just 10 percent by the year 2010, consumers will save $6 billion per year. By increasing the use of alternative motor fuels, we increase price elasticity in the event of supply disruption and thus reduce the potential damage to our Nation's economy. To do otherwise leaves us subjected to our current vulnerable situation where, again, according to the Department of Energy, ``For every one million barrels per day of oil disruption, world prices could increase by $3 to $5 per barrel.'' In closing, I emphasize that 1 million barrels per day is a mere 5 percent of U.S. oil consumption. Yet this very small amount would cause price hikes of 10 to 25 percent if oil were $20 per barrel. A little in alternatives, such as ethanol--or we could even say biodiesel--can go a long way toward protecting all consumers from OPEC efforts of price gouging. I thank my colleagues for working together in this bipartisan effort, which is good for the economy, good for the environment, good for jobs, and good for energy independence. As I so often say to describe ethanol, it is good, good, good.

Mr. GRASSLEY

Mr. GRASSLEY. I agree with Senator Baucus. Excluding participations and residuals from a property's initial depreciable cost basis under the income forecast method results in a mismatching of income from the property and the expenses incurred in producing the property. The Ninth Circuit reached this conclusion in Transamerica. Moreover, I would note that including participations and residuals in the initial depreciable cost basis is consistent with industry standards in computing income for financial accounting purposes. We should remove this uncertainty to avoid needless disputes and to ensure the accurate reflection of taxpayers' income.

Mr. GRASSLEY

Mr. GRASSLEY. I yield myself such time as I might consume. Mr. President, I rise today to address the House bill that we will be passing on economic stimulus and aid to dislocated workers. On a preliminary note, in normal circumstances, I would note that we should not make a practice of passing House bills as is. These are not, however, normal times and this is not a normal process. The House bill is really the latest bipartisan product on economic stimulus and aid to dislocated workers. It is a thinner version of last December's agreement between the White House and the Senate centrists. The bottom line is this bill now enjoys Senate Democratic leadership support because it has been thinned down. There is some good news and some bad news. Let's turn first to the good news. This bill is a bipartisan, bicameral product, that the President will sign. That's the good news. Help is on the way for unemployed workers and recovering businesses. Mr. President, the unemployed and struggling businesses have had to wait too long for the good news we deliver today. It has been over five months of long meetings, committee action, floor debates. Finally, we, the United States Senate, will do our duty and act on economic stimulus. Now, with the President's signature a certainty, several good things will finally happen. First off, the unemployed will get extended benefits. Businesses, large and small, will get a kick start with 30 percent bonus depreciation. That kick start will mean more jobs, so those unemployed workers will be able to go back to work. Businesses that have hit hard times will be able to carry back net operating losses for an additional three years. New York City will receive much needed tax relief for the purpose of rebuilding Lower Manhattan. In addition, tax provisions that expired this year will be extended for two years. Finally, our States will receive some relief in the form of an extension and reauthorization of portions of the TANF program. These measures are all good news for folks across America. I said there is some bad news too. That news is derived from all of the proposals dropped from the White House-centrist agreement. As I said above, this bipartisan agreement was before us in December, but we were blocked from considering it by the Democratic leadership. Let's take a lock at the things that were dropped. First off, there was a proposal to accelerate tax relief from last year's bipartisan tax cut legislation. I'm talking about dropping the 27 percent tax rate to 25 percent. I do not also discount the ideologically based opposition to accelerating the reduction in the 27 percent bracket. It is amazing to me that many on the other side see taxpayers in the 27 percent bracket as rich folks. A 2-percent rate cut for single folks earning between $27,051 and $65,550 is seen as a tax cut for the wealthy by the Democratic leadership. Likewise, a married couple with incomes between $45,201 and $109,250 is considered rich. But I recognize that this tax cut proposal was difficult for the Democratic leadership to accept. In this skinnier version, the other element of individual tax relief, this one for payroll taxpayers, was dropped. I am talking about the rebate checks for payroll taxpayers. The rebate checks are gone. Some on my side will view this omission positively. So, in terms of tax relief for individuals, forget about it. We were not able to strike the balance of the White House-centrist agreement. There is little in the nature of corporate AMT relief in the thin package. In some ways this is a good result. As I said at the time, the original House bill was too heavy on corporate AMT relief. On the other hand, there were noncontroversial reforms in the corporate AMT that we could have included. The most disappointing omission related to health care subsidies. We had before us revolutionary social policy in the White House-centrist agreement. For the first time, the Congress had sign able legislation that guaranteed health care benefits for laid off workers. The form of the benefit, a refundable tax credit, ran into ideological opposition by some on the other side. Because two-thirds of the Senate Democratic Caucus did not agree with the form of the benefit, unemployed workers will not receive the benefit. That's too bad. We had a chance to move the ball forward on an important bipartisan objective, improving access and affordability of health care. Instead of moving the ball, because of ideology, we had to punt. All of these were good provisions which enjoy broad bipartisan support. They were the foundation of the White House-centrist agreement. Yet because of an ideological fixation, all of these good things went by the wayside. I believe today, as I did almost 3 months ago, that, if we had been accorded a straight up or down vote on the White House-centrist agreement, we would have prevailed. If we had prevailed, the people would be better served. Mr. President unfortunately, it was not to be. So, here we are with a mixed bag. There is good news in terms of extended unemployment benefits, bonus depreciation, and other measures. But there is bad news in terms of missed opportunities. Mr. President, I ask unanimous consent that the Record be held open until 5 p.m. today for a statement by Senators, and that they be included at this point in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. I agree with Senator Baucus' remarks. These special depreciation allowance provisions are intended to cover all aircraft.