Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. I am sorry, I did not realize we were under time agreements.

Mr. GRASSLEY. Mr. President, I would like to go back to a very important subject that the Senator from Indiana brought up, and that is whether or not the bill is compliant in the future with some of our World Trade Organization obligations. I think it is very obvious that the committee anticipated that it might not be compliant because on page 35 of the report there is a paragraph on the Secretary of Agriculture doing an adjustment to farm payments if that becomes a problem. I cannot find fault with the writers of the legislation for putting this in here because in the other body, in the House bill--a Republican bill--they saw this as a problem, too. On page 131 of that House bill it says: The Secretary may make adjustments in the amount of such expenditures during that period to ensure that such expenditures do not exceed but in no case be less than such allowable levels. To me, it is a very serious problem we have; albeit, you might say it is going to happen--if it happens at all--in a minority of the instances because, as the Senator referred to FAPRI of Iowa State and Missouri, you said you think they said it would happen 30 percent of the time. But if you are in a situation where it happens that 37 percent of the time and we exceed and we are retaliated against, and that would be legal retaliation and it would be retaliation at a time, presumably, we get high payments, farmers are already in trouble or they wouldn't get the additional payments. So you could find yourself in a situation where at the very time prices are going down, and we also have the additional problems that we can't export because we are being retaliated against, that just at the time farmers need the safety net, then that safety net has one great big hole in it. We need to find some way to protect the American farmer so that the safety net the farmer has doesn't have a big hole in it. And we ought to also do it because we are in the leadership of all the nations of the world on reducing barriers to trade, particularly through our work in the Cairns group of nations. We are trying to get impediments to agricultural trade down to zero, both from the standpoint of market opening and from the standpoint of tariffs. That is our goal in the next round of negotiations under WTO. If we are a nation in trade that believes in the rule of law, we have to follow the rule of law. We anticipate we would be in trouble on that because of the farm bill. It seems to me at a time that we are talking about a safety net for farmers, we ought to do what we can to make sure that hole is mended before this bill leaves the Senate. If it goes to the House and the House is willing to ignore it, then where are we? We are in a situation where down the road 5 to 10 years, depending on how long a farm bill we have, we have a big potential problem for the American family farmer. When they need help, they aren't going to get it. We can't go to the WTO and complain because we ourselves have recognized the possibility we might be in jeopardy. In this regard, since we are going into the negotiations in the WTO-- they start next week--I think, in the special round on agriculture that is going to be discussed in Geneva, for example, even the larger negotiations of the Doha development round, we are hoping to accomplish a great deal in reducing or eliminating tariff barriers and tariffs on agricultural products. In fact, it is such an important item, I think eventually we are going to start referring to this as the agricultural round. We are going to set an example. We have always tried to set an example. Where we are, if we pass a bill that potentially violates WTO, we are giving encouragement to the competitor that we most have trouble with-- Europe. Europe has about 85 percent of all of the subsidies for exports in the entire world. Europe has about a $400 billion common agricultural program. We want that common agricultural program reduced. I think Europe knows they have to reduce it. We are going to be in a situation where we pass this legislation and, as they are looking at their common agricultural program, which they are doing, they are going to put off the big decisions of reducing that until probably the year 2005. In the process of our complaining to them about they aren't doing enough, they are obviously going to cite not only what they believe the impact of our legislation is, but they are also going to cite that our legislation actually recognizes that as based upon this paragraph on page 35 and based upon the House bill. I don't know why we don't live in the real world and why we don't try to deal with this. I am not saying that in a denigrating way to the Senator from Indiana. I am just saying that in a commonsense approach because he recognizes it. I suppose for the people who write the bill, they don't find an easy way to get out of it other than putting this paragraph and this language in the respective bills of the House and the Senate. This isn't directed towards Democrats because Republicans have put us in this boat as well. I know that the White House sees this as a problem. They want us to work our way out of it. I happened to be able to have breakfast this morning with the person who is going to succeed Mr. Mooree as executive for the World Trade Organization, Dr. Supachai Panitchpakdi of Thailand. He is a parliamentarian there. He is going to take over in September. He expressed this concern to me as well. And, by the way, his country is very much a participant in the Cairns group that wants to eliminate agricultural subsidies. He reminded me, even though he has a small country, his agricultural subsidies are $1.3 billion compared to Europe's $400 billion. But regardless, he says that it does not put the United States in a very good position going into the Doha round of negotiations to be able to say to the other 142 nations, in particular, as we address the 77 developing nations within the World Trade Organization that tend to be more protective about their agriculture, and wanting to do less in this area, it doesn't put us in a very good position if we are writing legislation that we recognize is a potential violation of the world trading organization because we are exceeding the $19.1 billion that is in the amber box limit. I have put forth some suggested amendments, a couple different approaches that I would have to confess maybe don't totally meet our requirements under the WTO, but I think tend away from heavy reliance upon price and heavy reliance upon production, which are the two items that if we tie our payments to tend to make us violate amber box requirements. I want to work with both managers of the bill and see what we can do about this. To repeat the two or three reasons why I want to work with them, because, No. 1, we brag about passing a safety net for farmers, that safety net should be a pretty certain safety net for the next 5 to 10 years, the length of the legislation. At a time when it is most needed, it should be most predictable what would happen. This language tells me that the bankers, to whom we are always listening, have to know what the farm program is going to be so they can make loans to farmers. They are going to look at this and say: We really don't know.

