Judd Gregg

Mr. GREGG

Mr. GREGG. Would it exclude Pakistan?

Mr. GREGG. If I could ask further, the FDA position, as I understand it, is that drugs which are unapproved for sale which come across the border violate the FDA approval. The Senator, in his statement, referred many times to ``FDA-approved drugs.'' As I understand the process today, the FDA views any drug purchased outside the United States, distributed outside the United States, as being unapproved for sale and therefore not meeting FDA standards. Is that not a correct analysis of the FDA view of how it views drugs that come into this country?

Mr. GREGG. That is correct. But if the Senator would yield further, the Senator is making a point in his statement that these would be FDA- approved drugs the people are purchasing when, in fact, they are not FDA-approved drugs because no drug that is imported into the United States, distributed outside the United States, can receive FDA approval under their rules because the FDA decided they cannot certify the efficacy and safety of those drugs. Isn't that the FDA position today?

Mr. GREGG. If I could inquire further, that is the essence of the difference. The FDA does not deem them to be exactly the same because the FDA cannot certify their efficacy and safety. That is why the FDA has said that because they are not manufactured here, because they do not have control over the manufacturing process, because they do not know how they have been adulterated or may or may not have been adulterated or how they have been synthesized, they are not going to approve drugs coming into this country. So there is a significant difference between what someone buys overseas and what someone buys in America.

Mr. GREGG. If I could ask the Senator a few more questions, then I am happy to yield the floor. Assuming your hypothetical is correct, that the FDA could reach beyond our borders and could effectively review these drugs, which the FDA claims it cannot do, which is why they said they will not approve this, your amendment says that Customs and Border Patrol shall not be able to stop these drugs from coming across the border. Customs and Border Patrol does not have any control over the efficacy or safety of these drugs. This amendment should really be directed at the FDA because to put Customs and Border Patrol in this position means they have to release drugs which the FDA today is saying it does not approve. Yet there is no process for having the FDA come in and be required to approve them under the Senator's amendment.