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am sending to the desk a sense-of-the- Senate resolution on the current situation in Colombia. The resolution expresses outrage over the current attacks on democracy and democratic institutions in Colombia by a gang of vicious thugs. The most recent outrage, in a long history of outrages, was the hijacking of a commercial airliner filled with innocent people that was forced to land, and then the kidnapping at gun point of a distinguished Colombian Senator. That Senator remains a prisoner, his fate unknown and uncertain. Four other members of the Colombian Congress are also prisoners, and now so is one of the candidates for president in Colombia's upcoming elections. Other members have been murdered, their families threatened, their children terrorized. These are only the most publicly visible victims of Colombia's guerrilla thugs. There can be no clearer testimony, if further evidence was called for, of the vicious nature of the actions of Colombia's insurgent movement, the FARC. They have branded themselves, if it was not clear before, as outright terrorists. Their actions are an assault on the rule of law and on democracy. My resolution expresses the concern over the fate of those in a companion institution. Our sympathies must go to their families, our concern to their countryman in their time of threat an menace. I hope that other members will join me in expressing our unanimous concern for the fate of democracy and the rule of law in Colombia. The other body has passed a resolution expressing its concern. I hope we will as well.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am glad to have the opportunity today to speak on the critical issue of energy security. In order to secure our country's economic and national security, we need to have a balanced energy plan that protects the environment, supports the needs of our growing economy, and reduces our dependence on foreign sources of energy. Every man, woman, and child in the United States is a stakeholder when it comes to developing a responsible, balanced, stable, long-term energy policy. When natural gas prices soared last winter, low-income families and the elderly were the hardest hit. Not too long ago, $2-per-gallon gas took a great toll on our economy. Trucking companies went bankrupt, small businesses and factories were forced to lay off workers, and farmers suffered a devastating blow of spiked input costs. We found ourselves, after 8 years of inaction by the Clinton administration, without a comprehensive energy policy. I questioned officials from the Clinton administration and encouraged them to provide to Congress a plan to deal with the rising cost of energy. I even authored an amendment to require them to compile a report detailing their plan to address the energy shortage. I never received such a plan. I was pleased that President Bush, soon after taking office, pledged to make the energy security of our country one of his highest priorities. It is unfortunate that since the release of the President's National Energy Policy report last year, it took over 10 months for the Senate to begin this debate. Even more troubling is the process by which this bill was put together. In October, the majority leader and the chairman of the Energy Committees chose to remove this bill from further consideration by the committee, and instead put together this bill without the input of the minority members of the Senate Energy Committee, and that is also unfortunate. The events of September 11 have made very clear to Americans how important it is to enhance our energy independence. We can longer afford to allow our dangerous reliance on foreign sources of oil to continue. It is time to get serious about implementing energy efficiency and conservation efforts, investing in alternative, renewable fuels and improving domestic production of traditional resources. I support a comprehensive energy policy consisting of conservation efforts, development of renewable and alternative energy resources, and domestic production of traditional sources of energy. As my colleagues well know, I have long been a supporter of alternative and renewable sources of energy as a way of protecting our environment and increasing our energy independence. In 1992, I authored legislation to provide the first-ever tax incentive for wind energy production. In 1997, I led the successful effort to extend for 10 years the tax credit for corn-based ethanol. The energy bill we are currently debating includes a number of provisions regarding conservation and renewable energy development. For example, included in this legislation is a renewable fuels provision which requires a small percentage of our Nation's fuel supply to be provided by renewable fuels such as ethanol and biodiesel. I strongly support the production of renewable domestic fuels, particularly ethanol and biodiesel. As domestic, renewable sources of energy, ethanol and biodiesel can increase fuel supplies, reduce our dependence on foreign oil, and increase our national and economic security. I thank the majority leader and Chairman Bingaman for including this renewable fuels standard, which is very similar to the standard that the Senate Energy Committee Republicans supported early last fall. The renewable fuels standard, supported by a broad coalition, is good for America's farmers, good for the environment, good for consumers, and good for national security. However, while this bill addresses conservation efforts and alternative energy, it falls well short on domestic energy development of traditional sources. Critical provisions to support new development of nuclear energy and domestic oil and gas exploration and production were unfortunately left out of the package. At a time when the United States is dependent on foreign countries for over 58 percent of our oil needs, this legislation does little to support development of resources on our own land. We currently import more than 750,000 barrels of oil a day from Saddam Hussein's Iraq. Yet this bill remains silent on the development of just 2,000 acres of land in Alaska that could supply the equivalent of the oil we import from Saudi Arabia for 30 years. We must do more to develop, in an environmentally sensitive way, the resources that God gave us. I look forward to working with my colleagues to ensure that the bill before the Senate does more to protect our national security, and reduce our dependence on foreign oil. I also look forward to debate on an amendment that I plan to offer with Senator Baucus. As ranking member of the Finance Committee, I have had the opportunity to work with Chairman Baucus to develop an energy- related tax amendment. Unlike the underlying bill, this amendment strikes a good balance between conventional energy sources, alternative and renewable energy, and conservation. Among other things, it includes provisions for the development of renewable sources of energy like wind and biomass, incentives for energy efficient appliances and homes, and incentives for the production of non-conventional sources of traditional oil and gas. I believe the Finance Committee did a good job to address our nation's energy security in a balanced and comprehensive way, and I look forward to the Senate's consideration of the energy-related tax package. In conclusion, I am please that the Senate has finally begun to address an issue with such a direct impact on our national and economic security. For the sake of our children and our grandchildren, we must implement conservation efforts, invest in alternative and renewable energy, and improve development and production of domestic oil and natural gas resources. I hope that during this process we can develop a bill that is truly comprehensive. I suggest the absence of a quorum.