Mr. GRASSLEY. May I have 30 seconds?

Mr. GRASSLEY. No. 2, then, so that we maintain our leadership in this effort to reduce trade barriers.

Mr. GRASSLEY

Mr. GRASSLEY. So at the end of 8 minutes, please notify me.

Mr. GRASSLEY. I have been informed Senator Collins is on her way over and would like a couple of minutes. So I will yield myself 8 minutes and then yield the remaining time to Senator Collins.

Mr. GRASSLEY. How much time is on the leader's time?

Mr. GRASSLEY. Am I right the time on this side has expired?

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I refer to an article on page 6 of the Washington Post this morning where there is a quote from colleagues in this body and in the other body about the President's budget. I refer to this comment from the ranking Democrat on the House Budget Committee, Congressman Spratt: When it comes to waging a war on terrorism, the President has our total support, but national security and homeland security need not come at the expense of Social Security. Philosophically, that is a good argument. It is an accurate argument for us to be using, but the inference is that with the President's new budget there is some sort of a new game in town, that because we do not have a general fund surplus, because we have to spend more money because of the war on terrorism, as well as the domestic aspect of the war on terrorism, we are going to take Social Security money to finance that because there is otherwise a debt. The implication is this is some new policy. The point I make is that this kind of talk is misleading because seniors become frightened that they might not receive their Social Security payments. Conservatives may feel as if there is not any fiscal discipline in Washington. Compared to the last 4 years, we have paid down on the national debt in the last 4 years on a relative basis. But conservatives might be concerned that there is no concern about fiscal discipline when it comes to Social Security. But, in fact, there is no new policy in town. The point I make is since Social Security was started in 1936, except for about 18 months in the years 1982 and 1983, it has had a positive cashflow, more money coming in from the Social Security payroll tax than has been paid out in benefits. As we anticipate that for the future, that will be true for another 14 years, or so. So for people who read this statement by Congressman Spratt--and I quote: When it comes to waging war on terrorism, the President has our total support, but national security and homeland security need not come at the expense of Social Security--I say it is not coming at the expense of Social Security. Nothing has changed on Social Security since 1936. We have a positive cashflow today. We have had a positive cashflow every year except for 18 months in 1982 and 1983, and we will have a positive cashflow in Social Security for at least another 13 or 14 years. National security and homeland security are not coming at the expense of Social Security, I say to the distinguished Congressman in the other body. Since we still have a positive cashflow in the year 2002, and we had a positive cashflow starting when the tax was first implemented, except for those 2 years, what happens with Social Security money? The disposition of Social Security money is the same today, last year, and years we have been running a surplus in the unified budget, and for a long time back. The surplus is invested in Treasury bonds because those are considered the safest investment for retirees. They draw interest. The interest accrues to the benefit of Social Security. That positive cashflow invested in Treasury bonds, plus the interest that is accrued, is going to be used to pay Social Security benefits when there is a negative cashflow in some future year. That is the way Social Security was set up. That is the way it has been operated since it was implemented in 1936. That is the way I believe it will be for a long time into the future. National security and homeland security is not coming at the expense of Social Security. Let me give a parallel analysis. I will use the highway trust fund. In my State, it is the road use tax fund. At the Federal level it is the highway trust fund. All of the gas tax money goes into the highway trust fund. It is paid out of that highway trust fund for transportation, mostly for highways. It is not used for anything else. There are times, though, that the Federal Government decided they did not want to spend all the highway trust fund money. It was invested in Treasury bonds, as well. And it was not used to buy bombs and guns and pay military pay. Over a period of years a lot of money accumulated. In the last highway bill, Congress decided we ought to spend down that money that accumulated in the highway trust fund, and we spent it down. Not entirely, but we are spending it down. Consequently, if you can take that money that accumulated in the highway trust fund, that was not spent on roads on a current basis, but later was and is being spent for highways, it is exactly the same for Social Security. Moneys accumulate, with interest accruing to the trust fund, to be spent when it is needed, in the same way that the gas money, when it was not spent on highways, accumulated and later Congress decided we ought to spend more money on highways and we spent more money on highways. It is one of the facts of trust fund accounting. The problem comes when we put Social Security in the context of a unified budget that it somehow gets lost in the public's mind. I assure the public that the implication of the statement by the ranking Democrat on the House Budget Committee, Congressman Spratt, that the President's war on terrorism, the American people's war on terrorism could somehow be paid for by Social Security. In fact, it is not being financed by Social Security money.