Pat Toomey

Mr. TOOMEY

Mr. TOOMEY. Mr. Speaker, I yield 1 minute to the gentleman from Iowa (Mr. Nussle), the chairman of the Committee on the Budget.

Mr. TOOMEY

Mr. TOOMEY. Mr. Speaker, I thank the gentleman for yielding me time. Let me start by saying, I do not mind when pharmaceutical companies make profits. In fact, I want them to make profits because it is evidence that they are providing a product that people value and people need. I am also one of the most vehemently opposed, amongst all Members of Congress, there is nobody more vehemently opposed to price controls than me. And I have nothing but criticism for countries overseas that fix their prices and intentionally set artificially low prices on drugs or anything else for that matter. The main reason that I support this rule and I support this bill is because this is the only way I can think of that we can begin the process of tearing down the artificial prices around the rest of the world that are forcing Americans to subsidize drug consumption all over the world. This is what we need to do in order to get to more normal market prices everywhere in the world. If we pass this legislation and American consumers start to go to other countries and buy drugs at those artificially low levels, pharmaceutical companies will have no choice but to confront those countries and threaten to either withdraw from those countries entirely or have those governments raise their prices to normal market levels. That is what they will do. Now, if a foreign country refuses the deal and says, go ahead and leave and we will make a knock-off product ourselves, then we have to use every vehicle available to us to enforce the intellectual property rights that are inherent in our patents laws and prevent them from going in every multilateral and bilateral forum that we have. That is an obligation that we have. Now, I wish I could wave a wand and make these price controls go away so that everyone in the world is paying their fair share of the cost of prescription drugs, but I cannot do that. And as the world-famous and brilliant economist Art Laffer said, and he supports this bill, by the way, he made the point that trade barriers have never made a problem better. Well, that is the case here today as well. The status quo is unacceptable. We need to take whatever measures we can to start to dismantle this very artificial construction of prices that are extremely unfair and unequal all around the world. I think this bill is the best chance to do that. I urge my colleagues to support the rule and support the underlying bill.

Mr. TOOMEY

Mr. TOOMEY. Mr. Chairman, I yield myself 3\1/2\ minutes. Mr. Chairman, I think all of us in this Chamber have been faced with the painful visits in our offices from constituents who come to us with a heartrending story of a member of their family, often a child, who is suffering from a terrible and debilitating disease, perhaps a fatal disease, perhaps a disease for which there is no cure; and they come to us asking for some help, asking for resources to provide for the research that might find a cure. And nobody has heard more of these heartrending and compelling stories than the distinguished chairman of this committee. I know he has devoted enormous amounts of time and effort to making sure the resources are there to help to try to find cures where it is possible. I think we have all embraced the idea of significant increases in funding for NIH, I have, and I think that is a bipartisan agreement. And we are all proud that we have doubled funding for NIH over 5 years. But what this amendment is about is trying to find a little bit more hope for a few more families. My amendment does not cut a dime of funding for NIH. What it does do is it would require the NIH to reprogram the money that is going to a few grants which we think are just much less worthy of taxpayer funding than the kind of research the NIH is generally doing to cure these devastating diseases. Now, one of these is a research project that the gentleman from Indiana is going to discuss, but I want to mention the four that my amendment would specifically exclude and forbid further funding from. These are projects, grants that are under way now and have already been funded by the NIH in the past, and we would, with this amendment, shut off further funding for. One of them is a study on the sexual habits of older men. A second is a study on San Francisco's Asian prostitutes and masseuses. A third one is a study on mood arousal and sexual risk-taking. And let me just share with my colleagues a highly sanitized and abbreviated summary of their grant application. If I actually read the whole thing, I suspect I would be admonished for the language I would be using on the House floor, so I will read just a little summary. This is a proposal, which says: ``In a series of laboratory studies, mood and sexual arousal will be induced and then their individual and combined effects on sexual risk-taking will be examined.'' Those are not my words. Those are the words of the applicant for the grants. There is another study on American Indian transgender research. The proposal, which is based on the proposition that American Indian and Alaskan native lesbian, gay, bisexual, transgender, and too-spirited individuals are a drastically understudied and underserved group. Mr. Chairman, I ask my colleagues, who thinks this stuff up? And, worse, who decides to actually fund these sorts of things? Well, unfortunately, the NIH has done so. These are the exceptions, and not the rule. This is not a general criticism of the NIH. But the point is these are not applications that are worthy of taxpayer funds. And let me make the point that there is nobody here that I know of that is saying we should ban this sort of research. If they want to do this sort of research, we need to fund this privately and not with taxpayer dollars. I simply want to make the point that there are so many far more important, very real diseases that are affecting real people; and that is what this kind of money could be used for, would be used for. We leave it to the NIH to decide how to reprogram this. And as for those who suggest that we should not interfere with the process by which the NIH decides how to allocate their funds, let me strongly disagree. We have an affirmative obligation in this Congress, as the body that controls the pursestrings of the Federal Government, to supervise and provide oversight. And when a bureaucracy is making mistakes, we have an obligation to come here and correct that. That is all we are saying. Mr. Chairman, I reserve the balance of my time.