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I am pleased to introduce with Senator Leahy a bill to reform the FBI. For almost a decade I have been engaged in FBI oversight and during that time I have seen numerous scandals and coverups. While Director Mueller is working to address these problems, Congress also has a role to play in the overhaul of the FBI. The FBI reform bill is designed to address the accountability problems that have plagued the FBI for years. The bill expands the Department of Justice Inspector General's jurisdiction, protects FBI whistleblowers, creates an FBI Security Career program and a Counterintelligence Polygraph program, enhances the FBI police force, and mandates various reports by the Attorney General. I have advocated some of these measures, particularly those dealing with protecting whistleblowers and expanding the jurisdiction of the DOJ Inspector General's Office to include the FBI. Let me provide some more detail about the most important provisions in the bill. In the past the FBI's own internal Office of Professional Responsibility was tasked with the sole authority to investigate the misconduct of FBI personnel. Clearly this constitutes a conflict of interest. In fact, no other area of the Department of Justice maintains this type of accountability system. Last summer, Attorney General Ashcroft issued an order which changed that situation by expanding the jurisdiction of the Department of Justice Office of Inspector General to encompass both the FBI and the DEA. Specifically, the order gave the DOJ Inspector General primary jurisdiction over allegations of misconduct against employees of the FBI and DEA. Previously, the Inspector General could not initiate an investigation within the FBI or the DEA, without receiving permission from the Deputy Attorney General. I commended Attorney General Ashcroft's order because I had been saying for many years that the FBI should not be allowed to police itself. I was encouraged that the establishment of a free and independent oversight entity would have a beneficial impact on the FBI's management culture. The bill codifies the Attorney General's order making it a permanent fixture in the plan to reform the FBI. Specifically, the bill provides statutory authority for the DOJ Office of Inspector General to investigate all allegations of criminal and administrative misconduct by DOJ employees, including those in the FBI and the DEA. However, it does not abolish the FBI's Office of Professional Responsibility, OPR, but rather gives the DOJ Inspector General discretion to refer certain investigations to the FBI OPR. Because the FBI OPR is particularly good at investigating certain types of low level offenses, it is good that the Inspector General will have this discretion. The bill also contains much needed protections for FBI whistleblowers. As many of you know, I believe that good government requires that the brave men and women who blow the whistle on wrongdoing be protected. I have been an active champion of the rights of federal whistleblowers since 1983. This is because of my strong belief that disclosures of wrongdoing by whistleblowers are an integral part of our system of checks and balances. Whistleblowers ensure that waste, fraud, and abuse are brought to light. Whistleblowers play a critical role in ensuring that public health and safety problems are exposed. I truly believe that reform at the FBI will only occur when FBI employees feel free to blow the whistle on wrongdoing. Since the FBI was excluded from the Whistleblower Protection Act I have been concerned about the retaliation that is often perpetrated against whistleblowers at the FBI, such as Dr. Fred Whitehurst, who speak out about abuses and problems with the system. So, the bill gives FBI whistleblowers the same rights and protections that other Federal employees currently possess. When FBI employees are retaliated against for blowing the whistle, they can avail themselves of all the protections afforded them by the Whistleblower Protection Act. Since the FBI has made the fight against terrorism its top priority, many would be FBI whistleblowers may blow the whistle on wrongdoing that involves national security issues. Because of the need to keep that information secure, the bill directs the Attorney General to formulate regulations to provide specific protections for these employees consistent with the relevant portions of the WPA and the Administrative Procedures Act. Our FBI reform bill addresses several other issues that contribute to the FBI's culture of arrogance. I have believed for a long time that one of the biggest contributors to this culture is the cumbersome and unwieldy jurisdiction of the FBI. The Bureau currently investigates over 300 different federal offenses, which are divided between violent crime, white collar crime, organized crime, drugs, national security, and civil rights. Contained within these areas are numerous instances of concurrent or overlapping jurisdiction with other Federal law enforcement agencies. Despite having what many would describe as an already overburdened array of jurisdiction, the FBI has established a campaign of jurisdictional encroachment. This ``Pacman'' philosophy of the Bureau's past has only served to feed the culture of arrogance. I pointed this problem out to the DOJ and was pleased to hear of the Attorney General and the FBI Director's intention to put a stop to that ``Pacman'' mentality and limit the FBI's investigatory scope. But, this will be a complex issue. Just as Congress has been complicit in the FBI's expansion, we will need to be involved in the divestiture. The Department of Justice's Strategic Plan states that the FBI will focus on building and maintaining its utmost capacity to detect, deter, counter, and prevent terrorist activity. The plan also encourages the FBI to promote and, when available, use new legislation and authorities to conduct investigations of terrorist incidents. It is ironic that in light of this, the FBI continues to view many violations that it has traditionally investigated as being of strategic importance. Why are environmental crimes, health care fraud, bank robbery, telemarketing and financial institution fraud, computer intrusions, intellectual property crimes, and credit card fraud still viewed by the FBI as of strategic importance? I understand that terrorism investigations could potentially involve any one, or a number, of the above violations, but there are many other Federal regulatory and investigative agencies that have established historic expertise in these same program areas. In its reorganization, the FBI needs to scale back on some of its law enforcement activities which are duplicated by other Federal and state agencies. The Bureau needs to completely jettison some of these areas, but