Sheldon Whitehouse

Mr. WHITEHOUSE

Mr. WHITEHOUSE. I ask unanimous consent to speak for up to 10 minutes.

Mr. WHITEHOUSE. Mr. President, on the pending motion, I ask for the yeas and nays.

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Mr. President, I rise to discuss the ongoing negotiations on the Federal budget and our rapidly approaching debt ceiling. I think we all agree the situation we face is increasingly grave. I believe every responsible person agrees that a failure to act on the debt limit would have awful repercussions and set back our fragile and tentative economic recovery. Surpassing the debt limit could inflict a triple economic harm on our struggling economy: the economic harm of all at once pulling 40 cents of every Federal dollar out of the economy, the economic harm of shutting down every work project that depends on Federal permits, contracts or regulatory approvals, and the economic harm of driving up interest rates for our constituents and for our country. We must, therefore, act and act quickly to ensure that we avoid that outcome. I also believe the debt limit presents an opportunity to make some tough decisions on our unsustainable deficits. The longer we wait to make these choices, the harder they will be. It is my strong belief that any agreement we reach to reduce the deficits must be based on real savings and must not be made at the expense of our most vulnerable citizens. That is why I am so concerned about reports that Social Security and Medicare benefits have been raised as possible sources of deficit reduction. Cuts to Social Security and to Medicare benefits are unnecessary, are wrong, and should not be on the table. Social Security is not the cause of the deficit, and beneficiaries of Social Security should not be made to shoulder the burden of deficit reduction. A balanced deficit reduction package is certainly within our grasp. I wish to commend our chairman, Senator Conrad, chairman of the Budget Committee, for his proposal which would cut the deficit by $4 trillion over the next decade. His plan would cut the deficit by more than the House Republican budget and would do so without cutting Social Security or Medicare benefits. Chairman Conrad's blueprint would balance $2 trillion in spending cuts with an equal amount of tax loophole closers for wealthy individuals and corporations. His budget would call for shared sacrifice, not just go after the elderly and other vulnerable Americans. We should not, as Americans, balance the budget on the backs of those who can least afford it. That is why I rise to offer a resolution expressing the sense of the Senate that any budget agreement should not include cuts to Social Security or Medicare benefits. Social Security is funded through the contributions of our Nation's workers and businesses. It currently has a trust fund balance over $2.5 trillion, and it is projected to be fully solvent for another quarter century. So while I agree with steps to strengthen Social Security, it is a vital program, any changes should be considered independent of this effort to reduce the deficit, and under no circumstances should we cut Social Security benefits. Indeed, the solvency of the program could be extended significantly just by applying payroll taxes to a greater portion of the earnings of millionaires and billionaires. What we should never do is to put elderly Americans' security at risk in the stock market or increase the retirement age or cut benefits through backdoor methods such as lowering the cost-of-living adjustment. As has the Presiding Officer, I have heard from hundreds of folks from my home State--Rhode Islanders who agree with me--and, particularly, I rely on seniors to whom I have listened at community dinners and senior centers throughout the State who are concerned that they have already gone 2 years without a cost-of-living adjustment when prices are going up all around them. Audrey from Middletown told me that after her husband died, she had many expenses but ``no income except for his Social Security check which enabled me to go on living--simply but adequately--without being a burden on my sons and losing my dignity as well.'' Ronald from Cumberland, RI, has been on Social Security for a number of years. He wrote me to say: It . . . seems that it's always the people who need the help the most who get cut from the Federal Government. Why is this? No Social Security COLA for two years, yet prices for the basic needs still rise. . . . In a country like the United States of America, this should not happen. The threat to Medicare is just as real. Earlier this year, House Republicans passed a budget that in 10 years would put an end to the Medicare Program as we know it. Estimates suggest their proposal would end up forcing a typical 65-year-old senior to pay, on average, $12,500 each year in out-of-pocket expenses, starting in 2022--more than double what a senior is estimated to pay under the current system. In Rhode Island, where the average senior only gets about $14,200 per year from Social Security, charging an average $12,500 for seniors would be an exercise in poverty creation. The Republican budget would also throw seniors right away--in the next year--back into the Medicare prescription drug doughnut hole we have just begun closing through the affordable care act, and it would eliminate the lifesaving preventive services that were added by the health care reform law. Cutting Medicare benefits is the wrong approach to balancing our budget, especially while Republicans continue fighting to protect every single tax break, every single loophole, every single earmark in the Tax Code enjoyed by millionaires and billionaires and by corporations, many of whom pay no taxes at all. Medicare and Social Security are cornerstones of our Nation's prosperity, and they benefit all of us. These programs allow Americans to live their lives free from worry about their retirement security or the welfare and health treatment of their parents. This American freedom is a value we should fight to protect. While we should always be open to improving these vital programs, we must not cut the benefits our seniors and disabled Americans have earned and rely upon. I wish to thank Senators Blumenthal and Sanders; Senator Sherrod Brown; the Presiding Officer, Senator Merkley; and Senator Franken for their support in cosponsoring this resolution. I hope my colleagues will join us in protecting the promise we have made to our Nation's seniors through Social Security and Medicare. In closing, the challenge before us is a formidable one, but I truly believe we can reach an agreement on the deficit and debt ceiling without compromising the security and well-being of our seniors. I thank the Chair.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Mr. President, I rise to speak about two bills that I am introducing today to address a serious and persistent threat to the integrity of our government: regulatory capture. Over the last 50 years, Congress has tasked an alphabet soup of regulatory agencies to administer our laws through rule-making, adjudication, and enforcement. Protecting the proper functioning of these regulatory agencies has led me to the topic of regulatory capture. I held a hearing on the subject last year in the Senate Judiciary Committee and now am filing two bills that will make our government more resistant to the ever-growing power of special interests. I urge my colleagues to join me in passing these important good-government measures. At bottom, regulatory capture is a threat to democratic government. ``We the People'' pass laws through a democratic and open process. Powerful interests then seek to ``capture'' the regulatory agencies that enforce those laws so that they can avoid their intended effect, turning laws passed to protect the public interest into regulations and enforcement practices that benefit limited private interests. This concept of ``regulatory capture'' is well-established in regulatory and economic theory. In 1913, Woodrow Wilson wrote this: ``If the government is to tell big business men how to run their business, then don't you see that big business men . . . must capture the government, in order not to be restrained too much by it?'' The first dean of the Woodrow Wilson School, Marver Bernstein, wrote that a regulatory commission will tend over time to ``become more concerned with the general health of the industry,'' and try ``to prevent changes which will adversely affect'' the industry. This, he said, ``is a problem of ethics and morality as well as administrative method''; ``a blow to democratic government and responsible political institutions.'' Ultimately he said it leads to ``surrender'': ``The commission finally becomes a captive of the regulated groups.'' Regulatory capture has been the subject of work by Nobel laureate George Stigler in his article ``The Theory of Economic Regulation.'' Students of administrative law know how well established the doctrine of ``regulatory capture'' or ``agency capture'' is in that field. Last year, a senior fellow at the Cato Institute wrote in the Wall Street Journal about ``a striking example of regulatory capture.'' He described the phenomenon this way: ``Agencies tasked with protecting the public interest come to identify with the regulated industry and protect its interests against that of the public. The result: Government fails to protect the public.'' His example was the Minerals Management Service, in relation to the BP oil spill. The failures of MMS in the lead up to the oil spill in the Gulf of Mexico, the cozy relationship between MMS officials and industry executives, and the shameful behavior of some MMS employees are archetypal symptoms of regulatory capture. But the report of the commission on the Gulf oil spill never mentioned ``regulatory capture.'' That is a pretty strong signal that regulatory capture isn't getting the attention it deserves. When you think about the century-long academic and policy debate about regulatory capture, and when you look at the cost of recent disasters in areas regulated by the Minerals Management Service, the Mine Safety and Health Administration, and the Securities Exchange Commission, it seems pretty evident that Congress should be concerned not only about those prior incidents, but about addressing the threat of future regulatory capture. The experts I have spoken with in my home state of Rhode Island certainly understand that regulatory capture matters. They don't want a captured agency to allow the next oil spill or other man-made disaster to happen in our state, or for a financial agency to allow speculators to wipe out the savings of our citizens. Surely constituents of each of the members of this body would agree whole-heartedly. That is why I am introducing two pieces of legislation today. The first bill is called the Regulatory Capture Prevention Act. It would create an office within the Office of Management and Budget with the authority to investigate and report regulatory capture. The office would ensure that abuses were not overlooked, and sound the alarm if a regulatory agency were overwhelmed by a more sophisticated and better- resourced regulated industry. Scrutiny and publicity are powerful tools for protecting the integrity of our regulatory agencies. This bill would employ them to prevent powerful interests from coopting our laws. The second bill is called the Regulatory Information Reporting Act. It would shed extra sunlight into regulatory agencies by requiring them to report to a public Web site the following: first, the name and affiliation of each party that comments on an agency regulation; second, whether that party affected the regulatory process; and finally, whether that party is an economic, noneconomic, or citizen interest. By centralizing this information for public and congressional scrutiny, the bill would create a simple dashboard for hints of regulatory capture in agency rulemaking. As the Senate considers these bills, we should remember how much agreement exists about regulatory capture. During the hearing I chaired on regulatory capture last year, all of the witnesses, from across the ideological spectrum, agreed on each of the following 7 propositions. First, regulatory capture is a real phenomenon and a threat to the integrity of government. Second, regulated entities have a concentrated incentive to gain as much influence as possible over regulators, opposed by a diffuse public interest. Third, regulated industries ordinarily have substantial organizational and resource advantages in the regulatory process when compared to public interest groups. Fourth, some regulatory processes lend themselves to gaming by regulated entities seeking undue control over regulation. Fifth, regulatory capture by its nature happens in the dark--done as quietly as possible; no industry puts up a flag announcing its capture of a regulatory agency. Sixth, the potential damage from regulatory capture is enormous. Finally, effective congressional oversight is key to keeping regulators focused on the public interest. With that as a starting point, I am hopeful that the Senate can agree on legislation to address this very real problem. Administrative law may not be the most glamorous subject, but I hope to work with colleagues on both sides of the aisle to eliminate regulatory capture. This is so important because for as long as there are regulatory agencies, regulated industries, and money, there will be efforts at regulatory capture. We owe it to our country to do everything possible to defeat such efforts to capture our government of the people, by the people, and for the people.