Mr. GREGG. Mr. President, the Senator from North Dakota raised a few issues, some of which are actually subject to rule XIX. I did not make the point, but I probably should have. The fact that under this regime one would be able to set up a process where people could ship drugs into this country which would not be reviewed by the FDA and would not be stopped by Customs and Border Patrol is not an issue of defending the drug industry. It is an issue of making sure that the person who gets that drug is actually getting what they paid for, is getting something that is safe, and that this process has not blown a gaping hole in our capacity to develop adequate security for people who might want to ship into this country biological agents which could kill thousands of Americans. This amendment, as it was originally offered--and I just asked reasonable questions. I didn't make allegations of purpose, as was the representation of the Senator from North Dakota. This amendment, as it was originally offered, would have allowed drugs to come into this country through the Internet which would not have been reviewed by the FDA. We wouldn't know where they were manufactured, whether the label that claimed it was one drug was accurate to what was in them. It would have simply said that Customs and Border Patrol could not stop those drugs from coming into this country. It is pretty obvious that under this amendment as it was originally drafted, there were serious health risks for the people who were receiving those drugs. FDA wasn't going to review them, and Customs and Border Patrol was not going to be able to stop them. Think about that. A drug produced in some kitchen in Indonesia could be put in a bottle that was made to look like an American product, purchased over the Internet on an alleged Canadian site, and shipped into the United States, and the person who got those drugs would take them. There was a lot of anecdotal evidence when we had this bill before our committee that said most of the drugs that were coming in over the Internet were not as represented and some of them were actually poison. In addition, of course, there is the very serious concern of national security. Maybe the Senator from North Dakota doesn't believe it is a concern. Maybe he only thinks big drug companies are the people who are being protected when the FDA determines whether a bottle of Lipitor is really Lipitor coming from Pakistan or Afghanistan. I don't. I happen to think the people who are being protected when that bottle comes into this country are the people who are getting it and the public at large if it has an agent in it which would basically kill people. There is no question at all but that if I were a creative terrorist-- I wouldn't even have to be all that creative--I could fill hundreds, thousands of alleged prescriptions with anthrax, ship them to my cohorts in the United States, and then let my cohorts do with that anthrax as they wished, or other agents which would be even more violent and more communicable. There is a reason why we have the safest drug delivery system in the world, why people, when they go into the local drugstore, have absolute confidence that what they are buying is what is on that label. It is because we have the FDA policing the industry and making sure that as it is manufactured, labeled, and delivered, it is what it says it is. This amendment, as it was originally offered, did not accomplish that. For the Senator from North Dakota to come down here and allege people who might oppose it do so because they simply wish to carry the water of big drug companies is a discredit to those of us who are trying to address the issue of safety for the American people, not only on specific drugs that are delivered to them but as this bill is supposed to do on our homeland security. So let's move on to the specifics. I understand the Senator from Louisiana has a modification to the amendment that is going to basically limit it to Canada, and it is going to make sure it is structured in a way that conforms with the Cosmetic Act. I congratulate him for that modification. I appreciate him being responsive on that point. It will dramatically improve this amendment. There is still the issue out there that has to be addressed of, if Customs and Border Patrol is charged with not looking at this stuff which is going to come in from Canada, who is going to look at it? I have a bill which actually accomplishes this, by the way. It says FDA will have the authority to go into these foreign countries--and if you limit it to Canada, it will be very manageable--and will have the money and resources--it is more a resource issue, the Senator from Louisiana is correct. It is not really an authority issue. What they need is money to review the distribution process. Under my bill, what would happen is a Web site would have to have FDA-certifiable approval. In other words, if you went to a site from which you can allegedly buy Canadian drugs, FDA would have reviewed that Web site, reviewed the people who are selling through that Web site, reviewed the product coming through that Web site, and the Web site would receive something like a Good Housekeeping seal on it which couldn't be forged and which would basically be monitored, so that when you were buying off a Web site from Canada or directly from Canada by mail order or going into a Canadian pharmacy, you would know that the product was what it said it was and FDA had actually reviewed it. That is a very doable event. It takes a regime. It takes money. All that is actually going to have to be grafted on top of this amendment to make the amendment work. It is too complex to do at this level. However, if the Senator from Louisiana is going to modify his amendment, my representation would be that when we get to conference we will not take the amendment or, alternatively--which would be my druthers--put this modification on top of it which is the language I developed relative to giving FDA the regime authority and the financial authority to monitor Canadian-delivered drugs. I understand the Senator may move in that direction. If he does move in that direction, I congratulate him and thank him for making such a constructive change in his amendment. I appreciate it. We will proceed from there.

Mr. GREGG. Mr. President, if I might renew my question, the Senator from Florida may not have been in the Senate when I asked, Does this apply to Internet purchases, and the answer is yes; does it apply to mail order purchases, and the answer is yes; does it apply to countries such as India, Brazil, Pakistan, and the answer is yes. I understand the Senator from Louisiana will modify the amendment to take off a list of countries that it would not apply to, terrorist nations such as Sudan and I guess Cuba. I renew my question because I am not sure the Senator from Florida was dispositive on it, which is, Shouldn't this amendment be directed at the FDA because to direct it at Customs and Border Patrol means that Customs and Border Patrol will be stopped from basically taking the drug which comes into this country, which FDA has now declared it cannot certify the efficacy and safety of, taking that drug, sending it over to FDA, and having the FDA evaluate it? Customs and Border Patrol has no expertise in evaluating efficacy and safety of drugs. For all we know, the drug that is being ordered over the Internet under the Senator's amendment could be anything. It could be claimed to be Lipitor, but it could be rat poisoning. In fact, recent anecdotal studies have shown something like 80 percent of the drugs coming in through the Internet do not meet the standards they claim they do meet. So why would you amend this bill to put Customs and Border Protection in the untenable position of having to basically release drugs to come into this country, which the FDA says it cannot claim are safe, when you have not put in the higher regime requirements of having the FDA come in and determine whether those drugs are safe?