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I will comment also on the tax relief bill signed by the President of the United States on June 7, the tax bill that Senator Baucus and I wrote in a bipartisan way, to get passed last year. I will concentrate on the stimulative impact on the tax bill of last year because now, being in a recession and being on another stimulus package, I don't think we ought to lose sight of the fact that the tax bill of last year is having some economic good at a time most needed, in a time of recession. It does contain a significant number of tax reduction and tax relief provisions that will go into effect and should help build consumer confidence. Part of the economy may be uncertain, but the tax outlook is clear: Under the law we passed, Federal income taxes have declined and will continue to decline over the next 10 years. Taxpayers can take that knowledge to the bank, regardless of Senator Kennedy's suggestion that we not allow the remaining provisions of the tax bill to go into effect. Obviously, I don't think Congress should stop here. Our huge economy needs a shot in the arm. The tax bill of last year will help to provide that shot in the arm. It contains a generous amount of relief for individual taxpayers. Some of the measure's tax cuts went into effect last year and many other provisions became effective January 1 of this year. Those are the provisions I will address. There is a new 10-percent rate bracket. The act created a new 10- percent regular income tax bracket for a part of taxable income that had otherwise been taxed at a higher rate of 15 percent. The 10-percent bracket applies to the first $6,000 of taxable income for single individuals; $10,000 of taxable income for heads of household; and $12,000 for married couples filing jointly. This is effective beginning after December 31, 2000. That money is out there to stimulate the economy right now, but it will continue this year and next year and into the future. We had a reduction in other individual tax rates, the regular income tax rates phased down over 6 years. So effective July 1 of last year through 2003, the 28-percent rate is cut to 27 percent. We hope in this economic stimulus package to speed that one rate up, it be reduced to 25 percent right now to help middle-income taxpayers and to stimulate the economy at the same time. However, as written in last year's tax bill, the 31-percent rate is cut to 30 percent right now. The 36- percent rate is cut to 35 percent right now. The 39.6-percent rate is cut to 38.6 percent. Eventually, all these separate rates, after this phase-in period is done, will become 25 percent, 28 percent, 33 percent, and 35 percent, respectively. An increase and expansion of the child tax credit is surely going to help families, particularly middle-income families, particularly those in the $30,000-a-year income tax range, with their family needs, putting more money in their pockets. It is going to be a stimulus to the economy. The child credit was expanded to $600 per child, immediately through the year 2004; it goes up to $700 through the year 2008; $800 through the year 2009; and finally, $1,000 in 2010. But, more important, the child credit was made refundable to the extent of 10 percent of the taxpayer's earned income in excess of $10,000 for the years 2001 through 2004, and this is increased to 15 percent after the year 2005. I emphasize that because of all the people who say the Tax Relief Act of last year was for the wealthy. A refundable credit is helping people of the lower income tax bracket very much. For example, in the year 2001, a single mother with two children, making $15,000, received a credit of $500. This single mother likely now will receive a bigger tax refund check when she files her 2001 tax return by April 15. This expansion of the child credit will ensure that millions of low-income families, not rich people, will now receive the benefit of this child credit. For those people who spend so much of their income, maybe all of it in some cases, they are going to have more money to spend, and that is going to stimulate the economy. Then we have the extension and expansion of the adoption tax credit, not so much as a stimulus to the economy but because stable families are very important to our society. Moving children out of foster care into a home where they can actually have a mom and dad is very important social policy. So we move the tax credit from $5,000 to $10,000. Today, in the case of the special needs child, that tax credit is $6,000. This provision significantly eases the financial burden of adoption and encourages adoption. This is in effect for taxable income starting this year. We have a tax credit, then, for employers who provide child care for their employees. In my State of Iowa, 72 percent of the households have both spouses working, the highest percentage of any State in the Nation. For those families who have children, the need for dependable child care is very important. Getting that from the employer is even better for those families. So this new tax credit provides an incentive for employer-provided on-site daycare facilities. This is effective for taxable years beginning right now. We have marriage penalty relief, and it relates to the earned-income tax credit. That earned-income tax credit, which is available only to low-income families, phases out for married couples. We increased that phaseout by $1,000 immediately and ultimately increase it to $3,000. So those families who would otherwise have that earned-income tax credit phased out, not having the money, not being able to stimulate the economy, now are going to have up to another $1,000 immediately available. Again, being low-income families, that ought to help stimulate the economy starting right now for the year we are in. Mr. President, I see the Senator from Vermont. Is it possible for me to have another 5 minutes?