Mr. WHITEHOUSE

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

Mr. WHITEHOUSE. Mr. President, I would like to add a few words this afternoon about the ongoing negotiations on the Federal budget and on our rapidly approaching debt ceiling. I think we all agree that the situation we face is one of enormous importance and complexity. I believe every responsible person also agrees a failure to act would have awful repercussions that would jeopardize or worsen our fragile and tentative economic recovery. So I think the responsible view is, it is imperative we act and it is also clear to do so will require every side to make concessions. I rise this afternoon, however, because it is my strong belief that any agreement we reach must be based on real savings and must not be made at the expense of our most vulnerable citizens. That is why I am so concerned about reports that Social Security and Medicare have been raised as possible sources of deficit reduction. Cuts to Social Security and to Medicare benefits should not be on the table. Social Security is not the cause of the deficit, never has been the cause of the deficit, and beneficiaries of Social Security should not be made to shoulder the burden of deficit reduction. Social Security is funded through the contributions of our Nation's workers and businesses. It has an enormous surplus and is projected to be fully solvent for another quarter century. So while I would agree with steps to strengthen Social Security, any changes should be considered independent of our effort to reduce the deficit, and we should not cut Social Security benefits. I helped cofound the Senate defending Social Security caucus for this very reason. The solvency of the Social Security program can be extended significantly just by applying payroll taxes to a greater portion of the earnings of millionaires and billionaires. What we have seen in this country is a huge shift of income going more and more to the uppermost economic reaches and less and less to the middle class. The middle class has actually lost income in the last decade. So the contributions to Social Security are lower because there is less income to draw it off of and the income that is above the $106,000 Social Security cap is where the explosion of income has been and they contribute not a nickel from that income to Social Security. So there is a lot we can do to support Social Security, but what we should not do is give in to any of the calls to put our seniors' security at risk in the stock market by privatizing Social Security or increasing the retirement age so that a construction worker or a waitress who works on their feet all day long has to put in more years of service at that age--when their body, frankly, might not be up to it any longer--or to cut benefits through backdoor methods by lowering the cost-of-living adjustment. The Rhode Island seniors I have heard from at my community dinners and senior centers around the State I have visited are very concerned what would happen if their benefits were cut. Audrey, from Middletown, told me that after her husband died, she had many expenses but, as she said, ``no income except for his Social Security check which enabled me to go on living--simply but adequately without being a burden on my sons and losing my dignity as well.'' Two very important points Audrey makes. One is that Social Security is not just a benefit to Social Security recipients. It is a benefit to the children of Social Security recipients, on whom their parents might otherwise be a burden. It is an American value that senior citizens who have worked hard all their lives, who have played by the rules, who have built the America we now enjoy should be able to draw on so as not to lose their dignity at the end of their life. That is a principle that is worth defending. Ronald from Cumberland, RI, had been on Social Security for a number of years. He wrote to say: It seems that it's always the people who need the help the most who get cut from the Federal Government. Why is this? No Social Security cost of living adjustment for 2 years, yet prices for the basic needs still rise. In a country like the United States of America, this should not happen. These people who are living on Social Security income are not living high off the hog, and they should not be the targets of our cost- cutting zeal. The threat to the Medicare Program is just as real. Earlier this year, Republicans over in the House of Representatives passed a budget that would end the Medicare Program as we have come to know it for future generations. I can remember being at a senior center in North Providence, and a gentleman sitting at a table said to me: You know, I have helped build this country; I have fought in its wars; And I understand that the Republican proposal will protect Medicare for me; but I am not willing to let Medicare for my children be thrown under the bus. That would make me feel awful. It simply isn't right for me to stay on it and stand for the program to be taken apart and dismembered for everybody else. That was a moving statement for me to hear, and we need to honor that. Estimates suggest that the House Republicans' proposal would end up forcing a typical 65-year-old senior to pay, on average, $12,500 each year in out-of-pocket expenses starting in 2022. That is more than double what a senior is estimated to pay than if the current system of Medicare stayed in place. In Rhode Island, the average senior only gets about $14,200 per year from Social Security to begin with. So if you are going to ask people who now have $14,200 a year, who aren't getting cost-of-living adjustments by 2022 to pay $12,500 for Medicare, that would be a massive exercise in poverty creation, and what Medicare and Social Security have done is lifted the burden of poverty from America's seniors. I think sometimes we are blind to what life might be like without them, when some of our colleagues so cavalierly suggest that we should do away with these programs, privatize them, or turn them over to the insurance industry. The Republican budget would also reopen the Medicare prescription drug doughnut hole. We went through a lot of effort to close that doughnut hole in the Affordable Care Act. That doughnut hole will be gone in 10 years, thanks to the Affordable Care Act. The Republicans all voted against the Affordable Care Act. They all voted against closing the doughnut hole. And now in their budget on the other side they want to unwind that part of the bill and take away the protections we have provided for seniors in the doughnut hole. That would cost millions of dollars to seniors in Rhode Island starting next year if it were put into law. That is not something off in the future. That is right now, thousands of Rhode Island seniors having to cough up millions of dollars because of this Republican House budget plan. That is something I think we need to defend against. That is the wrong place to look. It is especially the wrong place to look as we find our Republican colleagues fighting so hard to protect tax breaks for millionaires and billionaires. I have given the speech repeatedly already, so I won't dwell on it now. But when our Republican colleagues stand and say, We are against tax hikes, it is important for Americans to look behind the curtain and see who they are defending, because I will tell you, everybody in this Chamber, Republican and Democrat alike, believes that ordinary American families earning ordinary levels of income should be exempt from any tax hikes. That is not even on the table. When our Republican colleagues talk about defending against tax hikes, they are talking about defending the oil industry from having subsidies they don't need and that taxpayers pay for taken away. They are talking about protecting the top 400 income earners in the country who, on average, pay Federal taxes, actually paid in--this isn't a theory, this isn't a rate; this is what they actually paid in, according to the IRS--18.2 percent. These are people who made on average more than $\1/4\ billion, with a B--$1 billion with a B, in 1 year. And God bless them. What a wonderful thing it is to make more than $\1/4\ billion in 1 year. But they pay taxes at lower rate than a truckdriver in Rhode Island does on average; the guy who wakes up every morning and gets into his clothes and puts on his boots and gets in the truck and goes out there and works all day, pays the same tax rate as the person earning over $\1/4\ billion. They can talk about tax hikes until they are blue in the face. It won't take away the fact that is the way it actually works in this country, and they are defending that and going after Audrey and the folks on Medicare in Rhode Island and Ronald from Cumberland. That is not right, and we need to argue about that and fight back. We can never overlook what Medicare and Social Security have contributed to our Nation's prosperity. It is not just the benefit for the Medicare beneficiary, it is not just the benefit for the Social Security recipient. It is the freedom we all feel knowing we will have a dignified old age; that we won't be at the mercy of Wall Street, that we won't be at the mercy of a private insurance company; that we will have the efficient and effective services that Medicare and Social Security deliver. We can know that now and enjoy that. We have more freedom as Americans now because we can make bolder choices in our lives knowing that we don't have to defend ourselves against that kind of poverty and that kind of misery in our old age. Our children can make bolder choices in their lives knowing that they don't have to safeguard against a parent's illness ruining their own financial futures, ruining their family's financial futures. Imagine how awful it must feel for a parent in that circumstance, if in your old age you become grievously ill and the only resource you have is to essentially wipe out your children who feel a moral obligation to take care of your medical expenses and put themselves into poverty and misery as a result of your illness. What an awful human tragedy that is for the people involved. And we don't experience that tragedy in America. We don't experience it because Medicare and Social Security are there. The challenge before us is a formidable one, but I truly believe we can reach an agreement on the deficit and the debt ceiling without compromising the security and the well-being of our seniors. I believe the Democratic Budget Committee's proposed budget is a good model for how we can actually do it, and I look forward to continuing this discussion. It is not necessary, in order to solve our immediate deficit problems and to get through this debt limit fight, to take our seniors and put Social Security and Medicare that they have relied on at risk; to take this country whose prosperity Social Security and Medicare do so much to support, and knock that down with a tax on Social Security and Medicare. It is not right, it is not necessary, and we should stand against it. Mr. President, I yield the floor and suggest the absence of a quorum.