in other areas the Bureau could simply take a secondary role, allowing another agency to take the lead. It is my hope that by scaling back on certain FBI investigative activities, the FBI will send a positive signal in dealing with its counterparts in state, local, and federal government. To assist in cutting back on the FBI's jurisdiction, the bill directs the Attorney General to report to Congress on the legal authority for FBI programs and activities, identifying those that have express statutory authority and those that don't. The bill also requires the Attorney General to recommend what criminal statutes he believes the FBI should have investigative responsibility for. This report will help Congress, as we continue to address the FBI's culture of arrogance. Another issue that contributes to the FBI's culture of arrogance is the collection, use, and reporting of crime statistics. It is often the case in Federal law enforcement that several agencies will claim credit for a single arrest. This double and triple counting of arrests leads to an inflation of statistics that often misrepresents the actual work load of the various agencies. This is a problem because these statistics are used by federal law enforcement agencies, including the FBI, to justify increases in their funding. To get a handle on the exact nature and extent of this problem, our bill directs the GAO to conduct a review of how crime and investigation statistics are reported and used by Federal law enforcement agencies. This report will assist us in future legislation on this issue. There are many more reforms contained in our FBI reform bill, but there is just one more that I want to focus on today. This reform is a change in the way employees of the Senior Executive Service are punished. Last summer, four exceptional and courageous FBI agents alerted the Judiciary Committee to the fact that there exists a gross inequality in the way Senior Executive Service (SES) employees of the FBI and rank and file agents are disciplined. SES employees are given a slap on the wrist for their infractions, while the rank and file agents are often punished to the letter of the law. This issue was further exposed by a GAO report on the investigation of the Larry Potts Retirement Dinner scandal. That report reemphasized what had been reveled in the FBI Law Enforcement Ethics Unit's position paper, ``FBI SES Accountability, a Higher Standard or a Double Standard.'' These two reports document the existence of a double standard. I was glad to see that former Director Freeh abolished the SES Review Board, but I'm not sure it was a sufficient change for a culture that has historically treated SES employees with kid gloves. So our FBI Reform bill attempts to address this problem by providing some flexibility in how SES employees can be punished. The Senate Judiciary Committee has heard repeatedly that this inflexibility is one of the main causes for the inequality in punishment at the FBI. Currently, the minimum suspension that SES employees can receive is 14 days, to the Bureau's management is often left with the choice of an overly harsh penalty or no penalty at all--so often they decide not to impose any meaningful disciplinary action. Specifically, our bill would lift the 14-day minimum suspension for SES disciplinary cases to provide for additional options in disciplining senior executive employees. Hopefully, this change will help to remedy this double standard. In conclusion, I urge my colleagues to support this bill to foster reform in the FBI. The Bureau is crucial in the war on terrorism. Let's fix the problems we have helped to create, so that the FBI can again be he best at what it does.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I would like to speak in morning business for about 9 minutes.

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

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, there has been a flurry of activity surrounding the bankruptcy of the Enron Corporation. Part of the attention has focused on the company's questionable accounting practices and tax havens. Another spotlight has been focused on the Enron retirement plans, particularly its 401(k) plan. These are legitimate areas of inquiry. The same fact pattern in the case of Enron applies to Global Crossings, a company that was founded in 1997, went public in 1998, sold shares worth $734 million before the company collapsed just this year, pauperizing its workforce and investors. In both companies, executives were lining their pockets with gold while they were duping investors and pillaging workers' retirement plans. The difference between Enron and Global Crossing is merely one of scale. Enron was the seventh largest company on the Fortune 500. Global Crossings was smaller but there are eerie similarities, both between these two bankruptcies, and the effect they have had on the way we now view pension plan security. Any company bankruptcy will inevitably harm workers, retirees and investors. Some Enron employees, and some of those at Global Crossing, invested large amounts of their own money in company stock. In addition, both plans matched contributions made by the workers with the, now worthless, company stock. Had the company's financial statements correctly reflected the value of its stock, neither the workers, nor the investors would have purchased the shares. Unfortunately, the financial statements of those two companies were at least, highly misleading and very possibly fraudulent. The losses by retirement plan participants are of concern to the Senate Finance Committee because it is the Committee with jurisdiction over both the Internal Revenue Code, IRC, and parts of ERISA. The Code provides generous tax benefits to retirement plan sponsors. In return for those tax preferences, plans must be established and maintained in accordance with the rules set out in the Internal Revenue Code and in the Employee Retirement Income Security Act of 1974, as amended, ERISA. The losses in the plans sponsored by recently bankrupted companies have prompted us to reconsider some of the laws that govern retirement programs. In particular, many have questioned whether plan participants should be permitted to hold any company stock in their accounts, or only a limited amount of stock. Other questions have been raised about fiduciary obligations, so-called ``blackouts'' and about information provided to workers. For those in the business community who are alarmed about the large number of proposals, including mine, making changes to this area of the law, I would urge caution. This bill is not written in stone. Further refinements will be made to it. I am introducing it today because the Finance Committee will be holding a hearing on this issue tomorrow. Barely three weeks thereafter, Congress will be entering another recess period. If the introduction of this bill is delayed, interested parties will not have the time they need to examine this proposal and give me their views. This bill gives workers new diversification rights on holdings of company stock in their accounts. Some legislative proposals have called for caps on the amount of stock that can be dedicated by employers to workers' 401(k) accounts through matching contributions or through gains on the value of