Orrin Hatch

Mr. HATCH

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

Mr. HATCH. Madam President, I yield the floor.

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. HATCH. As I understand it, we are prepared to vote. Amendment No. 642

Mr. HATCH. Mr. President, I rise in support of my amendment No. 642. It is fairly simple. It tightens the nexus between TAA benefits and actual jobs lost because of trade by requiring a stricter standard to receive TAA benefits. The expanded TAA benefit offered by my friends across the aisle continues the ``contributed importantly'' standard that says if trade is a cause which is important, but not necessarily more important than any other cause of the job loss, TAA benefits can be provided. That is not a tight nexus. As a result, many workers are eligible for TAA benefits even if their job loss was not caused by trade. My amendment requires that trade would have to be a ``substantial cause'' of job loss for TAA benefits to be available. This standard was established by President Reagan when he constrained spending on TAA. By returning to the stricter TAA standard, this amendment puts reasonable constraints on the program to stop it from expanding into another out-of-control spending program. I ask my colleagues to help the American taxpayers and constrain TAA spending by supporting this amendment.

Mr. HATCH. Mr. President, I ask for the yeas and nays.

Mr. HATCH

Mr. HATCH. Mr. President, I strongly oppose the TAA amendment offered by my good friend and colleague from Montana, Chairman Baucus. Before I get into the specifics, I think it is important to put this debate in context. For years I have been working to ensure that our pending trade agreements with Colombia, Panama, and South Korea receive fair consideration in the Senate. Unfortunately, while I worked to get these agreements approved, others placed obstacles in the way. As a result, days, weeks, and months passed. Eventually those months turned into years. Now 4 years later, we are taking out the sixth renewal of trade adjustment assistance in the time these trade agreements languished. To me, it is highly ironic that we not only passed but expanded legislation to help workers who are allegedly harmed by trade agreements five times over the last 4 years, while we have yet to pass a single trade agreement. This March President Obama made himself perfectly clear: Unless Congress agreed to spend more money for this pet trade priority, he would never send a trade agreement to Congress and U.S. workers would never benefit from these agreements. Basically, the President held U.S. exporters hostage while he squeezed more spending out of Congress. Despite my deep disappointment in the President's failure to make these agreements a priority, I am pleased we are having this debate today. Earlier this summer the administration tried to jam the domestic spending program into the Korea Free Trade Agreement implementing bill. I strongly opposed this move. I believe it violated longstanding trade rules and seriously jeopardized approval of the South Korea agreement. I strongly encouraged the White House to reconsider so we could have a robust debate with TAA considered solely on its merits. After all, if there is such a strong bipartisan support for the program, it should not be shielded from a debate and vote in an open forum. It appears the administration realized their position was untenable in the face of unequivocal Republican opposition. Thankfully they chose to heed my advice and today we have an opportunity to consider and fully debate TAA. If TAA passes the Senate, it should remove what we hope is the last obstacle the President and his party placed in front of FTAs. We will see. To date there is little evidence that the President is finally ready to step up to the plate. It has not been for lack of effort on our part. House leadership made it clear that TAA will be considered in tandem with the FTAs, as the President requested. Chairman Camp worked with Senator Baucus to develop a substantive deal on TAA, as the President requested. Despite my deep reservations about the program, a number of my Republican Senate colleagues stepped up in support of the TAA compromise negotiated by Chairman Baucus and Chairman Camp and even put their assurance in writing to support TAA. Before the August work period, Senators McConnell and Reid articulated a process for consideration of TAA and the FTAs, as the President agreed or requested. Still the administration refuses to provide any real assurance that it will actually send the pending free trade agreements to Congress for a vote. I am very disappointed we still have not heard definitively from the White House that they will send up the three FTAs. As for the trade adjustment assistance amendment before us today, I wish to summarize for my colleagues my concerns with the proposed expanded program, and my objections to additional domestic spending for this program at a time of immense budget difficulties. First, there is little evidence that the TAA Programs actually work. In fact, the opposite is true. Recent studies by professors at American University have found that the TAA program: . . . has no discernible impact on the employment outcome of the participants. If that is the case, I cannot understand why we would expand this ineffective program. This summer I was surprised to learn from an article in the Wall Street Journal that the Department of Labor is 4 years late on producing a report to Congress intended to demonstrate that the numerous Trade Adjustment Assistance Programs actually improve the employment outcome for TAA participants. Yet today we are considering an amendment to not only reauthorize the program for 3 years but to make many of the benefits retroactive. Before we authorize $1 billion more in taxpayer spending, shouldn't we know if the program actually improves the job prospects for TAA beneficiaries? My friend and colleague from Oklahoma, Dr. Coburn, has made it a priority to identify and eliminate wasteful government programs. In his first report on the subject, the Government Accountability Office identified dozens of programs without any identifiable metrics on whether they actually succeeded in their mission. At a time of crushing budget deficits and increasing debt, Congress could easily start by eliminating these programs that have no proven track record of success and, in my opinion, we would have to put TAA at the top of that list. Consider that we are still waiting on the report from the Department of Labor on TAA's efficacy. I suspect if the facts and data clearly demonstrated benefits to workers participating in the TAA Programs, the report would have been issued years ago. I am sure this report will be issued, but only after TAA has been passed. I cannot support increasing funding for a program without any real evidence that it works. Some will argue more people are using the program, therefore it must be working. I strongly reject that argument. Spending more money and certifying more workers does not mean a program is succeeding. It simply means the program is expanding, and that is my second concern. Like many Federal Government programs, this domestic spending program continues to grow and grow. TAA money now goes to farmers, firms, community colleges, and service workers. Even more troubling, the critical nexus between job loss caused by trade agreements and TAA eligibility has been jettisoned. Today all workers who lose their jobs allegedly due to ``globalization'' could be eligible. As the global economy and global supply chains become more integrated, I suspect the potential number of beneficiaries and the cost to the U.S. taxpayer will grow enormously. Third, at a time when we need to severely constrain Federal spending, this program increases it. In 2009, TAA was significantly expanded as part of the President's failed stimulus bill. Most of those increased costs are included in the TAA amendment before us today, but there may be additional hidden costs. Because the income support and the health coverage tax credit are entitlements, there is no cap on future spending. Although the health coverage tax credits are to expire when ObamaCare goes into full effect, I have serious doubts that they actually will. History shows again and again it is much easier to create an entitlement than to end one. As I said, I suspect this program, like most Federal programs, will cost more than expected, especially after unemployment insurance returns to its traditional 26-week level, which will consequently increase the use of trade reallocation allowances and increase the TAA Program's cost. Fourth, the program is fundamentally unfair. Suppose one of our fellow Americans loses their job or his job because their factory burns down, another loses their job because his or her company could not compete with a domestic competitor, and a third loses his or her job because of foreign competition. How can we tell two of our fellow Americans ``tough luck''? Two can only use the general job training and unemployment insurance programs while the third worker is provided with a host of more