Mr. TOOMEY. Mr. Chairman, I yield myself the balance of my time. Let me say, we can read the entire application, and the projects do not sound any more compelling or any more convincing. The point is this is about priorities. There are just so many devastating diseases that are killing people every day in this country. There are many where the NIH is responsible for tremendous progress being made on so many fronts. I think we have an obligation to do as much as we can for those priorities. Studying Asian prostitution in San Francisco massage parlors and the study of mood swings on sexual arousal does not strike me as deserving the same kind of priority as curing cancer in small children and so many other devastating diseases. That is what I think this is about. As for the peer review process, as a general matter I completely agree with the peer review process, but I do not think that absolves us completely of our obligation to have some oversight on these issues and decide whether or not in some cases this peer review process runs amok. That is what I think this debate is all about: Do we draw the line anywhere ever, or do we not. I think we do, I think we should on these specific grants, and I urge my colleagues to vote to adopt this amendment. Mr. Chairman, I yield back the balance of my time.

Mr. TOOMEY. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman from Arizona (Mr. Flake).

Mr. TOOMEY. Mr. Chairman, may I inquire as to who closes in this process.

Mr. TOOMEY. Mr. Chairman, I offer an amendment.

Mr. TOOMEY. Mr. Chairman, I demand a recorded vote.

Mr. TOOMEY. Mr. Chairman, I ask unanimous consent that the amendment be modified in the form at the desk.

Mr. TOOMEY. Mr. Chairman, I yield 3 minutes to the gentleman from Indiana (Mr. Chocola), the cosponsor of this amendment.

Mr. TOOMEY

Mr. TOOMEY. Mr. Speaker, today I would like to share my Report from Pennsylvania for my colleagues and the American people. All across Pennsylvania's 15th Congressional District there are some amazing people who do good things to make our communities a better place. These are individuals of all ages who truly make a difference and help others. I like to call these individuals Lehigh Valley Heroes for their good deeds and efforts. Today, I would like to recognize Bethlehem Catholic High School Head Wrestling Coach Tony lasiello as a Lehigh Valley Hero. He is working hard to make a difference in his community. Tony has built a remarkable record during his 38 years at Bethlehem Catholic High School. From 1966 to 2003, Tony has amassed an overall record of 408-228-3. He has coached 11 state champions, which ranks seventh in the state. The state champions he coached in 1979 achieved that feat through an undefeated, 18-0, record. He coached five straight PCIAA Catholic State Team Championships from 1968 through 1972. He has coached 29 Catholic PCIAA State Championships and 11 PIAA State Champions. Two of his wrestlers won NCAA championships. Tony also has been president of the District XI Wrestling Coaches Association for the past 22 years, and served 4 years on the board of the National Wrestling Coaches Association. He served as a PIAA referee for 20 years and an EIWA College official. Given his very active participation in our community, and his work in helping shape young men into responsible adults, Tony lasiello is a Lehigh Valley Hero in my book. Mr. Speaker, this concludes my Report from Pennsylvania.