company stock. I believe such an approach will discourage employers from giving stock to workers through their plan and could not be administered except through the application of benefit wear-aways. During the cash balance pension plan debate, Congress found out just how unpopular benefit wear-aways are with plan participants. Some have also suggested that employees should not be permitted to purchase employer stock in their plans. They argue the need for a paternalistic government to save employees from the ``temptation'' of investing in employer stock in their 401(k) plans. I do not believe the government should treat workers like children. American workers are intelligent, and when armed with the right information, they will exercise foresight and make decisions for the best interest of themselves and their families. My approach does not discourage employer matching contributions in company stock. Nor would it restrict a worker choice to invest in company stock. However, once the worker has three years of service with the employer, he or she should be permitted to change investments out of the company stock and into any other investment offered by the plan. This change gives maximum flexibility to the worker and will prevent the long holding periods that some companies impose on matching contributions in their own stock. An important exception to this rule will apply to closely held corporations. Because of the difficulty of valuing stock in closely held corporations, under my bill, these rules will not apply to closely-held companies. This bill also provides that a pure, ``stand- alone'' ESOP, one consisting solely of now-elective contributions is not subject to the new rule. The current draft of the bill does not include a long phase-in of the effective date for company stock currently allocated to workers retirement accounts. Such a delayed effective date has been proposed in other legislation. However, I am open to such a recommendation, if necessary. I encourage plan sponsors and practitioners to give me their thoughts on that issue. This legislation also provides new disclosure requirements. At the end of 2001, Enron stopped participants from trading their investments while they changed plan administrators. Its stock was declining in value at this time, and for a long period prior to the so-called ``blackout''. It is no surprise that while the plan was closed to trading, all indications are that the value of the stock continued to decline. It appears that Enron employees did receive a notice prior to the transaction suspension period. But concerns have been raised that a statutory requirement for a notice will help to protect participants in other plans from missing an opportunity to change investments prior to a transaction suspension period. I am inclined to agree. Consequently, this bill will also impose a requirement that plans provide 30-days advance notice of transaction suspension periods, the so-called ``blackouts''. These are periods when participants are unable to change their investments. This change in law is needed so that employees have the opportunity to trade out of company stock, or for that matter, any other investment, before the beginning of a blackout period. The bill does not limit the duration of a transaction suspension period. Some companies to a remarkable job in shortening the time during which a plan is closed to transactions, however, practitioners have convinced me that it would be impractical to limit these transaction suspension periods given the number of variables involved in reconciling accounts. New disclosure requirements for so-called blackouts will be supplemented by better information regarding the value of plan benefits. I have long been concerned that participants need better information regarding their retirement. In the 105th Congress, I introduced a bill with Senator Breaux that would impose a requirement for periodic pension benefit statements. Language on periodic benefit statements was included again in a bill that Senator Baucus and I introduced early last year. While most of that bill was enacted as the Economic Growth and Revenue Reconciliation Act of 2001, EGTRRA, Public Law 107-16, the requirement for periodic benefit statements was ``Byrded out''. In other words, it was dropped from the bill because it was revenue neutral and as such did not meet the rules governing a reconciliation measure. Because we did not enact that provision in EGTRRA, the benefit statements language has been replicated here. Under this bill, participants will be entitled to a quarterly statement from their defined contribution plan, such as a section 401(k) plan. If the workers also have a defined benefit plan, they would be entitled to an estimated benefit statement once every three years. Included in the periodic benefit statements will be language designed to alert workers to how much employer stock they hold in their accounts. Also included will be information regarding the importance to long-term retirement security of participants of a well-balanced an diversified portfolio. This information will encourage workers to avoid over-concentration in employer securities and to periodically re- balance their portfolio. Mr. President, I ask unanimous consent that the text of the bill and a technical explanation be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, there has been a flurry of activity surrounding the bankruptcy of the Enron Corporation. Part of the attention has focused on the company's questionable accounting practices and tax havens. Another spotlight has been focused on the Enron retirement plans, particularly its 401(k) plan. These are legitimate areas of inquiry. The same fact pattern in the case of Enron applies to Global Crossings, a company that was founded in 1997, went public in 1998, sold shares worth $734 million before the company collapsed just this year, pauperizing its workforce and investors. In both companies, executives were lining their pockets with gold while they were duping investors and pillaging workers' retirement plans. The difference between Enron and Global Crossing is merely one of scale. Enron was the seventh largest company on the Fortune 500. Global Crossings was smaller but there are eerie similarities, both between these two bankruptcies, and the effect they have had on the way we now view pension plan security. Any company bankruptcy will inevitably harm workers, retirees and investors. Some Enron employees, and some of those at Global Crossing, invested large amounts of their own money in company stock. In addition, both plans matched contributions made by the workers with the, now worthless, company stock. Had the company's financial statements correctly reflected the value of its stock, neither the workers, nor the investors would have purchased the shares. Unfortunately, the financial statements of those two companies were at least, highly misleading and very possibly fraudulent. The losses by retirement plan participants are of concern to the Senate Finance Committee because it is the Committee with jurisdiction over both the Internal Revenue Code, IRC, and parts of ERISA. The Code provides generous tax benefits to retirement plan sponsors. In return for those tax preferences, plans must be established and maintained