training, income support, and health care benefits. This does not seem right to me. Why are we picking winners and losers amongst the other 14 million Americans looking for work? I am also troubled that although union workers are less than 7 percent of the private sector workforce, union workers receive over a third of TAA certifications. I do not see why we should support this vicious cycle. Unions drive industry after industry into bankruptcy by insisting on restrictive work rules and overly generous compensation and benefits plans, and the taxpayer gets to clean up the mess by providing the now unemployed workers with a new set of benefits far more generous than those received by others. Unfortunately, encouraging vicious cycles appears to be an objective to this administration when it comes to TAA. Let me share with you another one. By now most of you have heard of a company called Solyndra. It was held up by the President and his administration as an example of the wonders of the stimulus and its ability to transform taxpayer dollars into green jobs. Here is how President Obama described it: And we can see the positive impacts right here at Solyndra. Less than a year ago, we were standing on what was an empty lot. But through the Recovery Act, this company received a loan to expand its operations. This new factory is the result of those loans. Well, the President was right about that. The new factory was a result of the taxpayer-provided loans. According to the Wall Street Journal, those very same taxpayer loan guarantees also were a prime cause of Solyndra's bankruptcy. The ``taxpayer dollars to create green jobs'' alchemy worked about as well as medieval attempts to turn lead to gold. That is not the end of the story. To ensure the circle of taxpayer losses remains unbroken, the former Solyndra employees have now applied for trade adjustment assistance. That is right. As reported first by Americans for Limited Government, and then confirmed by Investors Business Daily, Solyndra employees have applied to the Department of Labor for trade adjustment assistance. To recap, the administration provides loan guarantees to a failing company and in the process saddles the taxpayer with over $\1/2\ billion in potential liability. These same loan guarantees precipitate the demise of said company, and this, in turn, justifies the receipt of new taxpayer-funded benefits for the now unemployed workers, benefits that go beyond and cost far more than those the other unemployed people in this country receive. The administration likes to talk about the multiplier effect of new Federal spending, but I don't think this is what they had in mind. For each initial wasted taxpayer dollar, the government multiplies the losses and manages to waste another quarter. Solyndra tried to make solar panels but ran up their costs far higher than even domestic competitors. Ultimately, with costs above the competition, the company failed. Of course, the failure was blamed on China. If you cannot even outcompete U.S. companies, it wasn't foreign competition that ruined your business, it was simply a failed business model. During our hearing on the South Korea Trade Agreement, Deputy U.S. Trade Representative Marantis testified that the purpose of the TAA Program is to help workers manage the transition to globalization and help workers train to be able to take advantage of the opportunities presented in the new economy. Well, according to President Obama and Vice President Biden, green jobs such as those found at Solyndra were supposed to be the jobs of the new economy. Now that the new economy venture failed, those very same workers are going to be retrained, at taxpayers' expense, for other jobs in the new economy. Government, under the President's green agenda, picks winners and losers and then pays off the losers when it makes the wrong picks. Pardon the American taxpayer for jumping to the conclusion that this plan doesn't make sense. Let's not forget that a handful of States receive the lion's share of TAA money. Again, this is unfair on its face and represents a distorted allocation of Federal resources. President Reagan did not graduate from an Ivy League college and he was not the editor of any law review, but the man understood how the economy grows and what types of programs waste precious government resources. This was his assessment of TAA: The purpose of TAA is to help these workers find jobs in growing sectors of our economy. There's nothing wrong with that, but because these benefits are paid out on top of normal unemployment benefits, we wind up paying greater benefits to those who lose their jobs because of foreign competition than we do to their friends and neighbors who are laid off due to domestic competition. Anyone must agree that this is unfair. That was President Reagan. I certainly do, as do most of my constituents, think the last thing this economy needs is another big spending program. Another important point is that TAA fuels the fire of virulent antitrade propagandists. TAA supporters say the program keeps faith with American workers and helps build support for trade. I think just the opposite is true. Unions and other antitrade zealots gleefully use TAA data to make the case that trade causes outsourcing and job loss. After all, the number of trade-dislocated workers is certified by the government. As the program is expanded to include more and more people and entities, including community colleges, firms, farmers, and fishermen, the myth that trade is bad for the American worker finds ready fodder and continues to build. Instead of helping build the case for trade, TAA certifications are used to show that trade is bad. In the end, TAA is really just a government subsidy for an antitrade propaganda. Many of those dedicated to fighting a market-opening trade liberalization agenda and who are hostile to a thoughtful and ambitious trade policy cite each TAA certification and each TAA benefit conferred as further evidence that trade and trade agreements are bad for America. These same groups use TAA certifications and TAA workers to attack the companies that laid those workers off as outsourcers, even attempting to name and shame the CEOs of those companies. For goodness' sake, why should we expand a program that arms the harshest trade critics with more fodder for their ill-informed and relentless attack on trade? Finally, TAA should move with TPA. Despite what many of my colleagues and many so-called trade experts say, TAA does not move with trade agreements. In fact, historically significant expansions and reforms to TAA have moved with omnibus trade legislation that included grants of trade negotiating authority to the President. There is a myth that TAA has always received strong bipartisan support. Again, the historical record does not bear this out. A simple review of a very helpful history of TAA provided by CRS this August shows just how controversial TAA has always been and continues to be and confirms that TAA reforms traditionally move with TPA. Inexplicably, this President doesn't want TPA trade promotion authority--and the White House is actually encouraging Leader Reid and Democratic Senators to vote down a TPA amendment Leader McConnell will offer. Leader Reid and Chairman Baucus and the White House have also apparently asked the business community to oppose an amendment on TPA as well, despite the fact that the business community has uniformly supported the granting of trade negotiating authority to every President, regardless of party. This is all baffling to me. But I agree with Leader McConnell that the President needs TPA whoever the President is--as soon as possible, and I can't imagine any President not wanting that authority. As I suspect the Democrats will vote down granting their President trade negotiating authority, I must also be inclined to vote against this TAA amendment. Much has been said about TAA and that it is the price for free-trade agreements. But we are paving new and dangerous ground by holding three trade agreements hostage to expanded TAA. Each time we have tried to move these agreements, a new roadblock has been erected. And while we dilly and dally, our trade competitors take more of our market share around the world, and American businesses and farms lose more money and more jobs. There has to be a better way. I urge the President to reconsider his trade priorities. Instead of expending his political capital on expanding the Federal Government, he should liberate the U.S. worker by accepting our offer to provide him with the authority to open new markets to U.S. exports. Our economy is in dire straits, unemployment is sky high, and Federal spending is out of control. We need the President's leadership, and we need it now. I yield the floor.

Mr. HATCH. I ask unanimous consent that immediately following my remarks, if it is all right with the distinguished Senator from Ohio, the former Trade Representative, the other distinguished Senator from Ohio, Mr. Portman, be allowed to give his remarks.

Mr. HATCH. I apologize to Senator Brown, but Senator Portman was promised he would be able to speak at 11:45.