Mr. GRASSLEY. I ask unanimous consent if I may have 5 more minutes.

Mr. GRASSLEY. I add that to my unanimous consent request.

Mr. GRASSLEY. I thank the Chair. So, obviously, this is going to help stimulate the economy because this $1,000 is going to go to low-income families who do not have very much discretionary income and can use it to improve their lot. But at the same time it will stimulate the economy--whether it is spent or whether they save it. We have improvements in the education savings accounts, or what we might call education individual retirement accounts, individual education IRAs. The annual limit on contributions to the education savings account increases from $500 to $2,000. The definition of qualified education expenses that may be paid tax free from the education savings account is expanded to include elementary and secondary school expenses. The phaseout ranges--for married taxpayers filing joint returns, it is increased to become twice the rate of single taxpayers, so more families can take advantage of this. Corporations and other entities, including tax-exempt groups, are permitted to make contributions to education savings accounts. These changes are effective right now, this taxable year. Then we have expanded consideration of prepaid tuition programs. Several provisions will encourage participation in prepaid tuition programs for higher education. Investment gains will be tax free, and private colleges and universities happen to be offering these plans. This provision goes into effect now. There is an exclusion for employer-provided educational assistance. This extends the exclusion to graduate education and makes the exclusion for undergraduate and graduate education permanent, effective right now. Then we have improvement in the student loan interest deduction. This eliminates the 60-month limit on the deduction of interest from a student loan. The income phaseout ranges, for eligibility for the student loan interest deduction, increasing it from $50,000 to $65,000 for individuals and from $100,000 to $130,000 for married taxpayers on joint returns. We repeal the restriction that voluntary payments of interest are not deductible. These provisions are effective right now. Then we have tax benefits for governmental bonds for public school construction. These benefits are effective for bonds issued starting this year. There is a deduction for college tuition, a provision allowing above- the-line deduction for college tuition expenses. It is intended to help low- and middle-income families pay for college. In the years 2002 and 2003, individuals with adjusted gross incomes of $65,000 may deduct $3,000. In the years 2004 and 2005, for those same individuals it would be $4,000. In the case of taxpayers with adjusted gross income that does not exceed $80,000, the deduction would be $2,000. I just read a lot of provisions that were taken from the tax bill. I started my remarks by talking about the stimulus impact of the tax bill we passed 7 months ago, the impact it is going to have at a time of recession. People might raise some question about the education provisions to which I just referred, of their stimulative impact. In a time of recession, obviously beyond the good that education does generally to help people in their lives in the future, we have a situation where maybe in a recession, families would shy away from going to college--their kids going to college, or adults, independent adults going to college. As they look at the provisions of last year's tax bill and the benefits that come from it, they might see the advantage of continuing their education, even at a time of recession. Any of that money that is spent as a result of that would obviously have some impact as stimulus in the economy. But for the long haul, it is a stimulus, too, because as people are better educated, they are more productive; they earn more money. It helps the long-term recovery of our economy. I want to make some reference to the estate and gift tax provisions. These have a beneficial impact, but they are not entirely stimulative for right now. Again, we have small business people who tend to be the most harmed by not being able to pass on the family business to their next generation. There is always a lot of anxiety during times of recession and during times of economic downturn. We ought to do whatever we can to relieve the anxiety of small business people who are under very tough constraints because of the recession. We ought to relieve that anxiety to the greatest extent possible. It gives me a chance to say what Senator Kyl said just before I took the floor; that is, that we have an opportunity on this economic stimulative package to make sure that the estate tax provisions of the bill the President signed last June be made permanent. I am going to yield the floor at this point. I thank my colleagues for their attention to some provisions of an old story--the tax bill of last year, a tax bill that is going to have beneficial impacts well into the future but, most importantly, has some impact right now as we are in a time of recession.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I would like to address a proposal by the Democrat leadership to repeal the future individual income tax reductions enacted in last year's historic tax cut bill. At this time last year, the CBO reported that, as a percentage of GDP, Federal taxes took 20.6 percent of GDP, a record post World War II level. Individual income taxes were at even more dramatic levels. CBO reported individual income taxes were at 10.2 percent of GDP. Even after last year's tax cut is fully in effect, however, the CBO estimates that Federal taxes will still take between 19.2 percent and 19.9 percent of GDP over the next 10 years. That is still way above historically average levels of Federal taxation. Just look at the chart behind me. This chart shows total Federal tax receipts as a percentage of gross domestic product over that past 40 years, and it projects tax receipts over the next 10 years as a result of last year's tax cut. As you can see, even after last year's tax cut, the level of taxation remains at historically high levels of GDP. As this chart shows, tax receipts have fluctuated frequently since 1960, but have escalated significantly since 1993. They will remain at historically high levels for the next 10 years. Now look at the history on this chart. The most shocking spike in tax receipts began in 1993. The CBO's January 2001 report to Congress shows that in 1992, total tax receipts were around 17.2 percent of GDP. Since that time, Federal receipts climbed rapidly. By the year 2000, Federal receipts had exploded to an astronomical 20.6 percent of GDP. The significance of this percentage can only be appreciated by historical comparison. In 1944, at the height of our buildup during World War II, taxes as a percentage of GDP were 20.9 percent--only \1/ 2\ percent higher than they are today. By 1945, those taxes had dropped to 20.4 percent of GDP. Even after last year's tax cut is fully phased in, taxes will still average around 19.4 percent over the next 10 years. As you can see from this chart, it is still higher than most of the levels over the past 40 years. Taxes were higher during the years 1993 through 2000, which were attributable to the tax increases forced through by President Clinton in 1993. Similarly, the increase in receipts from 1965 to 1969 was attributable to the Vietnam conflict. The