Mr. GREGG. If the Senator will yield for one last question, and then, obviously, the Senator from Florida wants to be heard on the subject. But it is not silly because basically the fact pattern that is going to be created--were this amendment adopted and if it became law, without any directive to the FDA they have to step forward and actually evaluate these drugs to see if they meet safety and efficacy standards--the practical effect of this amendment would be that Customs and Border Protection could not stop any drugs coming into this country from other countries. That would include countries such as Pakistan and India and other countries which have some serious issues as to the efficacy and safety of those drugs. In fact, if I were a creative terrorist, I would say to myself: Hey, listen, all I have to do is produce a can here that says ``Lipitor'' on it, make it look like the original Lipitor bottle--which is not too hard to do--fill it with anthrax and have a bunch of people from the United States order it who might be affiliated with me and import it that way into this country--or anything else they want to use in a biological way. Here we are telling Customs and Border Protection that their job is to ratchet down on the capacity of terrorists to use entry ports into this country. And what you are saying in this amendment is: You, Customs and Border Protection, are not going to be allowed to evaluate anything that comes into this country which has a seal which makes it look like it is an FDA-type of drug. And the FDA will not have reviewed it. So nobody will have reviewed it. So I think what you are creating--in your attempt to push FDA into doing something you feel they are not doing that they should do, you have targeted the wrong agency, and you are actually creating a massive hole in our capacity to secure or borders and protect ourselves.

Mr. GREGG. We are checking with the Democratic side, but if the Senator is agreeable, the Senator from North Dakota is going to speak for half an hour, and at the conclusion of his speech, I suggest we go to a vote, if the Senator from Louisiana wishes to have a recorded vote, or we can accept the amendment.

Mr. GREGG. Mr. President, I ask unanimous consent that the Senator from North Dakota be recognized for half an hour, that no amendments be offered during his term of speaking and that at the conclusion of his speaking, 2 minutes be equally divided on the amendment of the Senator from Louisiana, that we proceed to a rollcall vote, that the yeas and nays be deemed as ordered, and no second-degree amendments.

Mr. GREGG. Mr. President, it is my understanding that we are going to proceed to vote on the Vitter amendment at 12:15; is that correct?