Mr. HATCH

Mr. HATCH. Madam President, on the cusp of victory, the President sacrificed it by demanding more government spending on a controversial domestic training program. After first asking Colombia, Panama and South Korea to take unprecedented steps to solve our President's concerns with each agreement, the administration held a press conference and, with no prior cngressional consultation or notice, announced that they would not submit our pending trade agreements to Congress unless Congress first agreed to continue funding a domestic spending program at near stimulus levels. This was an astounding development. Instead of working with Congress to seek approval of these job-creating trade agreements the President chose to try and force Congress to agree to additional domestic spending first. In an opinion editorial, the Wall Street Journal called this move ``extortion.'' Weeks of intense negotiations followed between the White House, Senator Baucus and Chairman Camp to develop a package that would expand and renew trade adjustment assistance through 2014. Meanwhile, committee staff worked with the White House to prepare the implementing legislation for quick congressional consideration. It appeared that we were once again close to successfully considering these important trade agreements. But yet again, it was not meant to be. Upon reaching an agreement on the substance of a trade adjustment assistance package with Chairman Camp the White House again changed course, turning its back on a willing Congress and instead trying to force through consideration of trade adjustment assistance by including it in the implementing bill for the South Korea FTA. And, once again, this was done with virtually no notice or consultation with Congress. The reaction by the Republican caucus was predictable. We fought the administration's efforts to abuse trade promotion authority for its own narrow purposes and pushed for consideration of trade adjustment assistance on its own merits. Our position was made clear in a letter--signed by every Republican member of the Finance Committee--to the President, in which we expressed our united opposition to inclusion of expanded trade adjustment assistance in an implementing bill submitted to Congress under trade promotion authority. The administration ignored our concerns, and pushed forward on a partisan path to force a vote in the Senate Finance Committee. As a result, while the implementing legislation for the Colombia bill and Panama bills received strong bipartisan support, the South Korea implementing bill moved through committee on a strict party line vote-- the first time a trade agreement has done so in over 25 years. The administration then vowed to move forward on this path within days. After that we heard remarkably little from the administration about their intentions regarding these trade agreements. Until August, of course, when the President repeatedly called upon Congress to take the agreements up ``right now'' to help create jobs. This hollow call for action typifies the President's approach to the trade agenda. By calling upon Congress to act, he appears to be embracing the agreements and pushing for their quick approval. But, like so many of the President's trade initiatives his words do not match his deeds. In reality, Congress cannot take up these agreements ``right now.'' President Obama is relying upon a trade law called trade promotion authority to protect each of these agreements from being blocked or amended by Congress. In order to take advantage of this statutory authority, it is not Congress but the President who must take the first step and submit each agreement for consideration. If the President does not submit them, Congress cannot act under trade promotion authority. The President and his team know this. In fact, here is a chart which outlines the TPA process called ``How A Trade Agreement Moves Through Congress Under TPA.'' This was taken directly from the Web site of the Office of the United States Trade Representative. It clearly shows Congress cannot act until the President submits the agreements. But why take responsibility for moving the agreements when it's much easier to blame their continued delay on Congress? The fact is the President wants all the benefits of trade promotion authority but none of the responsibility. Once they were called out on the mismatch between their words and deeds, the administration finally reined in their rhetoric but provided little guidance as to what their actual plans are. In the meantime, Republicans continued to push for consideration of the three pending FTAs. Back in July, a group of Republican Senators signed a letter vowing to help the administration achieve its objective of gaining approval of trade adjustment assistance in exchange for submitting the FTAs. Despite a clear path forward the President remains silent to this day. As the President continues to delay, our country cedes each of these markets to our foreign competitors. Our economy and our workers are suffering under horrific levels of unemployment--almost one in ten American workers is out of a job under this administration. We can't afford to throw away any opportunity to create jobs. Yet this is precisely what the President is doing. While our economy remains troubled, and while the rest of the world watches in bewilderment as the United States lets other countries take over our export markets, we hear nothing but silence from the President. A case in point: the European Union's exports to South Korea increased almost 45 percent in the first 20 days since that agreement went into force on July 1. Their share of Korea's import market increased from 9.5 percent to 10.3 percent in just 3 weeks. Meanwhile, the U.S. share of Korea's import market dropped from 10.5 percent to 8.4 percent. Unless we act soon, these trends are likely to continue. In an open letter to the President and Congress, over 120 food groups and companies wrote that ``if there is any doubt about the seriousness of the problem for U.S. agricultural exports, one need only consider the damage that has already been done by the delay in implementing the Colombia FTA. ``Argentina and Brazil have negotiated trade agreements . . . with Colombia that have given them preferential access . . . as a result, U.S.-produced corn, wheat and soybeans have been hit hard, with the combined share of Colombia's imports for these products falling to 28 percent from 78 percent since 2008.'' On August 15, 2011, an agreement between Canada and Colombia entered into force, which will only make the problem worse for U.S. exporters. I appreciate the President's goal of doubling exports. Having goals is great. But we all know that, if you don't do the work or take action, goals become little more than false hope--they never become reality. The President and his cabinet admit that these agreements are key to their goal of doubling exports. Yet the action necessary to reach that goal, submission of the agreements, still remains in the distant future. Instead, we watch the days slip by, and with each day our overseas markets erode. The fact is that each of these agreements is critically important to our economy. For my home State of Utah and for workers across the country they mean more opportunity and jobs. The National Association of Manufacturers estimates that U.S. workers lose $8 million in wages and benefits every day these agreements are delayed. I for one stand ready to continue to fight for their consideration and approval. We have come a long way since January of this year, but we are not done yet. I hope the President will heed my call and submit these agreements to Congress so we can approve them. But history has shown that this President won't act unless he is forced to. This amendment I am offering will continue to put pressure on him to act and to act soon. The time for dithering and deliberation is over. Let's adopt this amendment and ensure that our work in moving TAA forward leads to the promised result--submission of the three pending free trade agreements by the President and their quick enactment in to law. Amendment No. 641 to Amendment No. 633 Madam President, I send amendment No. 641 to the desk and ask for its immediate consideration.

Mr. HATCH. I ask unanimous consent that further reading be dispensed with.

Mr. HATCH. Madam President, I wish to talk about an amendment I intend to offer linking TAA expansion to enactment of the three pending free-trade agreements. I will send an amendment to the desk in the near future for consideration. This amendment makes the effective date for additional TAA funding contingent upon the enactment of our free-trade agreements with Colombia, Panama, and South Korea. It is unfortunate this amendment is necessary. Supporters of this trade adjustment assistance bill tell us that TAA is a necessary precondition to submission of our pending free-trade agreements--a necessary precondition of the President. The President and his supporters say if TAA does not pass, the free-trade agreements will never be sent to Congress for our consideration. I find this logic disturbing. It basically boils down to this: Spend more taxpayer money on one of our pet trade priorities or we will refuse to allow Congress to vote on trade agreements that we know will create jobs. The administration has said it will create 250,000 new jobs. By the way, at a time when unemployment is over 9 percent, I simply can't understand why the President continues to hold up these FTAs and their consideration. Even today, we don't know if the President will actually send the FTAs to Congress if we pass TAA. So my amendment is very simple. It allows TAA to be approved, but it will only go into effect once the President submits the trade agreements to Congress, they are all approved, and when they are signed into law. To me, this amendment is about fundamental fairness. If we are to meet the President's demands, we can at least ensure our top priorities are addressed as well. I think it is worth taking a moment to review how we got here. In December 2010, the President announced he had finally reached agreement with South Korea to renegotiate parts of that trade agreement. Touting the benefits of these changes, the President seemed poised to immediately begin working with Congress toward its quick implementation; that is, the implementation of the Korean Free Trade Agreement. In February, Senator McConnell and I wrote to the President commending him for his strong support for the South Korea agreement but also expressing disappointment we did not see the same level of commitment to our pending free-trade agreements with Colombia and Panama. At that time, we warned that further delay would mean lost market share and alienation of key Latin American allies. We also made it clear each agreement would receive broad bipartisan support once the President submitted them to Congress for approval. Three days later, the President responded when Ambassador Kirk testified before the Ways and Means Committee that the President had directed him to immediately intensify engagement with Colombia and Panama to resolve the administration's outstanding issues with these two agreements. Senator Baucus and I welcomed that development when we wrote to Ambassador Kirk on February 14 and asked that he be prepared to provide testimony regarding what additional steps the administration believed Colombia and Panama should take and to provide a clear and expeditious timeline for moving both agreements through Congress. Shortly thereafter, in early March, Ambassador Kirk notified Congress the administration was ready to begin technical work on the South Korea implementing bill with the intent to seek approval in the spring of this year. Senator Baucus and I welcomed this development but again called for a specific timeline for resolution of the outstanding issues with Colombia and Panama. During our March 9 hearing on the administration's trade agenda, I made it clear that consideration of the South Korea agreement, without a clear path for the Colombia and Panama agreements, was simply not acceptable and that should the President ignore the will of Congress and send the Korea agreement without Colombia and Panama, I would do everything I could to make sure those two agreements were considered at the same time as Korea. Shortly thereafter, in early April, the President finally took steps to fully engage with the Government of Colombia, announcing an agreement on a labor action plan that would enable the administration to begin working with Colombia to achieve benchmarks that, if met, would then enable the President to submit the agreement to Congress. A few weeks later, Panama met one of President Obama's preconditions for consideration of their FTA when they approved a tax information exchange agreement and finalized additional modifications to Panama's labor laws. So there we stood in May, on the cusp of victory. Months of intense congressional pressure appeared to have finally resulted in an opportunity for Congress to consider our trade agreements with these important allies. But alas, it was not to be.