runup in receipts from 1976 to 1981 was caused by ``bracket creep,'' which occurs when inflation causes wages to increase, forcing people into ever higher rates brackets. We corrected that problem years ago. So as you can see, while the Democrats rail against last year's tax cut, it was actually rather modest. When compared to the levels of taxation imposed over the last 40 years, we still remain at historically high levels of taxation even after last year's tax cut. We hear now a great hue and cry from some on the other side of the aisle that last year's tax cut should be repealed. But I ask: Are high taxes the only way to balance our budget? One of the most ardent advocates of repealing last year's tax cut is my good friend Senator Kennedy. I have been pleased to work with Senator Kennedy on many bipartisan proposals and look forward to continuing those efforts. Senator Kennedy is an important leader. Whenever he speaks, I pay close attention because he's a serious and effective legislator who often reflects the heart and soul of the Democratic caucus. Last year's tax cut legislation carried the support of over one- fourth of the Democratic caucus. Although the tax relief has been defined by its harshest critics in terms of its budget effects, it's important to look behind the numbers and consider what this legislation means to the American people. Before I get to that point, however, I want to make clear that those of us who support bipartisan tax relief and accelerating reduction of the 27 percent rate do not agree with a fundamental premise of Senator Kennedy's proposal. Senator Kennedy and the Democrat leadership are arguing that the budget effects of the bipartisan tax relief deny the Congress and the President the resources to tackle other domestic priorities such as a prescription drug benefit for Medicare, Social Security reform, and education reform. This argument, however, is based on a couple of critical assumptions with which I disagree. The first assumption is that the tax relief measures beyond 2004 will have no effect on the growth of our economy. So, for instance, bringing the top tax rate for successful small businesses to a level equal to that of America's largest corporations at 35 percent is assumed to have no effect on the economy. That assumption flies in the face of economic theory and more importantly, the anecdotal evidence I gathered from some small business folks in Iowa. From my vantage point, the best way to bolster Federal revenues is to put policies in place to grow the economy. The second assumption is that the only way to approach Federal budget policy is to maintain record levels of Federal taxation on the American people. That view is reflected in the chart behind me. Senator Kennedy's proposal assumes even higher taxes are necessary to address all of our priorities. So in facing budget choices, Federal spending goes unchecked. The assumption is there are no savings to be made on the spending side of the ledger. Implicit in this assumption is growth in both federal revenue and Federal spending as a share of our economy is a desirable objective. To a certain extent, the proposal that Senator Kennedy and the Democratic leadership have put forward is a reversal of their previous support for significant tax relief. Last year, Senate Democrats proposed a tax cut of about $1.26 trillion. That compares with a bipartisan tax cut that we enacted that came out at $1.35 trillion. Their proposal was only about 6.7 percent less than the cut that was enacted. To hear the Democratic budget people describe it, however, you would believe it was a 67 percent difference. Keep in mind that 48 of 49 Democrats, including Senator Kennedy, supported their alternative. Now, I know that despite votes for long-term tax relief, many of the opponents of the bipartisan tax relief now think that we should keep the rebate and repeal the long-term tax relief. Nothing could be worse for a slumping economy. Do we really want to send a signal to workers, investors, and business people that their taxes are going to go up? Even if the Democrats are talking about a repeal that takes effect in 2005, higher taxes in the future are higher taxes. If the Democrats believe that the only way to solve our budget problems is to raise taxes, instead of reducing spending, what will they do to make up the difference? Let's start with the basis for the rebate. That is, the new 10 percent bracket. The revenue loss for this part of the package is $421 billion over 10 years. It is the biggest tax cut in the bill, by the way. I can not believe or any other member of the Senate wants to dismantle that piece. Where do we go next? The marginal tax rate cuts lose almost $421 billion over 10 years. It appears some folks think 35 percent is too low a top rate. Well, guess what. As I alluded to above, repealing the marginal rate cuts hits small business, the biggest job generator in our economy, the hardest. According to the Treasury Department, small business gets about 80 percent of the benefits of the cut in the marginal rates. Do we want to raise the tax rates of small businesses in a slumping economy? Does that make any sense? Where do we go next? Do the opponents want to repeal the proposal to double the child tax credit? Or how about the refundable piece that helps 16 million kids and their families? That proposal loses $172 billion over 10 years. Does the Democratic leadership really want to deny American families the increase in the child tax credit that kicks in, in 2005? How about the death tax relief package? That package scores at $138 billion over 10 years. Most of the revenue loss is attributable to increasing the exemption amount and dropping the rate to 45 percent on already taxed property. Is it unreasonable to provide additional relief from the death tax? Let's take a look at the marriage penalty piece. It is the first marriage penalty relief we've delivered in over 30 years. This proposal scores at $63 billion over 10 years. Again, I do not think many folks would want to raise taxes on folks because they decide to get married. Under Senator Kennedy's proposal, most of the marriage tax relief would be eliminated. Continuing on through the bipartisan tax relief package, let's take a look at the retirement security provisions. This package, which will help Americans save more for retirement, scores at $50 billion over 10 years. With the aging of the baby boomers, does anyone really believe we should reduce incentives for savings? Under Senator Kennedy's proposal, workers who want to put an additional $1,000 in an IRA or section 401(k) plan would lose that right beginning in 2005. Finally, let's talk about education. The bipartisan tax relief package includes $29 billion in tax incentives for higher education. In this era of rising higher education costs, should we gut tax benefits for families to send their kids off to college? Do the Democrats really want to cut back on these bipartisan investments in higher education? Now, I have just gone through about $1.3 trillion of tax relief. It sounds like a lot in abstraction, but it provides relief to every American who pays income tax. I would ask any of those who want to ``adjust'' or ``restructure'' the bipartisan tax relief, including the Democrat leadership, why would you cut the tax relief package? I think the American people would like an answer to that question. Mr. President, I yield the floor and suggest the absence of a quorum.