Mr. TOOMEY

Mr. TOOMEY. Mr. Speaker, I rise to offer congratulations to the confectioners at Just Born, Incorporated, as they celebrate the 50th anniversary of one of their most recognized and celebrated products, not to mention my daughter's favorite, Marshmallow Peeps. Just Born, with their Peeps, is a great American manufacturing success story. Over a billion Peeps are produced each year by Just Born's 400-plus employees. Their candies are exported to over 30 countries, making them available to over 1.5 billion people worldwide. Innovation and dedicated employees have really been the source of the success of this company. Just Born was founded in 1923 in New York City by Samuel Born, a Russian immigrant. The company moved to Bethlehem, Pennsylvania, in 1932 and under the leadership of Bob Born, Samuel's son, Just Born acquired a candy company in 1953 which manufactured by hand a small line of 3-D marshmallow products. The innovative Bob Born mechanized the process of making Peeps and dramatically increased the quantity of Peeps manufactured each year. Peeps once took 27 hours to make, they now take 6 minutes. It is this innovative, entrepreneurial spirit, and great workers that make American manufacturers the best in the world, and Just Born continues to lead the way among confectioners. If we do our part here in Congress to lessen government regulations, to expand trade opportunities and to lower taxes to encourage economic growth, we will see more success stories like Just Born, Inc. Mr. Speaker, I congratulate Just Born and 3 generations of Lehigh Valley employees for sweetening America.

Mr. TOOMEY

Mr. TOOMEY. Mr. Speaker, reclaiming the balance of my time, I would just say that I appreciate the thoughtful remarks of the gentleman from Iowa but respectfully disagree, and I think that the merits of this bill are really quite strong. In fact, the combination of the bill that I introduced, H.R. 859, and the bill that the gentlewoman from New York (Mrs. Kelly) introduced, H.R. 758, really are a modernizing effort here. It is going to help small businesses and their employees. It is going to help small banks and their employees and their customers. It is pro-free market legislation. It is bipartisan. It is really a commonsense repeal. Frankly, it was hard for me to believe when I first discovered that we have a law in the United States of America that says it is illegal for a bank to pay interest on a business checking account. I thought that was the business banks were in, as a matter of fact. But in fact it is hard to repeal a bad law in this country, and we have had this one on the books for about 70 years. Its repeal is long overdue. Today is our chance to do what we can do in the House to abolish this bill. Now, if it goes into effect and is signed into law, the actual repeal happens 2 years from now. I would prefer it happen sooner than that, but this is the compromise that was arrived at. So that is certainly better than continuing with the legislation. But I would like to be precise about the net effect of this. Because it is not precisely that businesses will now start earning interest which heretofore they have not. In fact, what happens now is that banks have found these cumbersome and very inefficient ways to circumvent this prohibition. So they pay the economic equivalent of most of the interest that a business would earn, but because of the expense of administering these bureaucratic programs, the businesses do not get the full value of the deposits they have. At the end of the day, we should not force banks and their customers to go through a lot of expensive and inefficient and economically unproductive hurdles to avoid a regulation that has no merit in the first place. So that is why we are here, to repeal this. Mr. Speaker, I thank everybody who has been involved in supporting this legislation, and I urge my colleagues to vote ``yes.'' H.R. 758 contains a provision, section 7, entitled Rule of Construction, regarding escrow accounts maintained for purposes of settling real estate transactions. This provision is similar to section 7 of H.R. 1009, the Business Checking Freedom Act of 2002, a bill I sponsored that the House passed last year. Section 7 of H.R. 758 makes clear that the current legal treatment of certain services and benefits provided by banks in lieu of interest in connection with such escrow accounts remains the same. There are some minor changes to this section from section 7 of H.R. 1009, which clarify that the provision does not prohibit or require the payment of interest on such accounts and that it does not affect State laws regrading the payment of interest on escrow accounts. I understand the latter is intended to ensure that State laws governing mortgage servicing escrow accounts for the monthly collection and payment of taxes and insurance are maintained. In brief, section 7 does not alter the current legal definition of interest or the legal treatment of real estate settlement escrow transactions. Under section 7, current Federal legal standards, including regulatory interpretations, regarding the definition of interest on deposits will continue to stand. For example, the Federal Reserve's Regulation Q currently provides that services and benefits can be given by banks in lieu of interest to depositors and that the provision or the receipt of such services and benefits does not constitute interest. This has been the Federal Reserve's consistent regulatory and interpretive view for decades. For example, a Federal Reserve staff opinion in 1978 stated that the ``absorption or reduction'' of banking service changes did not constitute the payment of interest (Fed. Res. Bd. Staff Op., October 27, 1978), a view also reflected in a 1964 Fed. interpretative letter (1964 Fed. Res. Interp., July 17, 1964). Under these regulatory principles, title companies and agents receive bank services, such as free printed checks, overnight float and safe deposit and night depository facilities, armored car services, as well as low-interest loans, that help defray their cost of maintaining real estate settlement escrows, ultimately lowering the cost of these services to the public. Such accounts often times last only a few days, the time necessary for settlement payments and other disbursements to be made after the closing of a real estate transaction. In our Nation's highly developed financial system, Federal banking law and regulations have operated to facilitate the smooth and efficient flow of real estate transactions and promoted American homeownership. I am optimistic that these services will continue to be provided in the current efficient manner when H.R. 758 becomes law.