Mr. HATCH. I would be happy to yield, without losing my right to the floor.

Mr. HATCH. Madam President, I am prepared to proceed.

Mr. HATCH

Mr. HATCH. Mr. President, I ask the Record to reflect that if I would have been present for today's vote, I would have voted to invoke cloture on the motion to proceed to H.R. 2832, to extend the Generalized System of Preferences. I would like to express my continued support for the extension of the Generalized System of Preferences, GSP. As the GSP expired on December 31, 2010, I am quite happy to see the Senate finally poised to take up this much overdue extension of this valuable trade program. I am also hopeful that this process will finally lead to quick consideration of our pending trade agreements with Colombia, Panama, and South Korea. These agreements are long past due. Unfortunately, they have been delayed because the President has made it clear that his most important trade priority is to spend more money on a domestic worker retraining program of dubious effectiveness. He has also made it clear that, unless Congress accedes to his demands, he will never submit these job creating trade agreements to Congress. It is a travesty that the President cares more about spending money than creating jobs. Yet now that we have this trade vehicle on the floor, I am hopeful we can find a way to allow a full and fair debate on TAA--and in doing so, finally remove what we hope is the last obstacle in front of these three free trade agreements. The GSP bill itself is important to our economy. The 2-year extension of GSP will provide greater certainty for both U.S. businesses and developing country exporters who are able to utilize the benefits of the program. The program has secured strong bipartisan support for over three decades, and I only expect this trend to continue. The GSP allows for nonreciprocal, duty-free tariff treatment of certain products from designated developing countries. In fact, some of the top GSP beneficiary developing countries in 2010 were Angola, Indonesia, Equatorial Guinea, South Africa, the Philippines, and Turkey. In order to be designated as a beneficiary country, nations must adhere to an extensive criteria list. In turn, GSP is not only a trade program, but can also be seen as one of our effective foreign policy tools. For starters, beneficiary countries must protect intellectual property rights, recognize workers' rights, commit to the elimination of child labor, and prevent the seizure of property belonging to U.S. citizens or businesses. GSP continues to promote trade, rather than aid, to nations that are advancing their economic development; it has worked to stimulate U.S. exports in these markets; and encourages the elimination of trade barriers in developing countries. What does this mean for the United States? This means our Nation not only has an opportunity to assist developing countries to promote economic growth in their nations, but we also have an opportunity for our American businesses to thrive, while lowering costs for American consumers. Across our Nation, U.S. manufacturers and importers benefit by receiving goods and raw materials at a lower cost. According to the U.S. Chamber of Commerce, approximately three-quarters of U.S. imports that rely on the GSP program, use raw materials, parts and components, or machinery and equipment, to manufacture goods in the U.S. for domestic consumption or for export. So, although the GSP program was initially created to assist with economic growth in the developing world, it now provides great assistance to our businesses here in the United States. In 2010 the United States imported $23 billion in GSP-eligible goods from 129 countries around the world. This includes 4,800 eligible products. And, according to the Office of the United States Trade Representative, GSP saved American importers $682 million in duties in 2010. These numbers cannot be overlooked--they represent millions of dollars in savings for our manufacturers, retailers, farmers and families. GSP is particularly helpful for our small businesses. The savings on duties by these small businesses allows them to compete with larger companies. During these uncertain and challenging economic times, we must give our businesses the necessary tools to compete not only in the global market, but also here at home. Unfortunately, the 9 months that the program has not been operational has negatively affected the competitiveness of thousands of American businesses that rely on duty- exemptions. For these companies, GSP is an integral component of their business model. In fact, according to the Coalition for GSP, from December 31, 2010, when the GSP program expired, U.S. companies have paid an additional $1.8 million a day in new duties. To date, this amounts to nearly $480 million in unnecessary additional costs for companies. Businesses in every state in the Nation have been affected by the expiration of GSP and have a vested interest in the renewal of the program. For example, in my State of Utah--the only State in the country to import Indonesian steam and vapor turbine parts--tariffs have exceeded $235,000 for these goods in the months following the expiration of GSP. Components such as mountings for buildings imported from Thailand, cost Utah businesses an additional $178,000 in tariffs through July of this year. And the total amount of Utah imports of GSP-eligible goods from January until July 2011 exceeded $26.2 million, of which an additional $1.1 million in unnecessary import taxes were paid. I have heard from Utah manufacturing companies, like Black Diamond Equipment, which is headquartered in Salt Lake City and employs more than 475 people worldwide. That company develops, manufactures and distributes a broad range of products including those used for mountain climbing, camping, and skiing. As of June 2010, they incurred more than $40,000 in tariffs for goods imported from the Philippines--goods that otherwise would have been covered under GSP. If GSP is not renewed, Black Diamond is projected to pay over $100,000 in unnecessary tariffs by the end of the year. As if that was not enough, because of these duties, Black Diamond is faced with reduced sales, competitiveness issues, and a limited hiring ability for their Utah office. To help companies like Black Diamond succeed, we must act now to renew GSP. I have shared just a few examples of the additional costs incurred by businesses in my State, and unfortunately, there are many other similar scenarios across the Nation due to the expiration of GSP. These Utah companies and other businesses around the country are left with difficult decisions about downsizing, hiring freezes, and employee layoffs--this at a time when our economy needs more than ever to be adding jobs. We must lift this additional burden on our small businesses, manufacturers, and farmers, by renewing GSP today, and making sure we provide retroactive application. I urge my colleagues to come together and extend the Generalized System of Preferences until July 31, 2013, and provide the much-needed retroactive benefits to our U.S. companies. Cloture Motion

Mr. HATCH

Mr. HATCH. Mr. President, I want to explain my vote of the FAA extension. As I have said many times, I share House Transportation and Infrastructure Committee Chairman Mica's frustration, and the frustration of Republican leadership in both the House and the Senate, that favors to organized labor have overshadowed the prospects for long-term FAA reauthorization. Last year the National Mediation Board changed the rules under which employees of airlines and railroads are able to unionize. For decades the standard has been that a majority of employees would have to agree in an election to form a union. However, the new NMB rules changed that standard so that all it takes to unionize is a majority of employees voting. The NMB wants to permanently impose unionization with less than majority support. The House passed long-term FAA reauthorization bill includes language I strongly support that eliminates this favor for big labor. The enactment of a long-term FAA reauthorization bill is very important and is something we need to accomplish. However, the NMB issue needs to be resolved for long-term FAA reauthorization to occur. I will work with my colleagues on a resolution, but they should be on notice that avoiding the issue through 22 short-term extensions is no longer an alternative. I hope my friends have a restful weekend, but they shouldn't feel too relaxed even though we just extended the FAA for 4 months. We need to get back to work on a long-term FAA reauthorization bill right away.