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

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I think sometime tomorrow we are going to have some cloture votes. Who knows what happens after you are involved with cloture votes? I suppose it depends on how the cloture vote turns out. But it also depends somewhat on what the majority leader decides to do. I did not hear him this morning or this afternoon. It was suggested that if we don't get cloture, then we may go on to other legislation. I want to speak procedurally, not so much on the substance of the underlying bill as I have done a couple of times this afternoon but about where we are and some of the irony of our being here; particularly, some of the irony about how some things are said and other things are done by the leaders who decide the agenda for the Senate. I will take a few minutes to talk about where we are on the economic stimulus bill before tomorrow's cloture vote. The good news is that there is bipartisan recognition of the need to help unemployed workers with an extension of unemployment compensation. There is bipartisan agreement that recognizes the need to provide taxpayers with a payroll tax rebate so we are able to help stimulate consumer spending and create jobs. There is bipartisan recognition of the need to provide bonus depreciation. I suppose there are some others as well. Kind of summing up in regard to that, there is kind of bipartisan agreement on the part of the Republicans for what Democrats want in this area, but in areas where Republicans want to add some things there is not bipartisan agreement on the other side for those things. That brings us to the bad news as a result of that situation. We are, in fact, stuck in a procedural quagmire. Yesterday the distinguished majority leader claimed that Republicans were slowing down the stimulus bill through filing of many amendments. I think it is a bit ironic today that we have amendments pending on which the majority leader seemingly does not want to vote. If he wanted to move this process to conclusion with a bill that the President has said he would sign, that could be done very easily. We could have a vote on that. There is bipartisan support for it. That bill would be down to the White House I believe faster than you could say Jack Robinson. Instead, the only votes that it seems we are going to be able to get are votes on dueling cloture motions. One vote will be on the majority leader's amendment. That vote is a take-it-or-leave-it vote, I believe. I call upon all of my colleagues, Democrats and Republicans, to pay close attention. A vote for cloture tomorrow means all amendments offered or filed that have not received a vote will not get a vote. That is a very important point. A vote for cloture on the underlying amendment filed by the majority leader means all of the following amendments will not receive a vote. I will go through those. Senator Bunning, a foster care amendment; Senator Baucus, emergency agriculture funding; a second-degree amendment to that amendment by Senator Kyl for permanent repeal of estate tax; Senator Hatch's amendment for a longer net operating loss carryback provision; Senator Reid's amendment on travel and tourism; a second-degree amendment to that by Senator Dorgan on travel industry stabilization; and Senator Domenici on a payroll tax holiday, which is probably the most stimulative idea that has been presented to the Senate. We will not have an opportunity to vote on that. Senator Durbin has an unemployment insurance amendment; Senator Allard, a research and development amendment, what we call permanent R&D; Senator Lincoln, Medicaid Upper Payment Limit payments to hospitals; Senator Smith of New Hampshire, an active duty waiver of IRA withdrawal penalty; Senator Smith again, ban on interstate commuter taxes; Senator Smith again, income tax waiver on tip income; Senator Smith again, above-the-line deduction for real property taxes; Senator Sessions, tax incentives in regard to unemployment compensation; Senator McCain, sale of principal residence for uniformed services, something our military people would benefit from very much; Senator Kyl again, a repeat of his second-degree amendment which would be a permanent repeal of the estate tax; Senator Thomas, small issue bond provisions; and an amendment I have offered which will also have a cloture vote for the bipartisan White House- centrist package, the bill that I said has bipartisan support in the Senate. If we could get it up for a vote, we would have a bill down to the President and signed. It would be an enacted economic stimulus package faster than you can say Jack Robinson. All of those amendments will not come to a vote if the cloture vote tomorrow on the Senate majority leader's motion carries. We are in the mode of a lot of Senators trying to put together a bill that can get a majority vote in the Senate and go to conference. Some of these amendments have to be agreed to to get that kind of bipartisan support. If you do not get a chance to vote on them, how do you ever get to a bipartisan bill? It takes that sort of bipartisanship to get anything done in the Senate. Let me make very clear that Members who vote for the cloture on that cloture motion, if they want to vote on these amendments, they will be foreclosed. I said there is going to be another cloture vote tomorrow. It arose out of necessity--not a necessity that I like. But the majority leader forced a vote on the White House-centrist bipartisan amendment that I offered because of his own cloture motion. The other cloture vote--in relation to the cloture motion I filed-- will be on the White House-centrist agreement on stimulus. If cloture is invoked and that amendment passes, the President says that bill will be signed. The bill has already passed the House of Representatives. That means, bottom line, the following things will happen when the President signs the bill--and there is little disagreement that these things ought to happen--workers will get unemployment checks. Low- income people, qualifying for rebates, will get rebates to spend money. Spending that money will create jobs. Middle-income taxpayers will get more income tax relief. Those who are unemployed for the first time will get help with their health care insurance. And business will get accelerated depreciation. By doing that--investing more, increasing productivity--it will increase the number of jobs. That is what a stimulus package is all about--two things--one, responding to the needs and the anxiety of the unemployed workers through improved unemployment benefits and for the first time, health care benefits. Currently there are 800,000 of more workers who are unemployed because of September 11; and there is probably more unemployment to come. We are all encouraged that during January unemployment was flat, there was no an increase in the rate--and helping those dislocated workers with additional unemployment benefits and with health insurance is greatly needed. The second thing objective of the economic stimulus bill, in various ways, is to stimulate the economy to create jobs. For those who say, ``Maybe the economy is turning around; we don't need it,'' we at least have an insurance policy against the usual downtick that comes after you have been a few quarters into a recovery. But if we want a strong economy, and a certainty of that strong economy, we are going to have to get a stimulus bill passed. So I hope tomorrow we have an opportunity not to have cloture on the underlying Daschle amendment and that we are able to then move towards a vote on the White House-centrist bipartisan package that has passed the House, has bipartisan support in the Senate, and the President has said he will sign. I yield the floor and suggest the absence of a quorum.