Mr. WHITEHOUSE. Mr. President, I rise to speak about a serious public health issue in Rhode Island and to commend the EPA for its actions to address it. Rhode Island has the sixth highest rate of asthma in the country. According to our Department of Health, more than 25,000 Rhode Island children or 11 percent of children in our State--more than 1 in every 10 kids--suffer from asthma, and 82,000 adults in Rhode Island, which is also about 11 percent of our adult population, also suffer from this chronic disease. From 2005 to 2009, asthma was the underlying cause or a contributing cause of death for 240 people in Rhode Island, including 4 children. In 2009, there were 1,750 hospital discharges in Rhode Island for asthma cases. Those hospital stays cost about $8 million--in just that 1 year--in direct medical costs, not counting the costs associated with days of work and school missed or the medication for ongoing treatment. On a clear summer day in Rhode Island, many of us have had the experience commuting to work and hearing a warning on drive time radio: Today is a bad air day in Rhode Island. Infants, senior citizens, and people with respiratory difficulties should stay indoors today. In fact, yesterday was just such a day in Rhode Island. An air quality alert was issued by our State Department of Environmental Management, warning that ozone was expected to reach dangerous levels in the southern half of our State by afternoon. They recommended that all residents limit physical exertion and take refuge in air- conditioned environments for the better part of the day. In addition, Rhode Island's public transit operator, RIPTA, offered free bus rides all day long to keep people out of their cars. These are real costs--costs paid in freedom, in reduced quality of life, in medical bills, in burdened public services to respond to the health risks of dirty air, and in more missed days of work and school. There is still a lot to learn about the causes and cures of asthma. But we know air pollution triggers asthma attacks. We know air pollution is a preventable problem. Armed with this knowledge, Rhode Island has taken great strides to reduce air pollution. In 2006, Rhode Island passed a law to prohibit cars and buses from idling with their engines on. In 2007, Rhode Island passed a law to retrofit all State school buses with diesel pollution controls. In 2010, Rhode Island began requiring heavy-duty vehicles used in federally funded construction projects to install diesel pollution controls, adhere to the State anti-idling law, and use only low-sulfur diesel fuel. RIPTA has voluntarily retrofitted half its bus fleet with diesel pollution control equipment. However, Rhode Island cannot solve its air pollution problem on its own. We could stop driving entirely and shut down every industry in our State, and we would still have problems with ground-level ozone and particulate matter pollution. Why is that? Because, as EPA has determined, most of the pollution that lands in Rhode Island is sent to us by other States. Much of that out-of-State pollution comes from virtually uncontrolled Midwestern coal-fired powerplants that are tied to excessively tall smokestacks that send pollution hundreds of miles away from the source. Last month, at my request, the Government Accountability Office completed a report about tall smokestacks at coal powerplants. Here is what the report said: In 1970, the year the Clean Air Act was enacted, there were two tall stacks--stacks over 500 feet--in the United States. By 1985, this number of tall stacks had grown from 2 to more than 180. Utilities and industry literally built their way into compliance with the Clean Air Act. The trend continued. As of December 31, 2010, at the end of last year, 284 tall stacks were operating at 172 coal powerplants in the United States. These tall smokestacks are associated with 64 percent of the coal generating capacity in our country. Most of the coal generating capacity in our country vents its pollution through tall smokestacks. Most of the tall stacks--207 of them or nearly three-quarters of them--are between 500 and 699 feet tall; 63 of them are between 700 and 999 feet tall. The remaining 14 are over 1,000 feet tall. The tallest stack at a coal powerplant in the United States is 1,038 feet, which is at the Rockport Powerplant in Indiana. This graphic compares some of these stacks with some of the well-known landmarks in our country. Here is the Statue of Liberty, at 305 feet; the Washington Monument, at 555 feet; and here are stacks at 1,000 feet, 1,038, and 12,004 feet--the Empire State Building in New York and the Willis Tower in Chicago. As I have noted in previous floor remarks, once a stack gets over 1,000 feet, it has to be actually marked on aviation maps as a hazard to avoid plane collisions. What do I mean when I say the utilities built their way into compliance with these tall stacks? In the early days of the Clean Air Act, some States allowed pollution sources to build tall stacks instead of installing pollution controls. The concept was that pollution sent high enough into the atmosphere would be sent far away from the source and it would not contribute to the air pollution problem in that State and everybody would be happy. The problem is, this air pollution causes problems downwind in other States. As the GAO report put it, ``Tall stacks generally disperse pollutants over greater distances than shorter stacks and provide pollutants greater time to react in the atmosphere to form ozone and particulate matter,'' which are the precursors to asthma. Yet public health policy has not yet caught up with this practice. Rhode Island pays the price. Making matters worse, the GAO found that more than half the boilers attached to these tall stacks at the coal powerplants have no scrubber to control sulfur dioxide emissions--none. Approximately 85 percent of these boilers went into service before 1980, so they are antiquated and dirty and they run the pollution up the tall stack and it ends up being dumped on Rhode Island instead of cleaned up at the source. Nearly two- thirds of boilers connected to these tall stacks have no postcombustion controls for nitrogen oxide--controls that are vastly more effective than so-called low NOX burners. Again, uncontrolled at the source, they dump the pollution up the tall stacks, export it elsewhere, and it is not their problem, but it then lands on Rhode Island. Here is a graphic that shows more than 70 coal plants which have tall stacks at boilers that operate without scrubbers or postcombustion nitrogen oxide controls. These boilers are sending hundreds of thousands of tons of unabated pollution up very tall smokestacks, into the jetstream, and the jetstream delivers it downwind onto States such as Rhode Island. As the GAO indicated: In the Mid-Atlantic United States, the wind generally blows from west to east during the day . . . ozone can travel hundreds of miles at night with the help of high-speed winds known as the low-level jet. This phenomenon typically occurs at night . . . due to the ground cooling quicker than the upper atmosphere, which can allow the low-level jet to form and transport ozone and particulate matter with its high winds. The map shows a typical prevailing wind pattern in the spring. Notice how the prevailing winds send so much of the pollution up and over to Rhode Island and other States along the eastern seaboard. In fact, five of the States on this map--Ohio, Pennsylvania, West Virginia, Illinois, and North Carolina--have been identified by EPA as contributing significantly to Rhode Island's pollution problems. The electricity that comes from these uncontrolled powerplants, which don't stop the pollution at the start but instead jet it up into this low-level jet so it gets dumped in other States--the electricity coming from them might seem cheaper to consumers than electricity from a pollution-controlled powerplant. But that is not so. That would be wrong to consider or to conclude. The costs weren't cheaper. The costs just got shifted. They got shifted from the companies and the consumers in the polluting States to the lungs of children in Rhode Island and other downwind States. It is the lungs of children and adults and seniors in Rhode Island that are actually paying for that cheap electricity. Happily, and at last, the EPA has begun to remedy this unfair and wrongful public health situation by requiring utilities in upwind States to control their pollution under the good neighbor provision of the Clean Air Act, because while a tall stack will send uncontrolled pollution farther than a short stack would, the most effective way to reduce pollution is to install pollution controls. Prompted by petitions from our downwind States, the Bush EPA attempted to set pollution limits for States that contribute to unhealthy pollution levels outside their borders. However, on review, the DC Circuit Court of Appeals told them they had not gone far enough. So the EPA went back to the drawing board and crafted the cross-State air pollution rule that has been announced today, which will cap the pollution that can be produced in upwind States, such as Ohio, Pennsylvania, West Virginia, Illinois, and North Carolina. Those caps were designed based on each State's contribution to pollution in States such as Rhode Island, and it will ratchet down whenever EPA tightens air quality standards based on the latest and best science. As I said, that rule was finalized today. So I thank the EPA. I commend the EPA for finalizing that cross-State air pollution rule. I also urge EPA to update the national ozone air quality standard based on the recommendations from the CASAC--the Clean Air Science Advisory Committee. This will lead to further