in accordance with the rules set out in the Internal Revenue Code and in the Employee Retirement Income Security Act of 1974, as amended, ERISA. The losses in the plans sponsored by recently bankrupted companies have prompted us to reconsider some of the laws that govern retirement programs. In particular, many have questioned whether plan participants should be permitted to hold any company stock in their accounts, or only a limited amount of stock. Other questions have been raised about fiduciary obligations, so-called ``blackouts'' and about information provided to workers. For those in the business community who are alarmed about the large number of proposals, including mine, making changes to this area of the law, I would urge caution. This bill is not written in stone. Further refinements will be made to it. I am introducing it today because the Finance Committee will be holding a hearing on this issue tomorrow. Barely three weeks thereafter, Congress will be entering another recess period. If the introduction of this bill is delayed, interested parties will not have the time they need to examine this proposal and give me their views. This bill gives workers new diversification rights on holdings of company stock in their accounts. Some legislative proposals have called for caps on the amount of stock that can be dedicated by employers to workers' 401(k) accounts through matching contributions or through gains on the value of company stock. I believe such an approach will discourage employers from giving stock to workers through their plan and could not be administered except through the application of benefit wear-aways. During the cash balance pension plan debate, Congress found out just how unpopular benefit wear-aways are with plan participants. Some have also suggested that employees should not be permitted to purchase employer stock in their plans. They argue the need for a paternalistic government to save employees from the ``temptation'' of investing in employer stock in their 401(k) plans. I do not believe the government should treat workers like children. American workers are intelligent, and when armed with the right information, they will exercise foresight and make decisions for the best interest of themselves and their families. My approach does not discourage employer matching contributions in company stock. Nor would it restrict a worker choice to invest in company stock. However, once the worker has three years of service with the employer, he or she should be permitted to change investments out of the company stock and into any other investment offered by the plan. This change gives maximum flexibility to the worker and will prevent the long holding periods that some companies impose on matching contributions in their own stock. An important exception to this rule will apply to closely held corporations. Because of the difficulty of valuing stock in closely held corporations, under my bill, these rules will not apply to closely-held companies. This bill also provides that a pure, ``stand- alone'' ESOP, one consisting solely of now-elective contributions is not subject to the new rule. The current draft of the bill does not include a long phase-in of the effective date for company stock currently allocated to workers retirement accounts. Such a delayed effective date has been proposed in other legislation. However, I am open to such a recommendation, if necessary. I encourage plan sponsors and practitioners to give me their thoughts on that issue. This legislation also provides new disclosure requirements. At the end of 2001, Enron stopped participants from trading their investments while they changed plan administrators. Its stock was declining in value at this time, and for a long period prior to the so-called ``blackout''. It is no surprise that while the plan was closed to trading, all indications are that the value of the stock continued to decline. It appears that Enron employees did receive a notice prior to the transaction suspension period. But concerns have been raised that a statutory requirement for a notice will help to protect participants in other plans from missing an opportunity to change investments prior to a transaction suspension period. I am inclined to agree. Consequently, this bill will also impose a requirement that plans provide 30-days advance notice of transaction suspension periods, the so-called ``blackouts''. These are periods when participants are unable to change their investments. This change in law is needed so that employees have the opportunity to trade out of company stock, or for that matter, any other investment, before the beginning of a blackout period. The bill does not limit the duration of a transaction suspension period. Some companies to a remarkable job in shortening the time during which a plan is closed to transactions, however, practitioners have convinced me that it would be impractical to limit these transaction suspension periods given the number of variables involved in reconciling accounts. New disclosure requirements for so-called blackouts will be supplemented by better information regarding the value of plan benefits. I have long been concerned that participants need better information regarding their retirement. In the 105th Congress, I introduced a bill with Senator Breaux that would impose a requirement for periodic pension benefit statements. Language on periodic benefit statements was included again in a bill that Senator Baucus and I introduced early last year. While most of that bill was enacted as the Economic Growth and Revenue Reconciliation Act of 2001, EGTRRA, Public Law 107-16, the requirement for periodic benefit statements was ``Byrded out''. In other words, it was dropped from the bill because it was revenue neutral and as such did not meet the rules governing a reconciliation measure. Because we did not enact that provision in EGTRRA, the benefit statements language has been replicated here. Under this bill, participants will be entitled to a quarterly statement from their defined contribution plan, such as a section 401(k) plan. If the workers also have a defined benefit plan, they would be entitled to an estimated benefit statement once every three years. Included in the periodic benefit statements will be language designed to alert workers to how much employer stock they hold in their accounts. Also included will be information regarding the importance to long-term retirement security of participants of a well-balanced an diversified portfolio. This information will encourage workers to avoid over-concentration in employer securities and to periodically re- balance their portfolio. Mr. President, I ask unanimous consent that the text of the bill and a technical explanation be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, in recent months, we in this country have been reminded of the sacrifices that are made every day for our Nation by the men and women serving in the U.S. Armed Forces. We owe a debt of gratitude to the brave individuals that are prepared to lay down their lives in defense of our liberty and the rights which we enjoy as citizens of the United States of America. One of the most fundamental rights we enjoy in a democratic society is the right to vote. No American should be unfairly