Mr. TOOMEY. Mr. Speaker, I yield to the gentleman from Iowa, with whom I actually have a disagreement on this particular issue, but I have enormous respect for his opinion and would like to give him an opportunity to rebut a point made earlier.

Mr. TOOMEY. Mr. Speaker, I thank the gentleman from Alabama (Mr. Bachus) and appreciate all his help on this legislation as well as the time he has yielded to me. I would also like to thank (Mr. Kanjorski), an original cosponsor of my bill, which is part of this one, as well as the gentlewoman from New York (Mrs. Kelly) for her work.

Mr. TOOMEY

Mr. TOOMEY. Mr. Chairman, I yield myself 15 seconds to respond to the gentleman from North Carolina by observing that the Democrat substitute has more spending, has higher taxes, and it has larger deficits for longer than the substitute that we are debating at this point.

Mr. TOOMEY. Mr. Chairman, I yield myself 15 seconds to respond to the creative and very amusing account from my good friend who just spoke about this. However, I would remind him that if he is very concerned about the size of the deficit and the magnitude of the debt, then he will vote for the RSC budget, the Toomey budget, because that is the one that gets us back to balance quickest; that is the one with the smallest deficits and the least debt. Mr. Chairman, I yield 2 minutes to the gentleman from Texas (Mr. Brady).

Mr. TOOMEY. Mr. Chairman, I yield 2 minutes to the gentlewoman from Colorado (Mrs. Musgrave).

Mr. TOOMEY. Mr. Chairman, before yielding to the gentleman from New Jersey, I yield myself such time as I may consume to observe that although our budget grows spending every year, total spending grows, it grows at a slower rate than the alternative budgets, and that is why we are able to get back to balance faster than any other budgets, and why I look forward to the Blue Dog support, and that is why the Americans for Tax Reform and Citizens Against Government Waste have endorsed the Republican Study Committee budget. Mr. Chairman, I yield 2 minutes to the gentleman from New Jersey (Mr. Garrett).

Mr. TOOMEY. Mr. Chairman, I yield myself 30 seconds to respond to the previous speaker, just to observe that under the budget that we are proposing, the Republican Study Committee, and under the President's tax plan, a family of four making $35,000 a year would pay nothing in federal income taxes. Zero. In fact, the top 50 percent of wage earners in America pay 96 percent of all Federal income taxes. When you lower taxes, it is just hard not to lower the taxes on the people who are actually paying the taxes. Mr. Chairman, I yield 3 minutes to the gentleman from Texas (Mr. Sam Johnson). (Mr. SAM JOHNSON of Texas asked and was given permission to revise and extend his remarks.)

Mr. TOOMEY. Mr. Chairman, I yield myself 30 seconds to respond and correct what I think was a misstatement. The fact is the cuts in spending in our Republican Study Committee budget did not result in larger deficits. They result in smaller deficits because we have got less spending, and that means less debt, and that means we get back into balance faster than any other budget that will be considered today; and I am looking forward to the enthusiastic support of the Blue Dogs, who feel very strongly about getting back into balance. Mr. Chairman, I yield 3 minutes to the gentleman from Arizona (Mr. Flake).

Mr. TOOMEY. Mr. Chairman, I yield 3 minutes to the gentlewoman from North Carolina (Mrs. Myrick).