Mr. GRASSLEY

Mr. GRASSLEY. Is there a time limit on morning business?

Mr. GRASSLEY. I ask unanimous consent to have 15 minutes.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I would like to make some comments in relation to the remarks the Senator from Nevada just made--not in disagreement with anything he said, but to supplement them and to put them in proper perspective. In regard to tax cuts and the war on terrorism and their impact on the deficit, even after the tax cuts of last year, we are still going to have a level of taxation that is as high as we had in World War II. The war on terrorism is taking our resources because, obviously, we have to put every resource we can into winning the war or it might not be won. And we are still going to have a level of taxation that was similar to the times of other wars. The benchmark we use is World War II, when taxes were at about 20.6 percent of gross national product. I ought to correct myself. At the end of 10 years, we would probably still have taxes a bit less than they were in World War II. But right now, they are at that level, even considering the tax cuts we passed. The war on terrorism has been one of the reasons we are in deficit. Also, the tax cuts are a reason there will be deficits. There are deficits because of the recession we are in right now, most of which was caused by the war acts of September 11, but also remember that the downturn in the economy, as far as manufacturing is concerned, started 19 months ago, in March of the last year of President Clinton's administration. Also remember that 50 percent of the loss of the Nasdaq took place in the last year of the Clinton administration. As far as the economy is concerned, the downturn started before President Bush ever took office, before we ever knew that the dastardly acts which occurred on September 11 would ever happen to us. I want to comment on a fact that is true, that this does affect Social Security. In a unified budget, Social Security is considered part of the deficit or part of the surplus, but it is wrong to refer to a situation for Social Security different now than a year ago when we anticipated a $5.8 trillion surplus. This is a historical fact about Social Security that has never changed since 1936: Whether we have a unified budget, which we have had since 1967 when President Johnson instituted it, or whether we have separate pots of money--some for Social Security, some for Medicare, some for disability, some for highways, some for airports--our different trust funds, the way Social Security has been accounted for has not changed since 1936. It is this simple: Since 1936, the Social Security payroll money has been paid into a trust fund. That trust fund has had some sort of a surplus since 1936 except for the years 1982 and 1983. My colleagues will remember, at that particular time when we did not have a surplus, we borrowed money from Medicare to keep Social Security checks going until we bailed it out. Since 1936, Social Security moneys have always been handled the same way. They have been put in the Social Security trust fund and the surplus has been invested in non-marketable Government securities. That has not changed since 1936, whether we have had unified accounting or whatever the situation has been. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I ask unanimous consent that Elmer Ransom, a fellow on the Finance Committee staff, be accorded floor privileges for the remainder of Senate consideration of H.R. 622.

Mr. GRASSLEY. Madam President, I ask unanimous consent that Dariusz Marzec, Stephen Seale, and Jeffrey Griswold, interns from the Senate Finance Committee, be granted the privilege of the floor during debate on the economic stimulus bill.