Mr. GREGG. Mr. President, let me quickly respond to some of the points made by the Senator from North Dakota, whom I greatly admire and enjoy working with on the Budget Committee because I think the context of those comments have to be put in proper form. There is no question but that the revenues of this country dropped significantly at the beginning of this administration. There is obviously a significant argument as to why those revenues dropped. The point that I made earlier, and which I think is very valid, is that coming out of the 1990s we had experienced an explosion of growth, much of which was unsupported. It was called a bubble, the Internet bubble. What is a bubble? That is when people are speculating irrationally--as at the time Chairman Greenspan said, irrational exuberance--irrationally in a way that is basically creating stock, in this instance, which has no substance behind it but is still being sold at a higher and higher price. That bubble burst. When a bubble bursts, the history of economics is that there is a severe contraction in the economy that is experiencing the bubble. That is what happened to us. We saw a severe recession begin. We followed the Internet bubble bursting with the attacks of 9/11. That was a huge catastrophe for us as a nation, a vicious attack killing thousands of Americans, but it was also an attack on our economy. These two events together would have led to a massive slowdown in our economy had not the President had the foresight to reduce the tax rates to a more fair level so that entrepreneurs, people who are willing to take risks, were willing to go out and do exactly that. The tax cuts were put in place, and the tax cuts benefitted everybody who paid taxes. It is hard to do a tax cut to benefit people who do not pay taxes, which seems to be the position of the people on the other side of the aisle. Essentially, the tax cuts benefitted all who pay taxes, but, importantly, it was to create an atmosphere where the entrepreneurs in our Nation, the people who are willing to take risks and as a result create jobs, did exactly that. They were rewarded for being risk takers and job creators. As a result a recession which should have been severe in its slope ended up being shallow. We are now seeing ourselves coming out of that recession. Now, for 39 months, we have had a very strong recovery, a recovery which is played down by the other side of the aisle but cannot be played down by the facts--5.4 million jobs created, 39 months of economic growth, some of the strongest growth periods we have had in the post-World War II period, and that has been driven in large part by tax rates which have generated more revenues to the Federal Government. The theory on the other side of the aisle, and their whole modus operandi for economic activity, is you should raise taxes in order to raise revenue for the Federal Government to meet spending. You can always expand spending because you can always raise taxes. That is basically the philosophy of the other side of the aisle, coined as ``tax and spend,'' or ``spend and tax.'' But the fact is--and it has been proven by three Presidents of both parties--that if you reduce rates to a level which gives people an incentive to go out and be productive, you actually generate more revenue for the Federal Government than if you overtax them. Why is that? It is human nature. If you say to a person: 70 percent of the next dollar you earn, or 50 percent of the next dollar you earn is going to go to the Federal Government or to the State government or the local government or a combination, a person doesn't have a whole lot of incentive to go out there and take a risk with their money or to work harder to produce that extra dollar. But if you say to a person: We are going to tax you at a fair rate so when you go out and take risks with your money you are going to get a fair return and the Government is going to get a fair return in taxes, then a person is willing to go out and take that risk and do those things that create those jobs. That is exactly what has happened under the tax laws that President Bush has put in place with the support of the Republican Congress. We have taken those elements of the tax law which are most related to creating economic activity--capital formation, risk-taking activity and thus resulting in job creation--and put those rates at reasonable levels, capital gains being the best example of that. The other side of the aisle wants to raise all these taxes again. What they are unwilling to acknowledge is that by having a fair rate of those taxes, at those tax levels, we have actually generated a huge increase in revenues. If you combine the last 2 years, we have the most significant increase in revenues that we have seen anytime in the post-World War II period for a 2-year period in rate of growth of revenues. It is because there has been an incentive for people to go out and be productive, create jobs, and as a result generate more income for the Federal Treasury. There is another effect, for example, of the lower capital gains rate which I mentioned earlier today. Not only does it create economic activity. In other words, if you are sitting on some stocks or sitting on a piece of real estate or you have a small family business, you are afraid to sell it because you don't want to pay the Government 30 percent, which was the rate, or 20 percent, which was the rate. Now the rate is 15 percent, and you say: I guess I can sell that asset. All right, you go out and sell that asset. The Federal Government would have never gotten any revenue from that asset because you were going to sit on it as long as the rates were too high, so by selling the asset the Federal Government got income it didn't expect, by having a fair rate. But more important, or equally important, you have that cash. You are going to go out and reinvest it in something that is going to produce more money and, as a natural flow of human nature, it is going to be more productive. You are going to get more productivity out of those dollars. What does that do? It creates more jobs. It creates more economic activity which creates more jobs. And it works. It has been proven to work by President Kennedy, by President Reagan, and now by President Bush. It worked so well that over the last 2 years, the CBO estimated that the revenues from capital gains would be half of what they actually were because they used the static model. They didn't factor in human reaction. So we generated almost $100 billion more revenue just from capital gains than we expected to get as a result of the CBO estimates. That is because human nature inherently, certainly in America at least, is entrepreneurial. It is risk taker and job creator oriented, and people who are risk takers are rewarded for that, and as a result jobs are created. So we have had this explosion of jobs in America. We have created more jobs in this country in the last 2 years than Europe and Japan combined--I believe is the statistic. Equally important, we have generated huge amounts of new revenues for the Federal Government. That is reflected in the midterm report which came out today and which is so dismissed by the other side of the aisle. You just can't dismiss the fact that we reduced the deficit by $126 billion, approximately, in 6 months, over what it was supposed to be, what we expected it to be. Why did it come down $126 billion? Because people were paying more in taxes because there was more job activity out there. Interestingly enough, most of that new revenue came from the highest income taxpayers in America today. In fact, they are paying more in taxes today than they have ever paid, that group of individuals. But the attitude of the other side of the aisle is, let's just raise taxes again. It doesn't work. It actually reduces revenues if you get taxes too high. What we have to do is control spending. That is why this side of the aisle has been talking about a comprehensive package to accomplish that. I see the Senator from Pennsylvania is here. I know he wished to speak. We have about 6 minutes. I yield the floor.

Mr. GREGG. Mr. President, I understand that the unanimous consent request did not include the yeas and nays. I ask for the yeas and nays.