Mr. HATCH

Mr. HATCH. Mr. President, I yield to the distinguished Senator from Tennessee and without losing my right to the floor, I ask unanimous consent that I be allowed to make my remarks immediately thereafter.

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

Mr. HATCH

Mr. HATCH. Mr. President, I thank my colleague. He is one of the more prescient people in this body, and we all care a great deal for him. I appreciate his leadership in this great body.

Mr. HATCH

Mr. HATCH. Mr. President, I remember September 11, 2001, as if it were yesterday. I was here in my office at my desk when the unthinkable happened. I remember driving to the Senate that morning thinking it was such a beautiful day. It was a crisp fall morning with a remarkable blue sky. Over the years, I have often wondered how such resplendence could occur amid such evil and suffering. I take solace in knowing that nearly 3,000 innocent victims, including 3 Utahns, hopefully touched the face of God that day. Yet since that horrible day, Americans have once again risen to the challenge. As President George W. Bush said 3 months after the attacks: Our enemies have made the mistake that America's enemies always make. They saw liberty and thought they saw weakness. But 10 years on, Americans have shown, once again, our resolve can never be broken. When confronted by evil, we will not yield. I remember on that day I came over here to the Senate, and we were told to evacuate the Capitol. As we walked out--some running as fast as they could--and walked down the steps of the Senate side of the Capitol, I turned around and saw that Senator Helms was back up on the veranda, and he was having difficulties, as he did in his later years, with ambulation, and I walked back up the steps, and he leaned on my arm as we came down the steps and were among the last to leave the Capitol at that time. We were warned there might be a plane flying into the Capitol or into the White House, and it was a matter of great concern to everybody. But 10 years later, as I have said, Americans have once again shown the resolve that is necessary. We have confronted evil, and we will continue to do so, and we will never yield. We, as a nation, continue to stand up to this threat and we have done much to overcome it. But we should never become complacent. As the 9/11 Commission's recent report card on the implementation of its recommendations clearly shows, we have made important advances in securing the homeland, but a lot of work needs to be accomplished. Some of the most profound changes, and also some of the least understood, have occurred in our intelligence community. For example, the 16 different agencies which constitute our intelligence community are collaborating as never before. Part of that is because of the PATRIOT Act, which requires that type of collaboration. The PATRIOT Act has worked very well, and even though there are some on the far right and the far left who do not accept the PATRIOT Act, I have to tell you it has worked amazingly well in helping us to protect our homeland. As the Commission pointed out, collaboration in the intelligence community was essential to the success of the raid which killed Osama bin Laden. That was 10 years later, but it sent a message to the world that we are not going to quit until we find these people, root them out, and get rid of them. In addition, I also believe our Nation is much safer due to the Terrorist Surveillance Program. The Terrorist Surveillance Program enables our intelligence agencies to monitor international communications from al-Qaida. This initiative has been the subject of much debate in Congress. However, the legislative compromise which was reached, I believe, strikes a proper balance by permitting our intelligence agencies to operate in an efficient manner while strengthening the oversight role of the Foreign Intelligence Surveillance Court, which has worked amazingly well. However, the need for improvements still remains. The Commission notes that over the past 6 years we have had four Directors of National Intelligence. As many managers would agree, such leadership changes will disrupt the implementation of any organization's modernization strategy. Yet in the realm of counterterrorism, the slightest misstep could be exploited by our foes to launch another attack. Other areas which require immediate attention include securing our borders. An important tool in helping us verify the identity of visitors to the United States is our biometric entry system, called US- VISIT. Unfortunately, the security offered by this system is incomplete. As the Commission pointed out, US-VISIT does not yet have a fully operational system to record when visitors leave our Nation. Such a capability is not only useful in tracking terrorists but is also an important capability in stemming illegal immigration. That is why I have introduced S. 332, the Strengthening Our Commitment to Legal Immigration and America's Security Act. This bill requires the Secretary of Homeland Security to create a mandatory exit procedure for foreign visitors to our country, the United States of America. Unfortunately, my optimism regarding Afghanistan, the planning ground and safe haven for those who plotted the attacks of September 11, has somewhat receded. The surge of forces has led to great gains in the southern Afghan provinces of Helmand and Kandahar. This is the heartland of the Taliban. According to GEN David Rodriguez, who until recently was our Deputy Commander in Afghanistan, the Taliban ``enjoyed near total control'' of these areas as recently as 2009. Moreover, our additional forces enabled the implementation of a robust counterinsurgency strategy. This means we had sufficient forces not only to clear an area of the Taliban but to hold it. As a result, we were able to provide security to the local population, assist in the development of the primarily agrarian economy, and train Afghani security forces. Unfortunately, the President's arbitrary decision to reduce the number of our forces deployed to Afghanistan by approximately a third, and instructing the reduction to be completed by next summer, only adds to the burden of our forces that remain. In fact, this summer I was fortunate to host former Director of the Central Intelligence Agency, GEN Michael Hayden, at a speaking event in Utah. I found his insight on this matter most illuminating. General Hayden did not quarrel with the notion of reducing the number of troops in Afghanistan. However, he was troubled by the timing of the drawdown. Specifically, the general stated he would have kept the troops in place until the conclusion of the 2012 summer fighting season. That being said, I have absolute confidence in our new commander, GEN John Allen. He succeeds General Petraeus, with whom I met over there in Afghanistan, and have met on other occasions, and who has done a tremendous singular service for our country. I have great respect for him. But I expect General Allen to be just as good. General Allen was one of the vital catalysts in the Sunni awakening in Iraq. The Sunni awakening and our counterinsurgency strategy are considered by many to be the driving forces for our success during the Iraqi surge. And, of course, we all remember what General Petraeus did there as well. I am confident General Allen will maintain the hard-won momentum our forces have achieved in Afghanistan, despite the reduction in resources. In addition, our troops will be assisted by an even greater number of Afghan troops. In this month's edition of Foreign Affairs, General Rodriguez wrote that the Afghan Army by the end of 2010 had increased in size to 143,000, which surpassed that year's goal by 9,000 troops. In addition, the Afghan Army ``has quickly become one of the country's most respected institutions.'' The general also writes: In 2011, 95 percent of all Afghan army units have been partnered with coalition forces, and they are showing steady improvement in providing security and in their ability to independently thwart insurgent attacks. In conclusion, much has been accomplished, but more remains to be done. The memory of that day--and those we lost--will be forever with us. We must never forget the hard lessons we learned on September 11. We must not become complacent or believe the threat is over or has gone. We have done much to mitigate the threats posed against us, but we always must be on guard for anything in the future. The hallmark of our democracy consists of the principles of liberty and equality, cherished by our citizens. The terrorists who attacked us on September 11 saw the civic virtues of our peaceful Republic and wrongfully concluded that we were weak. As others have been reminded in the past, it is a mistake to underestimate the courage and resolve of Americans when our constitutional ideals come under attack or when our lives and liberties are threatened. Even on that first day, the example of police and firemen charging into burning buildings at the World Trade Center and the Pentagon, and civilians fighting back above the skies of Shanksville, PA, showed to the world that America had not lost its resolve. To this day, we remain vigilant in our commitment to protect the natural rights to life and liberty announced in our Declaration of Independence and guaranteed by our beloved Constitution. Ten years have followed since that day, but I remain proud of the example that America has set for the world as it continues its relentless pursuit of those who would kill innocents and plot mass terrorist attacks on civilian populations. President Roosevelt called the attack on Pearl Harbor ``a date which will live in infamy.'' Similarly, September 11, 2001, remains a day of remembrance and resolve. We will always remember those who were killed that day and the loved ones they left behind, and we resolve to secure justice for those victims by bringing justice to those responsible for the attacks and who continue to plot against us. Mr. President, I yield the floor. I suggest the absence of a quorum.