denied this right, least of all the very men and women charged with defending our way of life. However, this is precisely what happened November 2000 in Florida. I am sure that many senators were as appalled as I was when I learned that military ballots received in Florida during the last election were targeted for rejection. Whether the votes of our servicemen and women were not counted because they failed to meet a state postmark requirement or because they arrived too late, it is essential that we do everything in our power to ensure that future ballots cast by military personnel overseas are delivered in time and in such a fashion that they will not be rejected. Items mailed from one of our overseas military installations or one of our ships at sea is the responsibility of the Department of Defense until it can be delivered to the U.S. Postal Service. While all the blame for uncounted military ballots cannot be laid at the feet of the Department of Defense, it is only logical that we should fix any kinks in the military mail system so that State and local election officials have no reason to reject ballots cast by members of the armed forces stationed overseas. My amendment takes some common sense steps to improve the delivery of election mail under the responsibility of the Department of Defense. To start, my amendment requires the Secretary of Defense to implement measures to ensure that absentee ballots collected at U.S. military facilities or vessels overseas are postmarked. The lack of a postmark or proof of mailing date was one of the excuses used in the Florida election to reject overseas absentee ballots cast by military personnel. Second, my amendment requires the Secretary of each military service to notify servicemembers stationed at an installation of the last date before a general election that absentee ballots should be mailed in order for them to arrive in time to state and local election officials back home. A soldier or sailor overseas can't know how long it will take from the time he or she drops a ballot in the mail until it arrives in their home State and guessing wrong could result in a late arrival and votes not being counted. Finally, my amendment requires the Secretary of Defense to report to Congress about the measures he will take to ensure the timely transmittal and postmarking of voting materials and identify the persons who will be responsible for implementing these measures. Any shortcomings in the handling of military mail are not because of poor intentions, but rather lack of accountability for failures in the system. The requirement of a report to Congress ensures accountability for the implementation of the measures Congress has spelled out for the proper handling of voting material. I don't pretend that this amendment is the only solution to the problems that have surfaced with military overseas voting or that states shouldn't be asked to do more to ensure that military absentee ballots are treated fairly. But, shouldn't we do everything we can to make sure that the votes or our men and women in uniform arrive in the hands of election officials so they can be counted? My amendment seeks to do just that so that our forces overseas are able to enjoy the very rights they protect for those of us back home.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I want to say a few words about James E. Gritzner, who was approved by the Senate last night to serve as United States District Judge for the Southern District of Iowa. I am pleased that the Senate was able to move swiftly on this judicial nomination. Jim Gritzner has extensive trial experience and is fully qualified to serve on the District Court. His reputation for being fair and evenhanded is something we expect of all judges, and he will be a great addition to the Southern District of Iowa. By way of background for my colleagues, Mr. Gritzner received a Bachelors of Arts degree from Dakota Wesleyan University, a Masters of Arts degree from the University of Northern Iowa, and a law degree from Drake University Law School. His distinguished legal career includes having practiced with several Iowa law firms, most recently with the Des Moines, Iowa firm of Neymaster, Goode, Voights, West, Hansell & O'Brien. In addition to being in private practice for over 20 years, Mr. Gritzner has had a long record of public service. He served as a member of the Iowa Board of Parole from 1980 to 1982. From 1985 to 1990, Mr. Gritzner was the primary prosecutor for the Committee on Professional Ethics and Conduct of the Iowa State Bar Association and the Client Security and Attorney Disciplinary Commission of the Iowa Supreme Court. I am sure everyone would agree that these are excellent qualifications. Jim Gritzner will serve the Federal bench very well, and I am proud to have supported his nomination to the Southern District of Iowa.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, in keeping with my policy on public disclosure of holds, today I placed a hold on further action on the Clean Diamond Trade Act, legislation reported out by House of Representatives. Although this bill is very important to the continent of Africa's efforts to rid itself of rebels that use the sale of rough diamonds to overthrow legitimate governments, the measures in this legislation fall within the jurisdiction of the Finance Committee. The proposed legislation calls for prohibiting diamond imports and should be discussed thoroughly before any rash decisions are made. With this in mind it is necessary for this bill to be referred to the Finance Committee to be heard and debated by our members before we send this legislation back to the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I also want to take this opportunity to, hopefully, get some people who represent big population States to look at our amendment. I think it is very much oriented toward helping consumers. We have more competition in the processing of livestock, as well as helping the family farmer. I am offering this second-degree amendment to the Craig amendment to clear up any concerns raised by the opposition regarding the word ``control''. The new language reads that a packer may not own or feed hogs or cattle, ``through a subsidiary, or through an arrangement that gives the packer operational, managerial, or supervisory control over the livestock, or over the farming operation that produces the livestock, so such an extent that the producer is no longer materially participating in the management of the operation with respect to the production of livestock.'' The new test established to clear up the question of what control means is found in the phrase ``materially participating.'' A farmer who materially participates in the farming operation must pay self- employment taxes. Those who do not materially participate, do not have to pay self employment taxes. The phrase has appeared in the IRS Code, section 1402(a) since 1956 and there is a full hopper of case law clarifying the definition. I came to the floor yesterday and explained that all the talk about this generating excess litigation, or bureaucracy, or limiting farmers risk management options is just talk. It's all blue smoke. Some of the packers' allies are already trying to complain that this only adds another layer of