Mr. GREGG

Mr. GREGG. Mr. President, I wish to commend the Senator from West Virginia for this amendment. Everything that he is proposing to fund in this amendment is needed and is critical. There is no question but that the agencies to which he is giving these additional dollars for the purposes of refurbishing both air and vehicle fleets are in dire need of these dollars, as he cited in his statement. The aircraft owned by Customs is 30 years beyond its useful life. Helicopters are averaging 20 years beyond their useful life. The vehicles in which these folks go out to protect our borders often break down and many times they can't fulfill their missions because the vehicles are not up to the capacity that is needed. So this is a good amendment. It is a needed amendment. I support it. Senator Byrd has found an offset which is a reasonable offset. It increases the fees for non-Americans who seek to use the Immigration Service and the Customs Service--mostly the Immigration Service, I believe. This will not raise blue slip issues. So I am in support of this amendment and urge its adoption. Mr. President, I ask unanimous consent that amendment No. 4557 be agreed to.

Mr. GREGG. Mr. President, I rise again to express my appreciation to the Senator from West Virginia. He has brought forward an amendment which addresses critical needs in port security and Coast Guard retooling. He has paid for it. My druthers were to take the 2006 authorization allocation which we had and allow it to lapse and go to deficit reduction. That was my initial plan. But I have been here long enough to know that if you leave that type of money on the table, somebody else will end up spending it. It is truly a critical need in the area of homeland security that we address the issues which the Senator from West Virginia has put into his package. The Coast Guard is especially important. An example: The Senator from West Virginia noted that he is going to fund the adding of armament to Coast Guard helicopters. Presently there are about 90 Coast Guard helicopters. Four or five are armed. The four or five that are armed have a 100-percent interception rate. In other words, when a smuggler is headed toward our shores, either with people or with contraband, if the helicopter that tracks them has armament on it, there is 100 percent interception rate. Those helicopters which do not have armament do not have anywhere near that interception rate. There was an interesting article just a day or so ago in the Miami paper, I believe, about how smugglers are coming in and that the Coast Guard fast boat tried to catch up with the smugglers. They were in a cigarette boat. The cigarette boat turned and was on a course to ram the intercept boats, and the intercept boats called in the armed helicopter and that stopped the confrontation. The smugglers were arrested. So it is critical that we do this type of upgrading to the Coast Guard. In this bill, we had upgraded 36 helicopters. This will upgrade another 30. We are getting pretty close to the entire Coast Guard fleet or as much as is needed to have that type of armament on it. In addition, the fast boats are critical, the observation aircraft are critical, and then the whole major thrust toward port security is equally important. It is a paid-for amendment. It is one that addresses needs that are there, that are obvious. They need to be addressed and were not addressed because of the tight resource situation. But, as usual, the Senator from West Virginia has been creative, and his proposal is not only reasonable but is an improvement of the bill. I am happy to support it. I know the Senator from North Dakota wants to speak on it.

Mr. GREGG. I thank the Senator from North Dakota. There is some irony in that, although neither the Senator from West Virginia nor the Senator from North Dakota has a port, unless Harpers Ferry is considered a port, they would be putting forward this concept. It is a good concept. I ask unanimous consent the amendment be agreed to.

Mr. GREGG. Mr. President, I send an amendment to the desk on behalf of Senator Salazar.

Mr. GREGG. I ask unanimous consent that reading of the amendment be dispensed with.

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

Mr. GREGG. I ask unanimous consent that the amendment be agreed to.

Mr. GREGG. I suggest the absence of a quorum.

Mr. GREGG. Mr. President, I think the Senator's amendment is a good amendment and I would like to accept it. There is an objection on our side to our accepting it at this time with which the Senator is familiar. I am hopeful we can resolve that objection. Rather than going to the yeas and nays, let's see if we can resolve the objection.

Mr. GREGG. Mr. President, I would appreciate it if the Senator from California would. I certainly assure the Senator that at some point, if we have to vote on it, we will vote on it. Right now there appears to be an objection going forward.

Mr. GREGG. The Senator has made an excellent point. It doesn't surprise me there is no criminality or law involved that restricts the ability to dig a tunnel from one country to another. It is pretty obvious that something should be done in this area. So I think the Senator has touched on a very important point. hopefully we will work it out, and we will work it out before this bill is off the floor.

Mr. GREGG. Mr. President, I ask unanimous consent that the order for the quorum call be dispensed with.