Mr. HATCH

Mr. HATCH. Madam President, I rise to express my continued support for the America Invents Act. We have been working on patent reform legislation for several years now--in fact, almost the whole time I have been in the Senate--so it is satisfying to see the Senate again voting on this bipartisan bill. It is important to note that this bill before us is the same one that was passed by the Republican-controlled House of Representatives in June. I commend House Judiciary chairman Lamar Smith for his leadership on this monumental legislation. He has worked hard on this for many years, and I wish to pay a personal tribute to him. I also wish to recognize the efforts of my colleague from Vermont, Senate Judiciary Committee chairman Patrick Leahy. Over the years, he and I have worked tirelessly to bring about long overdue reform to our Nation's patent system, and I personally appreciate Pat for his work on this matter. I also wish to recognize the efforts of Senate Judiciary Committee ranking member Chuck Grassley of Iowa, as well as many other Senate colleagues who have been instrumental in this legislative process. The Constitution is the supreme law of the land and the shortest operating Constitution in the world. America's Founders put only the most essential provisions in it, listing the most essential rights of individuals and the most essential powers the Federal Government should have. What do we think made it on to that short list? Raising and supporting the Army and maintaining the Navy? No question there. Coining money? That one is no surprise. But guess what else made the list. Here is the language: The Founders granted to Congress the power ``To promote the Progress of Science and useful Arts, by securing for . . . Authors and Inventors the exclusive Right to their Respective Writing and Discoveries.'' In other words, the governance of patents and copyrights is one of the essential, specifically enumerated powers given to the Federal Government by our Nation's Founders. In my view, it is also one of the most visionary, forward-looking provisions in the entire U.S. Constitution. Thomas Jefferson understood that giving people an exclusive right to profit from their inventions would give them ``encouragement . . . to pursue ideas which may produce utility.'' Yet Jefferson also recognized the importance of striking a balance when it came to granting patents-- a difficult task. He said: I know well the difficulty of drawing a line between the things which are worth to the public the embarrassment of an exclusive patent and those which are not. As both an inventor and a statesman, he understood that granting a person an exclusive right to profit from their invention was not a decision that should be taken lightly. This bill is not perfect, but I am pleased with the deliberative process that led to its development, and I am confident that Congress followed Jefferson's lead in striking a balanced approach to patent reform. There can be no doubt that patent reform is necessary, and it is long overdue. Every State in the country has a vested interest in an updated patent system. When patents are developed commercially they create jobs, both for the company marketing products and for their suppliers, distributors, and retailers. One single deployed patent affects almost all sectors of our economy. Utahns have long understood this relationship. Ours is a rich and diverse and inventive legacy. In the early 1900s, a young teenager approached his teacher after class with a sketch he had been working on. It was a drawing inspired by the rows of dirt in a potato field the teenager had recently plowed. After examining the sketch, the teacher told the young student that he should pursue his idea, and he did. That teenager was Philo Farnsworth, a Utah native who went on to patent the first all-electronic television. Farnsworth had to fight for many years in court to secure the exclusive rights to his patent, but he continued to invent, developing and patenting hundreds of other inventions along the way. Another Utah native developed a way to amplify sound after he had trouble hearing in the Mormon Tabernacle. His headphones were later ordered by the Navy for use during World War I. His name was Nathaniel Baldwin. William Clayton, an early Mormon pioneer, grew tired of manually counting and calculating how far his wagon company had traveled each day. So, in the middle of a journey across the plains, he and others designed and built a roadometer, a device that turned screws and gears at a set rate based on the rotation of the wagon wheel. It worked based on the same principles that power modern odometers. John Browning, the son of a pioneer, revolutionized the firearm, securing his inventions through a patent. He is known all over the world for the work he did. Robert Jarvik, who worked at the University of Utah--a wonderful doctor whom I know personally--invented the first successful permanent artificial heart while at the University of Utah. These and countless other stories illustrate the type of ingenuity that was required by the men and women who founded Utah, the type of ingenuity that has been exemplified in every generation since. Last year, Utah was recognized as one of the most inventive States in the Union. Such a distinction did not surprise me, especially since the University of Utah recently logged the university's 5,000th invention disclosure and has over 4,000 patent applications filed to date. This impressive accomplishment follows on the heels of news that the University of Utah overtook MIT in 2009 to become America's No. 1 research institution for creating startup companies based on university technology. A group of students at Brigham Young University recently designed a circuit that was launched with the shuttle Endeavour, and another group developed a prosthetic leg that costs $25 versus the $10,000 a prosthetic leg may typically cost. Utah inventors contribute to everything from electronic communications, to biotechnology, to computer games. Like my fellow Utahns, citizens across the country recognize that technological development is integral to the well-being of our economy and the prosperity of our families and communities. As technology advances, it is necessary at times to make adjustments that will ensure Congress is promoting the healthy progress of science and useful arts. The America Invents Act will improve the patent process, giving inventors in Utah and across the country greater incentives to innovate. Strengthening of our patent system will not only help lead us out of these tough economic times, but it will help us maintain our competitive edge both domestically and abroad. Take, for example, the transition to a first-inventor-to-file system and the establishment of a post-grant review procedure. These changes alone will decrease litigation costs so that small companies and individuals will not be dissuaded from protecting their patent rights by companies with greater resources. This bill provides the USPTO with rulemaking authority to set or adjust its own fees for 7 years without requiring a statutory change every time an adjustment is needed. Providing the USPTO with the ability to adjust its own fees will give the agency greater flexibility and control, which, in the long run, will benefit inventors and businesses. The legislation enables patent holders to request a supplemental examination of a patent if new information arises after the initial examination. By establishing this new process, the USPTO would be asked to consider, reconsider, or correct information believed to be relevant to the patent. Further, this provision does not limit the USPTO's authority to investigate misconduct or to sanction bad actors. I am confident this new provision will remove the uncertainty and confusion that defines current patent litigation, and I believe it will enhance patent quality. The America Invents Act creates a mechanism for third parties to submit relevant information during the patent examination process. This provision will provide the USPTO with better information about the technology and claimed invention by leveraging the knowledge of the public. This will also help the agency increase the efficiency of examination and the quality of patents. This bill would create a reserve fund for user fees that exceed the amount appropriated to the USPTO. I prefer the language in the Senate- passed bill, which created a new revolving fund for the USPTO separate from annual appropriations. Certainty is important for future planning, but the appropriations process is far from reliable. While conceptually I understand why our House counterparts revised the Senate-passed language--and I am in agreement about maintaining congressional oversight--I believe this is one area that should be reconsidered. It is just that important. That is why I support Senator Tom Coburn's amendment. If passed, his amendment will preserve congressional oversight and give the USPTO the necessary flexibility to operate during these critical times. The House-passed compromise language is a step in the right direction, especially since the chairman of the House Appropriations Committee has committed that all fees collected by the USPTO in excess of its annual appropriated level will be available to the USPTO. However, I remain concerned that the budget uncertainties that exist today may negatively impact the USPTO and its ability to implement many of the new responsibilities required by the America Invents Act. I remain concerned about some provisions the House either expanded or added. On balance, however, the positives of this legislation far outweigh the negatives, and I am confident it will contribute to the greater innovation and productivity our economy demands. It provides essential improvements to our patent system, such as changes to the best mode disclosure requirement; expansion of the prior user rights defense to affiliates, with an exemption for university-owned patents; incentives for government laboratories to commercialize inventions; restrictions on false marking claims; removal of restrictions on the residency of Federal circuit judges; clarification of tax strategy patents; providing assistance to small businesses through a patent ombudsman program and establishing additional USPTO satellite offices. We all know every piece of legislation has its shortcomings. That is the reality of our legislative process. However, taken as a whole, the America Invents Act further builds upon our country's rich heritage of intellectual property protections--a cornerstone provided by article I, section 8 of the Constitution. Passage of the America Invents Act will update our patent system, help strengthen our economy, and provide a springboard for further improvements to our intellectual property laws. I urge all of my colleagues to join in this monumental undertaking, and I appreciate those who have worked so hard on these programs. Again, I mentioned with particularity the Congressman from Texas, Lamar Smith, and also my friend and colleague, Senator Leahy, and others as well, Senator Grassley especially. There are others as well whom I should mention, but I will leave it at that for this particular time. I suggest the absence of a quorum.