pollution reductions in States upwind of Rhode Island and further benefit Rhode Islanders. These rules will bring us closer to the day when the coal powerplants on this chart start taking responsibility for their pollution and stop exporting that pollution into Rhode Island and other States, when they install pollution control equipment rather than sending their pollution to where it becomes someone else's problem, and to when Rhode Island children can play outdoors safely without the risk of an asthma attack. I am looking forward to that day, and I know the people of Rhode Island are too. When you drive in and that morning radio tells you today is another bad air day and that children and seniors should stay indoors and can't play, can't take a walk, can't engage in anything that involves any exertion, it is frustrating when there is nothing you can do about it. The Rhode Island Department of Environmental Management could pass regulations until it was blue in the face. The Rhode Island General Assembly could write new laws all day long and it would make no difference because the bombardment of outside pollution on our State is what is driving these health problems. That is why EPA is so important. We would have no voice in this if it were not for a National Environmental Protection Agency that can look out for small States such as ours that are on the receiving end of this kind of a pollution dump from the uncontrolled coal-fired plants in the Midwest. I thank very much the Presiding Officer, I yield the floor, and I suggest the absence of a quorum.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Mr. President, I rise to speak about two bills that I am introducing today to address a serious and persistent threat to the integrity of our government: regulatory capture. Over the last 50 years, Congress has tasked an alphabet soup of regulatory agencies to administer our laws through rule-making, adjudication, and enforcement. Protecting the proper functioning of these regulatory agencies has led me to the topic of regulatory capture. I held a hearing on the subject last year in the Senate Judiciary Committee and now am filing two bills that will make our government more resistant to the ever-growing power of special interests. I urge my colleagues to join me in passing these important good-government measures. At bottom, regulatory capture is a threat to democratic government. ``We the People'' pass laws through a democratic and open process. Powerful interests then seek to ``capture'' the regulatory agencies that enforce those laws so that they can avoid their intended effect, turning laws passed to protect the public interest into regulations and enforcement practices that benefit limited private interests. This concept of ``regulatory capture'' is well-established in regulatory and economic theory. In 1913, Woodrow Wilson wrote this: ``If the government is to tell big business men how to run their business, then don't you see that big business men . . . must capture the government, in order not to be restrained too much by it?'' The first dean of the Woodrow Wilson School, Marver Bernstein, wrote that a regulatory commission will tend over time to ``become more concerned with the general health of the industry,'' and try ``to prevent changes which will adversely affect'' the industry. This, he said, ``is a problem of ethics and morality as well as administrative method''; ``a blow to democratic government and responsible political institutions.'' Ultimately he said it leads to ``surrender'': ``The commission finally becomes a captive of the regulated groups.'' Regulatory capture has been the subject of work by Nobel laureate George Stigler in his article ``The Theory of Economic Regulation.'' Students of administrative law know how well established the doctrine of ``regulatory capture'' or ``agency capture'' is in that field. Last year, a senior fellow at the Cato Institute wrote in the Wall Street Journal about ``a striking example of regulatory capture.'' He described the phenomenon this way: ``Agencies tasked with protecting the public interest come to identify with the regulated industry and protect its interests against that of the public. The result: Government fails to protect the public.'' His example was the Minerals Management Service, in relation to the BP oil spill. The failures of MMS in the lead up to the oil spill in the Gulf of Mexico, the cozy relationship between MMS officials and industry executives, and the shameful behavior of some MMS employees are archetypal symptoms of regulatory capture. But the report of the commission on the Gulf oil spill never mentioned ``regulatory capture.'' That is a pretty strong signal that regulatory capture isn't getting the attention it deserves. When you think about the century-long academic and policy debate about regulatory capture, and when you look at the cost of recent disasters in areas regulated by the Minerals Management Service, the Mine Safety and Health Administration, and the Securities Exchange Commission, it seems pretty evident that Congress should be concerned not only about those prior incidents, but about addressing the threat of future regulatory capture. The experts I have spoken with in my home state of Rhode Island certainly understand that regulatory capture matters. They don't want a captured agency to allow the next oil spill or other man-made disaster to happen in our state, or for a financial agency to allow speculators to wipe out the savings of our citizens. Surely constituents of each of the members of this body would agree whole-heartedly. That is why I am introducing two pieces of legislation today. The first bill is called the Regulatory Capture Prevention Act. It would create an office within the Office of Management and Budget with the authority to investigate and report regulatory capture. The office would ensure that abuses were not overlooked, and sound the alarm if a regulatory agency were overwhelmed by a more sophisticated and better- resourced regulated industry. Scrutiny and publicity are powerful tools for protecting the integrity of our regulatory agencies. This bill would employ them to prevent powerful interests from coopting our laws. The second bill is called the Regulatory Information Reporting Act. It would shed extra sunlight into regulatory agencies by requiring them to report to a public Web site the following: first, the name and affiliation of each party that comments on an agency regulation; second, whether that party affected the regulatory process; and finally, whether that party is an economic, noneconomic, or citizen interest. By centralizing this information for public and congressional scrutiny, the bill would create a simple dashboard for hints of regulatory capture in agency rulemaking. As the Senate considers these bills, we should remember how much agreement exists about regulatory capture. During the hearing I chaired on regulatory capture last year, all of the witnesses, from across the ideological spectrum, agreed on each of the following 7 propositions. First, regulatory capture is a real phenomenon and a threat to the integrity of government. Second, regulated entities have a concentrated incentive to gain as much influence as possible over regulators, opposed by a diffuse public interest. Third, regulated industries ordinarily have substantial organizational and resource advantages in the regulatory process when compared to public interest groups. Fourth, some regulatory processes lend themselves to gaming by regulated entities seeking undue control over regulation. Fifth, regulatory capture by its nature happens in the dark--done as quietly as possible; no industry puts up a flag announcing its capture of a regulatory agency. Sixth, the potential damage from regulatory capture is enormous. Finally, effective congressional oversight is key to keeping regulators focused on the public interest. With that as a starting point, I am hopeful that the Senate can agree on legislation to address this very real problem. Administrative law may not be the most glamorous subject, but I hope to work with colleagues on both sides of the aisle to eliminate regulatory capture. This is so important because for as long as there are regulatory agencies, regulated industries, and money, there will be efforts at regulatory capture. We owe it to our country to do everything possible to defeat such efforts to capture our government of the people, by the people, and for the people.