confusion. That's an absolute lie. What this amendment does is crystalize the issue, and this issue is whether packers should be packers, or packers should be producers. Let me make this clear. The vote this morning is a vote on whether packers should own livestock, nothing more and nothing less. If you oppose my amendment you support packer ownership. If you oppose my amendment you must believe that independent livestock producers should compete on an even playing field with corporations that can generate hundreds of millions of dollars to compete with farmers. If you oppose my amendment you are supporting packer greed versus the independent producer's need. Ask any independent producer in the United States. If we were able to ask them if they think packers should be able to compete with them dollar for dollar, who benefits? I realize that AMI has been arguing that ``the sky is falling'' is this passes, but what would your independent producers really want you to do? The revised Grassley amendment will inject greater competition, access, transparency and fairness into the livestock marketplace. Small and medium sized livestock operations will gain greater access to markets that will have greater volume and be subject to less manipulation. The revised bill clarifies that arrangements that do not impose control over the producer can still provide all the benefits of coordination and product specification that many ``grid'' marketing arrangements desire. We are not limiting independent producers at all, only packers. I've got letters and endorsements from possibly every group interested in this issue that doesn't allow packers to be included in their membership. These endorsements come from state pork producer and cattlemen groups, to the American Farm Bureau. I have well over 135 organizations that signed a letter in support of my second degree amendment. Just a few of those groups are the: Livestock Marketing Association (who stated they would like to voice their strongest possible support), National Farmers Union, R-CALF USA, Ranchers- Cattlemen Action Legal Fund, United Stockgrowers of America, National Catholic Rural Life Conference, and the Organization for Competitive Markets. The packers are an important piece in the rural economy, but only a piece, not the whole pie. They think they are the whole pie. The question we need to ask ourselves is whether packers should be packers or packers should also be producers. Is it our intent to let packers compete with producers on an even playing field? Once again, is there any question who will lose this competition? The reason we keep sows in farrowing stalls is to protect the piglets. Sows are extremely important for the health and well-being of the piglets, but if we let the sow out of the crate we stand the chance of getting the piglets crushed by the sheer weight of the sow, or worse, and watch the sow grow fatter. Let's build a strong farrowing stall for the packers and facilitate the health and well being of our independent producers. Support the Grassley second-degree, your independent producers would.

Mr. GRASSLEY. Madam President, I yield myself 5 minutes. First of all, if you read the history of the Packers and Stockyards Act passed roughly around 1920, I believe you will find a lot of the same arguments being used against the passage of the original act at that particular time as you are now finding used against our efforts to modify the act to a small extent. We have had a good Packers and Stockyards Act for 80 years. We are trying to bring it up to date. It didn't anticipate the control that a few packers would have over the livestock industry. We are adjusting it to take into consideration new ways of marketing. Also, I would ask just my Republican colleagues, not my Democrat colleagues--I am not sure exactly which ones I am talking about, but there was a group of us who met with the new Secretary of Agriculture about a year ago--there were probably 8 to 10 Republican Senators present--to give our views on certain issues for her, an incoming new Secretary of Agriculture. I don't take notes on these meetings, but I remember, to my astonishment, the number of my colleagues who told the Secretary of Agriculture as they reflected on the grassroots opinions which they received from their constituents that one of the greatest concerns was about concentration in agriculture. I will bet the distinguished Senator from Michigan, the Presiding Officer, hears that from family farmers in Michigan. This was not in reference to what I am trying to do today. I don't imply that at all. My amendment is not a result of that meeting. But my amendment has something to do with the opinion that my Republican Senators expressed to the Secretary of Agriculture--that we have to do something to make sure we have more competition in agriculture because of this concern about less competition, and particularly because a few packers have the vast majority of the slaughter of livestock. That is one thing. But it is compounded by their ownership of livestock which they can dump on the market on a day they choose to dump it on the market. That depresses the market, and the marketplace just does not work. I want my Republican colleagues--I do not know who they were, but they were from the Midwest and the West--to think of that meeting we had with Ann Veneman and the opinions they expressed. I hope they will find my amendment in tune with their points of view. The other thing I want to make a comment on is the insinuation in the Midwest newspapers and by Smithfield's CEO that if this amendment went through, they were not going to build any new plants in certain States in the Midwest. I had an opportunity to have a long conversation maybe about 18 months ago with Mr. Luter about competition in agriculture. I had never met him before. He is obviously a very good entrepreneur and has developed Smithfield Foods. Out of that meeting I remember two very distinct things he said. He said, first of all, he wanted me to know that his view was that family farmers for the most part are not good businesspeople and are not very sophisticated. Second, he told me something to the effect he--again, I didn't take notes at those meetings; this is a recollection. I hope I am not doing him an injustice. I am sure Mr. Luter would say that I am. But the second point he made was he thinks there should be a lot of pork producers across the United States. It is just that they should all work for him by feeding his pigs. He has such an arrangement with a lot of pork producers. That is how he controls the market. He would argue that is how he controls the quality. That is how he satisfies the consumer. I am not insinuating bad motives that he has as a quality producer of pork. I am just saying his attitude is very different from that of the family farmer in the United States. Consequently, I hope that is why we can get this amendment adopted, because we want to help the family farmers.

Mr. GRASSLEY. Madam President, how much time do I have remaining?

Mr. GRASSLEY. Madam President, I yield the Senator from Iowa, my colleague, 3 minutes.

Mr. GRASSLEY. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. GRASSLEY. Madam President, I yield myself such time as I might consume. It is my understanding I have 4 minutes.