Mr. TOOMEY. Mr. Chairman, I yield 5\1/2\ minutes to myself. Mr. Chairman, I would like to begin by commending the gentleman from Iowa (Chairman Nussle) for the outstanding work the gentleman has done. The gentleman has worked very hard. Our committee has worked very hard, and the budget is a good budget. But I believe the alternative budget that I am going to describe right now and that the Republican Study Committee is putting forward is a better budget. I want to go over the highlights of the differences and engage in this discussion about the alternatives. Let us look at the major differences. The big difference between the Republican Study Committee budget and the committee budget are three. First, we provide more tax relief. We provide more tax relief than the committee budget does, we provide more tax relief than any of the alternative budgets do. Number two, we actually cut some spending. Now the committee's budget cuts the rate of growth of spending. Our budget actually cuts nondefense, not homeland security discretionary spending. The third thing is we run smaller deficits and we get back to a balanced budget faster than any other budget, including faster than the Blue Dog budget that we just heard a lot of discussion about. We do it in 4 years, faster than any other, and that is not accounting for the faster economic growth that would result from our budget package. Let me run through these three areas. First on the tax front, we recognize in this budget that we are still overtaxed. The fact is that Federal taxes consume about 21 percent of national income, and total taxes from all government in our country is over a third of national income. This is well above the post-war average high. The fact is we are not undertaxed; we are still overtaxed. Many of our constituents are facing tax increases at the State and local levels. They need to have that off-set, and we can do that in our budget. Our budget accommodates the President's entire growth package; and that is critical because we need to get this economy growing again, so we accommodate the elimination of the double taxation of dividends. This would end a great inequity in our tax system, a bias in our current code, a bias that, frankly, falls disproportionately on older Americans; and it would also stimulate economic growth. If we follow the wisdom of the President's proposal and eliminate the double taxation on dividends, it has a number of positive effects for our economy. It would immediately result in higher equity prices, which is a good start. The current tax also increases the cost of capital. By lowering the cost of capital, we encourage capital formation. It also would reduce the current distortion of the allocation of capital. Abolishing the double taxation will over time release billions of dollars for more productive investment. The bottom line is the President's proposal encourages saving and investment and capital formation, and that helps sustain economic growth. That is why we need to do it. We also need to accelerate the phase-in of marginal tax rate reductions. When you lower marginal income tax rates, you increase the incentive to save and work and invest, and when you increase the incentives, you get more savings and work and investment. If we delay this any further, we just postpone the beneficial effects. In our budget, we accommodate the President's entire tax relief package. Then we do something more. We do not specify exactly what that would have to be, but, Mr. Chairman, it would be large enough to accommodate a 50 percent reduction in capital gains rates, and that would also significantly encourage economic growth. That kind of capital formation is a precondition for strong economic growth. On the spending side, as I said earlier, ours is the only budget that makes some real cuts in spending. On the discretionary side, we do not cut defense spending. We use the same number that the President has proposed and the same number that the committee has proposed. We recognize this obligation. We recognize that we are at war. We do not cut homeland security funding. On the mandatory spending side, we do not touch Social Security at all, we make no changes, and we do not actually cut anything in mandatory spending, although we do restrain the rate of growth. What we actually do cut is in nondefense, nonhomeland security discretionary spending. Why is it important to get this spending under control? Because, Mr. Chairman, total government spending is the real measure of the burden that the government imposes on our economy. More than deficits, more than the debt, it is the total amount of money that the government sucks out of the private sector, whether it does it by borrowing or whether it does it by confiscating people's money, that is the measure of the misallocation of capital. We all know there are a lot of vital programs that have to be funded, but on the margin we know that this spending occurs through a political process where Members are spending money to try to get reelected. It is not the allocation of capital that individual consumers and businesses would allocate for stronger economic growth. The other problem with too much spending is the enormous waste. We have heard a discussion about that earlier, but the government cannot even account for over $17 billion in spending in 2001. The Federal Government acknowledges $20 billion in overpayments. The list of ridiculous misspent money, missing money, overpayments is a very long and a very embarrassing list, frankly. We are never going to wring that waste out of government until we impose some spending discipline. The fact is government Federal spending, discretionary spending, total spending has been growing at several times the rate of inflation, and now is the time to rein that in. If we cannot rein that in now, Mr. Chairman, when can we rein that in? The net budgetary effects of our budget is greater tax relief, modest spending discipline, and as a result we run smaller deficits for shorter periods of time, and we get back to a balance faster than any other budget proposal. I heard the Blue Dogs come down on this floor and talk about how much they want to balance this budget, how quickly they want to do that, why they want to do that. I am glad to hear that. I look forward to their voting for our budget because it gets to a balance faster than any others. The other point I would make is that there can be no doubt that our combination of lower taxes and less spending would lead to stronger economic growth. Mr. Chairman, I reserve the balance of my time.

Mr. TOOMEY. Mr. Chairman, I offer an amendment in the nature of a substitute.

Mr. TOOMEY. Mr. Chairman, I demand a recorded vote.