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Mr. President, I rise to make remarks on the introduction of the Responsible Electronics Recycling Act. I would like to thank Senators Sherrod Brown and Lisa Murkowski for joining me in this bipartisan effort, as well as the House sponsors, Representatives Gene Green, Mike Thompson, Steven LaTourette, and Lee Terry. Significant amounts of U.S. electronic waste are currently exported to developing countries that handle the waste in an unsafe manner. Much of this waste contains toxic materials, such as lead and mercury, and the workers who disassemble and process the electronics use crude, unsafe methods that can lead to health problems. This legislation would put an end to these dangerous practices. The Responsible Electronics Recycling Act would restrict the export of electronic waste, help boost the U.S. recycling industry, and support efforts to domestically recover rare earth materials found in electronics. The United States is the only developed country that has not ratified the Basel Convention, which prohibits exports of hazardous waste to developing countries. Under the convention, much of the U.S. exportation of electronic waste to developing countries is illegal under the laws of the receiving countries but unfortunately, these laws are poorly enforced. If we recycled these materials in the U.S., it would create recycling jobs for U.S. workers. Companies recycling in the U.S. often operate under capacity because they cannot compete with the cheaper option of exporting electronic waste to developing countries. We should be processing this waste using U.S. workers, and many companies stand at the ready to begin recycling additional electronic waste. Moreover, the dumping of used electronics in the developing world can come back to haunt us. Some countries have active underground markets for U.S. hard drives, contributing to identity theft, as documented in a 2009 Frontline investigation. Business Week reported in 2010 that used computer chips from old personal computers are fraudulently re- marked in China as ``military grade'' chips and sold to U.S. military suppliers. Given the risks to our armed forces from defective equipment, I have also introduced the Combating Military Counterfeits Act to enhance the ability of prosecutors to keep counterfeit goods out of the military supply chain. One of the benefits of recycling electronic waste domestically is the potential to recover rare elements in the process. Rare earth materials are vital to a number of manufacturing processes, including for products such as hybrid car batteries and solar panels, yet prices have skyrocketed as global supply has tightened. According to the Department of Energy, recycled content from electronics could be a valuable secondary source of rare earth materials, but additional research is required on recovery techniques and collection of electronic waste. This act would establish the Rare Earth Materials Recycling Research Initiative at the Department of Energy to coordinate research into the recovery of rare earth materials used in electronics. The Responsible Electronics Recycling Act would also address the health, environmental, and national security concerns by amending the Solid Waste Disposal Act to prohibit the export of electronic waste to developing countries, with certain exceptions. These exceptions include legitimate exports of tested and working equipment, warranty returns, and recalls. There is also a de minimis exception to allow the export of materials that have so little toxicity they would not pose a risk to human health or the environment. Exporting under the exceptions would require a license and notice to the Environmental Protection Agency. Additional restrictions apply to exports for warranties or recalls, including written consent from the receiving country. The act creates a criminal penalty for knowingly exporting electronic waste, and provides the EPA the authority to inspect establishments handling electronic waste. Twenty-five States, including Rhode Island, have passed electronic waste recycling laws. States such as Rhode Island already seek to ensure that their downstream recyclers do not export the electronic waste but instead responsibly recycle it here in the U.S. But States can only do so much and a federal law is needed to restrict these harmful exports. We are pleased to have the support of a number of electronics manufacturers and retailers, including Hewlett Packard, Dell, Apple, Samsung, and Best Buy. We are also pleased to have the endorsement of 29 recyclers representing 74 recycling operations in 34 states. The breadth of our coalition is a testament to the consensus that the harmful export of these products must stop. With more and more Americans relying on new technologies and generating a growing amount of electronic waste each year, we must take steps to properly dispose of this material. This legislation will crack down on the dumping of electronic waste on developing countries, protect American consumers from counterfeit schemes and identity theft, and support the growth of electronic waste recycling jobs in Rhode Island and across the country.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. That is why I think the loopholes need to be closed, and I thank the distinguished Senator for the colloquy. Exhibit 1 [From the National Review Online, July 5, 2011] Politics vs. Reality (By Thomas Sowell) It is hard to understand politics if you are hung up on reality. Politicians leave reality to others. What matters in politics is what you can get the voters to believe, whether it bears any resemblance to reality or not. Not only among politicians, but also among much of the media, and even among some of the public, the quest is not for truth about reality but for talking points that fit a vision or advance an agenda. Some seem to see it as a personal contest about who is best at fencing with words. The current controversy over whether to deal with our massive national debt by cutting spending, or whether instead to raise tax rates on ``the rich,'' is a classic example of talking points versus reality. Most of those who favor simply raising tax rates on ``the rich''--or who say that we cannot afford to allow the Bush ``tax cuts for the rich'' to continue--show not the slightest interest in the history of what has actually happened when tax rates were raised to high levels on ``the rich,'' as compared with what has actually happened when there have been ``tax cuts for the rich.'' As far as such people are concerned, those questions have already been settled by their talking points. Why confuse the issue by digging into empirical evidence about what has actually happened when one policy or the other was followed? The political battles about whether to have high tax rates on people in high income brackets or to instead have ``tax cuts for the rich'' have been fought out in at least four different administrations in the 20th century--under Presidents Calvin Coolidge, John F. Kennedy, Ronald Reagan, and George W. Bush. The empirical facts are there, but they mean nothing if people don't look at them, and instead rely on talking points. The first time this political battle was fought, during the Coolidge administration, the tax-cutters won. The data show that ``the rich'' supplied less tax revenue to the government when the top income tax rate was 73 percent in 1921 than they supplied after the income tax rate was reduced to 24 percent in 1925. Because high tax rates can easily be avoided, both then and now, ``the rich'' were much less affected by high tax rates than was the economy and the people who were looking for jobs. After the Coolidge tax cuts, the increased economic activity led to unemployment rates that ranged from a high of 4.2 percent to a low of 1.8 percent. But that is only a fact about reality--and, for many, reality lacks the appeal of talking points. The same preference for talking points, and the same lack of interest in digging into the facts about realities, prevails today in discussions of whether to have a government-controlled medical system. Since there are various countries, such as Canada and Britain, that have the kind of government-controlled medical systems that some Americans advocate, you might think that there would be great interest in the quality of medical care in these countries. The data are readily available as to how many weeks or months people have to wait to see a primary-care physician in such countries, and how many additional weeks or months they have to wait after they are referred to a surgeon or other specialist. There are data on how often their governments allow patients to receive the latest pharmaceutical drugs, as compared with how often Americans use such advanced medications. But supporters of government medical care show virtually no interest in such realities. Their big talking point is that the life expectancy in the United States is not as long as in those other countries. End of discussion, as far as they are concerned. They have no interest in the reality that medical care has much less effect on death rates from homicide, obesity, and narcotics addiction than it has on death rates from cancer or other conditions that doctors can do something about. Americans survive various cancers better than people anywhere else. Americans also get to see doctors much sooner for medical treatment in general. Talking points trump reality in political discussions of many other issues, from gun control to rent control. Reality simply does not have the pizzazz of clever talking points. Exhibit 2 [From the National Review Online, July 4, 2011] Entitlement Bandits (By Michael F. Cannon) The budget blueprint crafted by Paul Ryan, passed by the House of Representatives, and voted down by the Senate would essentially give Medicare enrollees a voucher to purchase private coverage, and would change the federal government's contribution to each state's Medicaid program from an unlimited ``matching'' grant to a fixed ``block'' grant. These reforms deserve to come back from defeat, because the only alternatives for saving Medicare or Medicaid would either dramatically raise tax rates or have the government ration care to the elderly and disabled. What may be less widely appreciated, however, is that the Ryan proposal is our only hope of reducing the crushing levels of fraud in Medicare and Medicaid. The three most salient characteristics of Medicare and Medicaid fraud are: It's brazen, it's ubiquitous, and it's other people's money, so nobody cares. Consider some of the fraud schemes discovered in recent years. In Brooklyn, a dentist billed taxpayers for nearly 1,000 procedures in a single day. A Houston doctor with a criminal record took her Medicare billings from zero to $11.6 million in one year; federal agents shut down her clinic but did not charge her with a crime. A high-school dropout, armed with only a laptop computer, submitted more than 140,000 bogus Medicare claims, collecting $105 million. A health plan settled a Medicaid-fraud case in Florida for $138 million. The giant hospital chain Columbia/HCA paid $1.7 billion in fines and pled guilty to more than a dozen felonies related to bribing doctors to help it tap Medicare funds and exaggerating the amount of care delivered to Medicare patients. In New York, Medicaid spending on the human-growth hormone Serostim leapt from $7 million to $50 million in 2001; but it turned out that drug traffickers were getting the drug prescribed as a treatment for AIDS wasting syndrome, then selling it to bodybuilders. And a study of ten states uncovered $27 million in Medicare payments to dead patients. These anecdotes barely scratch the surface. Judging by official estimates, Medicare and Medicaid lose at least $87 billion per year to fraudulent and otherwise improper payments, and about 10.5 percent of Medicare spending and 8.4 percent of Medicaid spending was improper in 2009. Fraud experts say the official numbers are too low. ``Loss rates due to fraud and abuse could be 10 percent, or 20 percent, or even 30 percent in some segments,'' explained Malcolm Sparrow, a mathematician, Harvard professor, and former police inspector, in congressional testimony. ``The overpayment-rate studies the government has relied on. . .have been sadly lacking in rigor, and have therefore produced comfortingly low and quite misleading estimates.'' In 2005, the New York Times reported that ``James Mehmet, who retired in 2001 as chief state investigator of Medicaid fraud and abuse in New York City, said he and his colleagues believed that at least 10 percent of state Medicaid dollars were spent on fraudulent claims, while 20 or 30 percent more were siphoned off by what they termed abuse, meaning unnecessary spending that might not be criminal.'' And even these experts ignore other, perfectly legal ways of exploiting Medicare and Medicaid, such as when a senior hides and otherwise adjusts his finances so as to appear eligible for Medicaid, or when a state abuses the fact that the federal government matches state Medicaid outlays. Government watchdogs are well aware of the problem. Every year since 1990, the U.S. Government Accountability Office has released a list of federal programs it considers at a high risk for fraud. Medicare appeared on the very first list and has remained there for 22 straight years. Medicaid assumed its perch eight years ago. How can there possibly be so much fraud in Medicare and Medicaid that even the ``comfortingly low'' estimates have ten zeros? How can this much fraud persist decade after decade? How can it be that no one has even tried to measure the problem accurately, much less take it seriously? The answers are in the nature of the beast. Medicare and Medicaid, the two great pillars of Pres. Lyndon Johnson's ``Great Society'' agenda, are monuments to the left-wing ideals of coerced charity and centralized economic planning. The staggering levels of fraud in these programs can be explained by the fact that the politicians, bureaucrats, patients, and health-care providers who administer and participate in them are spending other people's money--and nobody spends other people's money as carefully as he spends his own. What's more, Medicare and Medicaid are spending other people's money in vast quantities. Medicare, for example, is the largest purchaser of medical goods and services in the world. It will spend $572 billion in 2011. Each year, it pays 1.2 billion claims to 1.2 million health- care providers on behalf of 47 million enrollees. For providers, Medicare is like an ATM: So long as they punch in the right numbers, out comes the cash. To get an idea of the potential for fraud, imagine 1.2 million providers punching 1,000 codes each into their own personal ATMs. Now imagine trying to monitor all those ATMs. For example, if a medical-equipment supplier punches in a code for a power wheelchair, how can the government be sure the company didn't actually provide a manual wheelchair and pocket the difference? About $400 million of the aforementioned fines paid by Columbia/HCA hospitals were for a similar practice, known as ``upcoding.'' And how does the government know that providers are withdrawing no more than the law allows? Medicaid sets the prices it pays for prescription drugs based on the ``average wholesale price.'' But as the Congressional Budget Office has explained, the average wholesale price ``is based on information provided by the manufacturers. Like the sticker price on a car, it is a price that few purchasers actually pay.'' Pharmaceutical companies often inflate the average wholesale price so they can charge Medicaid more. Teva Pharmaceuticals recently paid $27 million to settle allegations that it had overcharged Florida's Medicaid program by inflating its average wholesale prices, and the Department of Justice has accused Wyeth of doing the same. Merck recently settled a similar case. Most ominously, how does the government know that people punching numbers into the ATMs are health-care providers at all? In his testimony, Malcolm Sparrow explained how a hypothetical criminal can make a quick million: ``In order to bill Medicare, Billy doesn't need to see any patients. He only needs a computer, some billing software to help match diagnoses to procedures, and some lists. He buys on the black market lists of Medicare or Medicaid patient IDs.'' With this information in hand, Billy strides right up to the ATM, or several at a time, and starts punching in numbers. ``The rule for criminals is simple: If you want to steal from Medicare, or Medicaid, or any other health-care-insurance program, learn to bill your lies correctly. Then, for the most part, your claims will be paid in full and on time, without a hiccup, by a computer, and with no human involvement at all.'' These schemes are sophisticated, so Billy might hire people within Medicare and at his bank to help him avoid detection. Last year, the feds indicted 44 members of an Armenian crime syndicate for operating a sprawling Medicare-fraud scheme. The syndicate had set up 118 phony clinics and billed Medicare for $35 million. They transferred at least some of their booty overseas. Who knows what LBJ's Great Society is funding? And there are other forms of fraud. An entire cottage industry of elder-law attorneys has emerged, for instance, to help well-to-do seniors appear poor on paper so that Medicaid will pay their nursing-home bills. Medicaid even encourages the elderly to get sham divorces for the same reason. It's all perfectly legal. It's still fraud. Medicaid's matching-grant system also invites fraud. When a high-income state such as New York spends an additional dollar on its Medicaid program, it receives a matching dollar from the federal government--that is, from taxpayers in other states. Low-income states can receive as much as $3 for every additional dollar they devote to Medicaid, and without limit. If they're clever, states can get this money without putting any of their own on the line. In a ``provider tax'' scam, a state passes a law to increase Medicaid payments to hospitals, which triggers matching money from the federal government. Yet in the very same law, the state increases taxes on hospitals. If the tax recoups the state's original outlay, the state has obtained new federal Medicaid funds at no cost. If the tax recoups more than the original outlay, the state can use federal Medicaid dollars to pay for bridges to nowhere. As Vermont began preparations for its Obamacare- sanctioned single-payer system this year, it used a provider- tax scam to bilk taxpayers in other states out of $5.2 million. In his book Stop Paying the Crooks, consultant Jim Frogue chronicles more than half a dozen ways that states game Medicaid's matching-grant system to defraud the federal government. Since 1986, the GAO has published at least 158 reports about Medicare and Medicaid fraud, and there have been similar reports by the HHS inspector general and other government agencies. In 1993, Attorney General Janet Reno declared health-care fraud America's No 2 crime problem, after violent crime. Since then, Congress has enacted 194 pages of statutes to combat fraud in these programs, and countless pages of regulations. Yet federal and state anti-fraud efforts remain uniformly lame. Medicare does almost nothing to detect or fight fraud until the fraudulent payments are already out the door, a strategy experts deride as ``pay and chase.'' Even then, Medicare reviews fewer than 5 percent of all claims filed. Congress doesn't integrate Medicare's myriad databases, which might help prevent fraud, nor does it regularly review the efficacy of most of the anti-fraud spending it authorizes. Many of the abuses noted above, such as those of the Brooklyn dentist, were discovered not by the government but by curious reporters poking through Medicaid records. The amateurs at the New York Times found ``numerous indications of [Medicaid] fraud and abuse that the state had never looked into,'' but ``only a thin, overburdened security force standing between [New York's] enormous program and the unending attempts to steal from it. The federal government's approach to fraud is sometimes so inept as to be counterproductive. Sparrow testified that a defect in the strategy of Billy, our hypothetical criminal, is that he doesn't know which providers and patients on his stolen lists are ``dead, deported, or incarcerated.'' But Medicare's anti-fraud protocols help him solve this problem. When Medicare catches those claims, it sends Billy a notice that they have been rejected. ``From Billy's viewpoint,'' Sparrow explained, ``life could not be better. Medicare helps him `scrub' his lists, making his fake billing scam more robust