Mr. HATCH

Mr. HATCH. Mr. President, I rise today to speak about the passing last month of Mark Hatfield, a former colleague of mine in the U.S. Senate whose service to the people of our great Nation and his beloved State of Oregon is truly noteworthy and continues to inspire public servants today, 15 years after his retirement in 1996 from the world's greatest deliberative body. Indeed, service is the hallmark of Senator Hatfield's legacy; I know because I had the pleasure of serving alongside him for many years. Senator Hatfield served the people of Oregon as a State legislator, as their secretary of state, as their Governor, and as a U.S. Senator. The only election he ever lost was for student body president for his beloved alma matter, Willamette! Although that is a record any statesman can envy, it is more importantly, an example of public service we can all admire. As a Senator, Mark Hatfield served the people of Oregon for 30 years--longer than anybody in the history of the State--and he served them well. He was an Oregonian through and through, and you could tell he loved his home State. He worked tirelessly for all Oregonians, regardless of their background or political persuasion. As a young naval officer, Mark Hatfield experienced the battle of Iwo Jima and the aftermath of the atomic bomb in Hiroshima. These experiences had a profound and lifelong effect on Senator Hatfield. He hated war, but he always had respect for our servicemen and women. Senator Hatfield was also deeply religious, and relied upon his religious convictions and love for this country to guide him. He believed in America as what some call it, ``a miracle of light.'' Senator Hatfield and I did not always agree on everything, but we respected each other's views. I admired that Senator Hatfield always tried to find common ground with his fellow Senators. This made him a successful statesman and a respected individual on both sides of the aisle. Today, I am honored to have the privilege to add my voice to the chorus of praise for this outstanding public servant whose service will long endure in the heads and hearts of all Americans, especially those who knew and had the pleasure of serving with him. My thoughts and prayers are with his family as they mourn the loss and celebrate the life of this great man.

Mr. HATCH

Mr. HATCH. Will the Senator yield?

Mr. HATCH. I ask unanimous consent that I be permitted to give my remarks immediately following the Senator.