Mr. GRASSLEY

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

Mr. GRASSLEY. Madam President, whether it is a majority or whether it is two-thirds, if I had to go back to my Republican caucus to find out that I had a certain percentage of the caucus behind me, there would be no point in negotiating. I do not dispute what the Senator from Nevada just said, because he is an honest person and he would state it as he sees it, but it was widely interpreted and it was printed in the press as ``two-thirds.'' Even some people from the other side of the aisle seemed to indicate that in the press. So that is what my statements are based on. The point is, a caucus appoints people to negotiate something that can get through the Senate. That means 51 votes. Whatever restrictions were put on--the specific percentage aside--it is an impossible situation in which to negotiate. That was the environment that was present during these negotiations, during this period of time that the Senate majority leader is trying to use as an excuse when nothing could get done and saying that Republicans were holding it up. Another comment that was made during the debate, within the last couple weeks this bill has been up, is when the Senate majority leader referred to Republicans offering amendments. We had this agreement between the two sides to have an even number of amendments offered: Republicans will offer amendments, Democrats will offer amendments. A Republican would offer an amendment and then a Democrat would offer an amendment. This is so we each have an equal opportunity to get our ideas on the Senate floor for debate. That isn't something used just for this bill. It is done quite often in this body, just so this body functions and functions in a fair way. There may not be, at this point, as many Democrat amendments filed as Republican amendments, but under the procedure in which we are operating there can surely be an equal number of amendments if the Democrats want to have an equal number of amendments. I would like to respond to the argument that Republicans are delaying and not cooperating. I would like to put that proposition to the test and look at each side and their movement. We had a stimulus package, suggested by the President of the United States, in early October, which was before there was a consensus even within this body that the Finance Committee or those of us who lead that committee ought to be working on one. The President, as a Republican--but he did not do it because he is a Republican; he did it because of the anxiety that had been in the country at that time, and is still there because of the September 11 terrorist attack--needed to do what he could to stimulate the economy as well as helping people who were unemployed and who had health care problems. So the President put a proposal on the table. I would like to have you look at the President's proposal. President Bush took issues off the table that maybe just Republicans would want more than Democrats. For instance, he took the capital gains reduction off the table. At the same time he was taking issues off the table, he purposely put some on the table that appealed to Democrats, such as the extended 13 weeks of unemployment benefits and rebates for payroll taxpayers. What I am speaking about occurred in October when he first put his proposition on the table. That was not well received in the Congress, even among Republicans. So the President has moved a long ways to do even more than what he suggested. But I want to say upfront, the President of the United States was trying to be as bipartisan as he could by suggesting things that he knew Democrats would want. In early December, he encouraged the centrists--they are a group of Democrats and Republicans who are more in the center of the political spectrum--to push to get a compromise package and indicated that he would work with them. They came up with something. The President met with them, both before it was finalized and after it was finalized. The President said: If the Senate passes it and if the House passes it, I will sign it. So I think the President of the United States--albeit he is a Republican--was out in front on this issue, both from the standpoint of the original proposals and from the standpoint of trying to get something that could pass the Senate that he could sign. We heard from the distinguished majority leader a little earlier about how Republicans objected to help for unemployed workers and having health insurance for unemployed workers coming up on the airline bailout bill. But we were following the consensus of people who were suggesting that if we were going to have a stimulus package, that there should not be anything in it that was industry specific--industry specific meaning helping just unemployed people in the airline industry when you have other unemployed people who would not get help. Consequently, we were following the advice of people such as Chairman Greenspan to be very generic in our approach to helping business or to helping individuals. On the other hand, I do not like the accusation that somehow helping the airline industry did not help the workers. If those airlines had gone under, instead of there being 30,000 people unemployed, there would have been 330,000 people unemployed. Keeping the airlines flying kept workers on the job and less of them laid off. We recognize that laid-off workers need help. Obviously, that is why the President came out with a proposal. It was not an industry-specific proposal but was a generic approach to help workers--and not just from the airline industry but from all industries--with the additional 13 weeks of unemployment benefits. It was also said that Republicans refused to negotiate for 3 weeks. This was that period of time when there were shackles put on Democrat negotiators when we negotiated with them. That was part of it. But also that does not give credit to the hours and hours that Senator Baucus and I spent negotiating prior to a bill ever coming up on the floor of the Senate. It does not take into consideration, also, the fact that, at the instigation of the majority leader, the Senate Finance Committee met, and contrary to how we normally do our business in a bipartisan way, there was a push to get a very partisan bill out of the Senate Finance Committee. And it did come out on a party-line vote. So it seems to me that if we are going to be accusatory, we ought to take into consideration that when there was an opportunity to develop a bill in a committee--the Senate Finance Committee, which almost always does things in a bipartisan way--there was an effort to go strictly partisan and the result was to go strictly partisan. We have the President of the United States pushing more than anyone else, and the House Republicans passed a bill in early fall. That was a bill not very many people liked. The House accepted that. They scaled the bill back and agreed to go to conference a quasi-conference, not a formal conference such as we used to have. The House of Representatives, in this informal setting, along with representatives of the White House, made this deal with the Senate centrists, what I call the White House-centrist bipartisan package that would have a majority vote of the Senate, albeit not the 60 votes that are required. The bottom line is that the President of the United States, in saying he would sign the bill, and the House of Representatives, in passing it, took up the challenge and did what needed to be done. Here we are, once again, in the Senate ignoring something that had a majority bipartisan vote in December before we went home for the holidays. Here we are again. Presumably, it has the same bipartisan votes we had then. Look with me at the other side of the aisle. I already mentioned the partisan bill in the Finance Committee. I already mentioned the intractable position in conference over non-COBRA eligible, meaning when you are unemployed, you only have to take the insurance from where you were laid off, and if you did not have that insurance, you would not be able to get any other insurance under that proposal. We allow people to continue the insurance from where they worked with 60-percent credit, but we also allow people who are unemployed who did not have insurance where they last worked to get the same 60-percent credit. But there was an ideological block to that on the part of Democrats who were negotiating. Then we had the refusal of a vote in December on the White House-centrist agreement. I think the Democratic leadership has resisted movement to the center represented by a bipartisan group of Republicans and Democrats who call themselves the centrists. Even though I am more conservative, I have bought into that plan as one we ought to pass in the Senate. Many amendments have been filed, debated, and voted on, so we have been trying to move this bill along. I am going to finish where I started last December. Let's have a vote on the White House-centrist agreement. If we pass it, the President will sign it. The unemployed will get their unemployment checks, payroll taxpayers will get rebate checks from the Federal Treasury, middle-income taxpayers will get more money in their paychecks, and the unemployed will get help with health care. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. I send a cloture motion to the desk.

Mr. GRASSLEY. Mr. President, is the amendment filed and the cloture motion filed?