and less detectable over time; and meanwhile Medicare pays all his other claims without blinking an eye or becoming the least bit suspicious.'' Efforts to prevent fraud typically fail because they impose costs on legitimate beneficiaries and providers, who, as voters and campaign donors respectively, have immense sway over politicians. At a recent congressional hearing, the Department of Health and Human Services' deputy inspector general, Gerald T. Roy, recommended that Congress beef up efforts to prevent illegitimate providers and suppliers from enrolling in Medicare. But even if Congress took Roy's advice, it would rescind the new requirements in a heartbeat when legitimate doctors--who are already threatening to leave Medicare over its low payment rates--threatened to bolt because of the additional administrative costs (paperwork, site visits, etc.). Politicians routinely subvert anti-fraud measures to protect their constituents. When the federal government began poking around a Buffalo school district that billed Medicaid for speech therapy for 4,434 kids, the New York Times reported, ``the Justice Department suspended its civil inquiry after complaints from Senator Charles E. Schumer, Democrat of New York, and other politicians.'' Medicare officials, no doubt expressing a sentiment shared by members of Congress, admit they avoid aggressive anti-fraud measures that might reduce access to treatment for seniors. It's not just the politicians. The Legal Aid Society is pushing back against a federal lawsuit charging that New York City overbilled Medicaid. Even conservatives fight anti-fraud measures, albeit in the name of preventing frivolous litigation, when they oppose expanding whistle-blower lawsuits, where private citizens who help the government win a case get to keep some of the penalty. Sparrow argued that when Medicare receives ``obviously implausible claims,'' such as from a dead doctor, ``the system should bite back. . . . A proper fraud response would do whatever was necessary to rip open and expose the business practices that produce such fictitious claims. Relevant methods include surveillance, arrest, or dawn raids.'' Also: ``All other claims from the same source should immediately be put on hold.'' Some of the implausible claims will be honest mistakes, such as when a clerk mistakenly punches the wrong patient number into the ATM. And sometimes the SWAT team will get the address wrong, or will take action that looks like overkill, as when the Department of Education raided a California home because it suspected one of the occupants of financial-aid fraud. How many times would federal agents have to march a handcuffed doctor past a stunned waiting room full of Medicare enrollees before Congress prohibited those measures? ``It seems extraordinary,'' Sparrow said, that the HHS Office of Inspector General recommends ``weak and inadequate response[s] . . . to false claims and fake billings'' and that Medicare ``fail[s] . . . to properly distinguish between the imperatives of process management and the imperatives of crime control.'' Extraordinary? How could it be any other way? Anti-fraud efforts will always be inadequate when politicians spend other people's money. Apologists for Medicare and Medicaid will retort that fraud against private health plans is prevalent as well, but this only drives home the point: Since employers purchase health insurance for 90 percent of insured non-elderly Americans, workers care less about health-care fraud, and have a lower tolerance for anti- fraud measures, than they would if they paid the fraud-laden premiums themselves. The fact that Medicare and Medicaid spend other people's money is why the number of fraud investigators in New York's Medicaid program can fall by 50 percent even as spending on the program more than triples. That is why, as Sparrow explained in an interview with The Nation, ``The stories are legion of people getting a Medicare explanation of benefits statement saying, `We've paid for this operation you had in Colorado,' when those people have never been in Colorado. And when you complain [to Medicare] about it, nobody seems to care.'' The Ryan plan offers the only serious hope of reducing fraud in Medicare and Medicaid. Its Medicare reforms, especially if they were expanded later, would make it easier for the federal government to police the program, and its Medicaid reforms would increase each state's incentive to curb fraud. To see how the Ryan plan would reduce Medicare fraud, imagine that the proposal really were what its critics claim it is: a full-blown voucher program, with each enrollee receiving a chunk of cash to spend on medical care, apply toward health-insurance premiums, or save for the future. Instead of processing 1.2 billion claims, Medicare would hand out just 50 million vouchers, with sick and low-income enrollees receiving larger ones. The number of transactions Medicare would have to monitor each year would fall by more than 1 billion. Social Security offers reason to believe that a program engaging in fewer (and more uniform) transactions could dramatically reduce fraud and other improper payments. As a Medicare-voucher program would, Social Security adjusts the checks it sends to enrollees according to such variables as lifetime earnings and disability status. The Social Security Administration estimates that overpayments account for just 0.37 percent of Social Security spending. Overpayments are higher in the Supplemental Security Income (SSI) program (8.4 percent), a much smaller, means-tested program also administered by the Social Security Administration. But total overpayments across both programs still come to less than 1 percent of outlays. In reality, the Ryan ``voucher'' is much closer to the current Medicare Advantage program, through which one in four Medicare enrollees selects a private health plan and the government makes risk-adjusted payments directly to insurers. Skeptics will rightly note that, judging by the official improper-payment rates, Medicare Advantage (14.1 percent) is in the same ballpark as traditional Medicare (10.5 percent). Therefore, the Ryan plan should be seen not as a solution to Medicare fraud in itself, but as a step toward a vastly simplified, Social Security-like program in which the task of policing fraud is less daunting. The Ryan plan would also vastly increase the states' incentive to curb Medicaid fraud. Just as a state that increases funding for Medicaid gets matching federal funds, a state that reduces Medicaid fraud gets to keep only (at most) half of the money saved. As much as 75 percent of recovered funds revert back to the federal government. In a report for the left-wing Center for American Progress, former Obama adviser Marsha Simon noted that ``states are required to repay the federal share . . . of any payment errors identified, even if the money is never collected.'' The fact that Albany splits New York's 50 percent share of the spending with municipal governments may explain why the Empire State is such a hot spot for fraud: No level of government is responsible for a large enough share of the cost to do anything about it. The result is that states' fraud-prevention efforts are only a tiny fraction of what Washington spends to fight Medicare fraud. Ryan would replace Medicaid's federal matching grants with a system of block grants. Under a block-grant system, states would keep 100 percent of the money they saved by eliminating fraud. In many states, the incentive to prevent fraud would quadruple or more. Block grants performed beautifully when Congress used them to reform welfare in 1996. They can do so again. The Ryan plan would not reduce Medicare and Medicaid fraud to tolerable levels, but neither would any plan that retains a role for government in providing medical care to the elderly and disabled. What the Ryan plan would do is reduce how much the fraudsters--many of whom sport congressional lapel pins--fleece the American taxpayer. And that is no small thing.

Mr. WHITEHOUSE. Would the Senator yield for a question?

Mr. WHITEHOUSE. One of the things I have been tracking is the share of wealth, income, and taxes at various percentages toward the top. The Senator was good enough to mention that the top 1 percent pays about 28 percent of the taxes, the top 5 percent pays a little over 44 percent of the taxes, and the top 10 percent pays 55.4 percent of the taxes. But I think in order to get a complete picture, it is also important to note that the top 1 percent controls 24 percent of the income, the top 5 percent controls 39 percent of the income, and the top 10 percent controls 50 percent of the income. If you go to wealth, the top 1 percent controls 33.8 percent of the wealth, the top 5 percent controls 60.4 percent of the wealth, and the top 10 percent controls 71.5 percent of the Nation's wealth. So if you are in the top 10 percent and you control 71.5 percent of the Nation's wealth, it doesn't seem to be unreasonable that you should be paying 55 percent of the Nation's taxes, particularly if you are taxing based on dollars and not on just number of people. I don't know if those numbers are wrong. We got them from the Federal Reserve Board, from the IRS, and from the Congressional Budget Office. I think they are accurate. It would appear to show that at the very high end, although these individuals are paying considerable taxes toward our Nation's economy, they are paying considerably less than the amount of wealth they control and not much more than the amount of income they control. In a graduated system of progressive taxation, which we are supposed to have, that is not surprising. In fact, what is surprising is that the top 24 percent of the income only pays 28.3 of the taxes.