Mr. HATCH. Madam President, I compliment the senior Senator from Kentucky for his good remarks on the floor and for allowing me that unanimous consent request. We are coming down to the wire here. We will soon be voting on a proposal that would couple some deficit reduction with an increase in the statutory debt limit. There are some positive features in this legislation, and the Senate's minority leader, the Speaker of the House, and conservatives throughout the country should be commended for insisting on them. First, the President asked for a clean debt limit increase, and conservatives refused. They held the line and made clear that any increase in the debt limit required matching deficit reduction. Second, having lost the fight over a clean debt limit increase, the President insisted on a balanced approach to deficit reduction, by which he meant reducing the deficit by raising taxes. But conservatives again fought this back. They knew that the primary driver of our debt is spending. Regardless of the President's talking points, nondefense discretionary spending is at historic levels. We are set for our third straight trillion dollar deficit. We have a national debt of $14.5 trillion, and the President's budget would give us $13 trillion more in debt. The answer to this is not giving the government more money to spend. And third, conservatives resisted the effort by the President's allies to push most of the deficit reduction in this package down the road. So there are some achievements in this proposal that conservatives can hang their hat on. But I regret to say that I will not be able to support it, because it does not sufficiently provide us with the solution to the debt crisis that the markets are demanding. Last week, Moody's made clear that the real threat to America's Triple A rating is not default, which even the administration now acknowledges was never going to happen. The real threat of a downgrade comes from a failure of will. It comes from a failure of presidential leadership in getting federal spending under control. There is a solution to this spending crisis. It is cut, cap, balance, which I was an early supporter of. In addition to providing short term relief by cutting and capping spending, it provides for a long-term solution through passage of a strong balanced budget amendment. This proposal falls well short of cut, cap, balance, and I cannot support it. I would like to address a technical point about this package that raises concerns for me--whether the President is looking to the deficit reduction committee as an opportunity to raise taxes. He says that he is, as have some of my colleagues in the Senate. I do believe that it will be very difficult, given the committee's charge to reduce the deficit, to raise marginal tax rates. However, I worry that some Democrats will be looking at tax expenditures in order to hit the committee's required deficit reduction targets. This would be a mistake for a number of reasons. The President has referred to tax expenditures as ``spending through the Tax Code.'' But rhetoric aside, tax expenditures are an opportunity for individuals and businesses to keep more of the money that they earn. And getting rid of tax expenditures, without corresponding reductions in tax rates, will result in a net tax increase on the American people. The President would have you believe that getting rid of tax expenditures is acceptable, because they only impact the rich. That is why he talks about bonus depreciation for jets and yachts used as second homes. Yet in a series of speeches, I have attempted to show that this rhetoric of class warfare might work politically, but as a description of tax reality it is lacking. The fact is, the largest tax expenditures, those that the President and Democrats would have to look to in order to raise revenue for deficit reduction, benefit middle class itemizers the most. Consider the example of the home mortgage interest deduction. Since adoption of the 16th amendment to the Constitution in 1913--98 years ago--the United States has had an individual income tax. And for that entire time home mortgage interest has been deductible in calculating taxable income. Most of our fellow Americans, when buying a home, do not pay cash for the entire purchase price. Rather, they typically pay a certain percentage in cash and borrow the rest. It is common that the money borrowed is repaid in monthly increments over the course of 15 or 30 years. Those payments from the homeowner to the lender to compensate for the borrowing of money are interest payments. If you itemize your deductions, you get to subtract home mortgage interest from adjusted gross income--or AGI--in arriving at taxable income. The most significant of the itemized deductions available to taxpayers is the home mortgage interest deduction. The mortgage interest deduction is the second largest tax expenditure identified by the Joint Committee on Taxation, and it is not primarily a benefit for the wealthy. Thirty percent of the benefit of the mortgage interest tax expenditure goes to taxpayers over $200,000. Taxpayers with income below $200,000 receive 70 percent of the benefit of the mortgage interest deduction. By a ratio of almost 2 to 1, taxpayers under $200,000 benefit from the mortgage interest deduction. Since $200,000 basically fits the definition of rich used by my friends on the other side of the aisle, we can see that the nonrich or middle income group disproportionately benefit from the mortgage interest deduction. There have been proposals over the decades to eliminate the home mortgage interest deduction, but none of them have succeeded. In 1986, during the last major tax reform effort, there were active proposals to get rid of the home mortgage interest deduction. President Clinton attacked some of the tax benefits associated with home ownership back in the 1990s. Specifically, President Clinton proposed taxing the imputed income associated with home ownership. A homeowner by living in his home enjoys a certain benefit--the ability to live in his home. That is, he could have rented the home out for a certain amount of money, but he instead decided to live in the home. It is as if he received the rental money for the home, and then spent it on rent so that the owner himself could live in the home. As policy this is somewhat convoluted. Generally, Congress has been reluctant to tax people when they have received no cash. In addition, those on a fixed income would have found it difficult in many cases to get the cash to pay the tax. Finally, there would be significant administrative concerns--just what would the rental value of a home be? How would that be determined? It would be quite difficult. Thus, in a bipartisan fashion, Congress rejected the President's proposal to tax imputed income arising from owner-occupied housing. Now President Obama is taking another crack at it because he wants to raise money to reduce the deficit. President Obama has proposed, reproposed, reproposed again, and reproposed yet again to reduce the benefit of the home mortgage interest deduction. I am speaking of President Obama's proposed 28 percent limitation on itemized deductions. President Obama has proposed to limit the tax rate at which high-income taxpayers can take itemized deductions to 28 percent. This is meant to lessen the benefit to higher income taxpayers of itemized deductions--the home mortgage interest deduction being the most significant of the itemized deductions. The Joint Committee on Taxation says that this provision would mean the Federal Government would collect an additional $293 billion in taxes over 10 years. To understand this provision, allow me to tell you about two taxpayers: William and Spencer. Let's assume that William is in the 15 percent tax bracket, and that Spencer is in the 35 percent tax bracket. Under current law, an additional itemized deduction of $100 is worth $15 to William, and $35 to Spencer. That is, an additional itemized deduction of $100 will reduce William's tax bill by $15, but Spencer's tax bill would go down by $35. If the President's 28 percent limitation proposal were to go forward, however, although the itemized deduction would still be worth $15 to William, it would now be worth only $28 to Spencer. Of course, one may think--well why should high-income Spencer get a more valuable tax benefit from an itemized deduction than low-income William? But that mischaracterizes things. First of all, high-income Spencer, even under current law, still pays significantly more tax than low-income William. That is not only true in absolute dollar terms, but also in terms as a percentage of their respective incomes. Furthermore, the 35 percent bracket was set by Congress with an understanding and realization that itemized deductions would allow a significant tax benefit. That is, had Congress known that higher income taxpayers would be disallowed some of their itemized deductions, as the President now proposes, undoubtedly Congress would have created a lower maximum tax rate bracket than the current 35 percent tax bracket. So, to take away some of the benefit of itemized deductions to higher-income taxpayers but leave the high-income tax rates at their current high levels is to upset the balance struck by prior Congresses. Obviously, Congress is allowed to do that. But let's not pretend that current law is somehow an oversight, or unintended consequence, from prior legislation. Some of the President's advisers defend the proposed 28 percent limitation on the grounds that 28 percent was the tax benefit one would get during the later Reagan years. Yes, that is true. But it is only true because 28 percent was the highest tax bracket after the Reagan tax reform! The larger point is this, however. To the extent that the home mortgage interest deduction, or any tax expenditure for that matter, should be addressed by Congress, it should be addressed through the context of a comprehensive, revenue neutral tax reform that lowers rates. These tax-expenditures should not be cherrypicked by the President and his liberal allies to pay for the checks that his administration has written. I have made this point many times, but today, it is important to make it again. To the extent that any tax expenditures are taken away, tax rates should come down, so that the net effect to government revenues on a static-score basis is neutral. That's what tax reform is all about-- getting rid of tax expenditures so as to reduce tax rates. By reducing tax rates, we will unleash the free-market. By unleashing the free market, we will grow the economy. By growing the economy, tax receipts will increase, even though on a static-scoring basis, tax reform would be revenue neutral. If we get rid of tax expenditures without an offsetting tax-rate reduction, then we have simply made the task of tax reform that much harder. We have squandered an important opportunity. I would like to make a last procedural point about where we go from here. Even if Congress passes, and the President signs, this deficit reduction package, we are going to be back at this again before the year is out. The President will be asking Congress to raise the debt ceiling again. Given that, I would like once again to address the failure by the Treasury Department to respond to repeated requests I have made over the past week about Treasury's short-term cash position, and the failure by almost every member of the so-called Financial Stability Oversight Council--or, F-SOCK--to provide Congress with information about their contingency plans in the event there is a ratings downgrade on U.S. debt in the future. Does Treasury still think it will run out of cash by midnight tonight? I have been given only limited information. Treasury continues to say we will run out of cash today and will not be able to pay our bills, the same date they estimated way back in May. But, Treasury won't show me how they are arriving at that estimate. I have not been informed, Congress has not been informed, and Americans counting on timely Social Security payments have not been informed. Almost every member of the F-SOCK, including Treasury and the Federal Reserve, has refused to provide me with any information about their contingency plans for ratings downgrades. Even if the debt limit is raised, there is no assurance that we won't face a downgrade. We need to know the government's plans. As I have said repeatedly, this is unacceptable. I want to be clear about two things. First, Congress will have to look into this matter very carefully, and investigate whether Treasury and most of our major financial regulators have been deliberately withholding information from Congress, and if so for what purposes. Second, assuming that down the road Treasury will present Congress with another default date, I want to put them on notice that this fall I will be demanding timely substantiation of Treasury's assessment and the government's cash position. Absent this cooperation, I will stand in the way of any debt limit increase demanded by an unsubstantiated Treasury-determined deadline. In closing I want to be clear. I cannot support the outcome of these negotiations. But my opposition is not owing to the failure of conservatives or the Republican leadership in the House and Senate. It is owing to what is clearly amounting to the failed presidency of President Obama. He and his allies are ideologically committed to more spending. Fortunately, the American people will have the final verdict on this economic philosophy in 2012.