Mr. WHITEHOUSE. I would be delighted to do that. And I might actually throw in the data from the IRS that shows that the top 400 income earners in the country in the most recent period that they have actually gone back and done the calculation paid 18.2 percent total taxes, which is less than I think the average American, certainly the average middle-class American family pays. So there is this reversal at the high end where people actually end up paying less. Indeed, in one building in New York, the payment for the most recent year was 14.7 percent from the occupants, whereas janitors and doormen and security guards are paying up in the 20-percent ranges. It is not progressive in that sense. It is regressive at the high ends, according to those things. So let's get the information together, and we will have that discussion.

Mr. WHITEHOUSE. Mr. President, I am honored to follow my distinguished colleague from Maryland in this discussion about our priorities as we address the debt limit we are approaching. I think Leader Reid was wise to choose to cancel the scheduled Fourth of July recess so we could continue to work toward an agreement to prevent defaulting by the United States on our government debt and the financial consequences that would ensue here in America and around the world. As we negotiate an end to this debt limit standoff, we also, obviously, have to address our looming budget deficits and our looming debt, which threaten to cripple our potential for economic growth in years to come. Where we are on this, of course, is that President Clinton put our budget on course to permanent surpluses. We would be a debt-free nation right now if the predictions the nonpartisan Congressional Budget Office had put in place when President Clinton left office had been kept. In fact, there were changes. President Bush and a Republican Congress squandered away those surpluses with unnecessary tax cuts and unwise spending increases. Our multitrillion- dollar deficits have resulted. We must now fix the budget and bring it back into balance. So where are we in this standoff? Well, we need to cut spending. Democrats and Republicans agree on that. We need to protect ordinary families who enjoy ordinary levels of income from tax increases. Democrats and Republicans agree on that. The disagreement is whether we also need to raise some revenues in other areas to help balance the budget, areas such as oil and gas and ethanol subsidies, closing corporate tax loopholes, and putting an end to high-income tax-dodge schemes. On that front, I rise in support of Leader Reid's resolution calling for a deficit reduction package that includes a ``more meaningful contribution'' from millionaires and billionaires. The Republicans are threatening that they would rather let this government default on its obligations than to what they call ``raise revenues'' by requiring the wealthy to pay their fair share. Just last week, Senate Republican leader Mitch McConnell called on President Obama to take any raised revenues ``off the table'' and to balance the budget solely on spending cuts that affect the middle class and lower income families. In an opinion piece on cnn.com, Senator McConnell proclaimed that ``tax hikes can't pass the Congress.'' Well, let's pull the curtain back and take a little glimpse behind it as to whom the Republicans are fighting so hard to protect. As shown in this picture I have in the Chamber, here is a building in New York City on Park Avenue, the Helmsley Building. Because this building is large enough to have its very own ZIP Code, we know from actual IRS information--not projections, not guesses, not conclusions drawn from rates; from actual paid-in IRS information--that the wealthy and successful individuals and corporations that call this building home paid a 14.7-percent total Federal tax rate in the last year they have done the calculation, 2007. That is lower than the actual tax rate, on average, of the New York City janitor or doorman or security guard who would work in this building. It is upside down. The people who serve the occupants of this building pay a higher tax rate than the occupants of this majestic building. The tax gimmicks that let those occupants pay a lower rate than the people who take care of the doors and the cleaning and the security for them--that is what the Republicans are fighting to protect. This problem is not just a fluke in the Helmsley Building. Each year, the Internal Revenue Service publishes a report that adds up all the taxes paid by the 400 highest income earning Americans. I spoke earlier this year--several times, actually--on last year's report, which included data from 2007, like the same year as for the Helmsley Building. In that year, these super-high-income earners, making, on average, $\1/3\ billion, approximately--billion with a ``b''--paid a lower tax rate in 2007--the 400 of them did, on average--than an average hospital orderly who is a single payer pushing a cart down the halls of a Rhode Island hospital at night. In May, the IRS published updated data on the top 400 income earners for 2008. Let's take a look at the status of the top 400 earners in that more recent year. Well, they are down from $\1/3\ billion, on average, to over $\1/4\ billion each. Certainly we can applaud that kind of success in America. That is definitely the American dream come true. But, on average, they paid an average tax rate of 18.2 percent. That is what they actually paid. That is what they put into the IRS. Once you get through all the tax dodges, all the different schemes, all the different deductions, all the different rates, when you actually put the pen to the paper at the bottom line, it is 18.2 percent. We spent a lot of time around here debating whether the top income tax rate should be 35 percent or 39.6 percent. Folks, that is not what they are paying. The Tax Code is so filled with special provisions that tend to exclusively or disproportionately benefit the wealthy that the highest 400 income earners, earning more than $\1/4\ billion in 1 year, paid an average tax rate of 18.2 percent. This means that the 400 highest earning individuals in the Nation, in 2008, paid the same effective tax rate as a truckdriver in Rhode Island. According to the Bureau of Labor Statistics, on average, an ordinary truckdriver earns $40,200, which is about the place in the Tax Code, on the way up, where you first hit paying 18.2 percent of your income in taxes. So what the Republicans are asking as part of the debt limit compromise is that we cut employment and job training support now, at a time of record joblessness, while they continue to fight to make sure that people making a quarter of a billion dollars a year pay lower Federal tax rates than average middle-class families. Here is another building that has a little story to tell. This is a building called Ugland House. It is over in the Cayman Islands. This building does not look like much. It is pretty nondescript. But over 18,000 corporations claim to be doing business out of this building-- 18,000 out of that little building. Clearly what is going on is that those corporations are hiding through shell companies, phony corporate identities that they and wealthy taxpayers use to hide assets and play tax games with the IRS. This kind of mischief down in the Cayman Islands and elsewhere through these tax dodges is estimated to cost us as much as $100 billion every year. As part of a debt limit compromise, the Republicans are asking us to cut America's investments in science, cut America's investments in technology at the same time they are fighting to protect corporations that hide in offshore tax havens so that the honest American taxpayer has to pick up the burden for them. That is what they are fighting for when you pull back the curtain. When all is said and done, everyone, Democrat and Republican, agrees that there needs to be cuts. And everyone, Republican and Democrat, agrees there should be no tax increases on ordinary middle-class families. Those concerns are not at issue. Where is the dispute? What is the blockade? Again, pull back the curtain and you will see that the Republicans are willing to let us as a nation default for the first time in our history on our debt, which would devastate our economy, all to defend tax rates for millionaires and billionaires that are lower than those paid by regular hardworking Americans; all to defend offshore tax havens that are used to evade taxes while ordinary families are expected to pay their taxes; all to defend corporate and special interest tax loopholes, earmarks for the wealthy and well- connected. That is where they have chosen to stand their ground. That is where they have chosen to pick a fight. As our Nation rushes toward the August 2 deadline and the agreement deadline before August 2 when we must have something in place in order to get the President's signature on a bill by August 2--as we rush toward that, as the world's economy and America's economy are imperiled by the threat of our debt limit not being lifted, what are they fighting for? That is what they are fighting for, for the superprivileged, for the super well-connected, for the tax dodges they take advantage of, and for the lower rates the superrich pay compared to the rest of all of us. Those are the interests that Republicans are protecting when they reject any revenue increases to bring down our unsustainable deficit. They say it is tax increases they are against. Well, the answer to that should be Americans asking the question back: Tax increases for who? Because if it is tax increases for the guy who is making a quarter of a billion dollars, and is paying a lower tax rate than a truckdriver, that is okay with me. That is a tax dodge we can get rid of. If it is a tax increase for a company that is going to hide in this building in the Cayman Islands to shelter its incomes so that Rhode Island corporations and Oregon corporations, American corporations have to make up the difference--American taxpayers have to make up the difference, and they cannot hide their income down there any longer, that is a tax increase I can live with. I do not think that is what ordinary Americans have in mind when they say we do not want tax increases. They mean we do not want our rates to go up. But ordinary Americans know that our Tax Code is filled, riddled with gimmicks and tricks and loopholes and deductions that have been put in it over the years by lobbyists. They are earmarks, they just happen to be earmarks in the Tax Code. They spend America's money through the Tax Code just as much as if it were an appropriation. But what is the big difference? The big difference is it takes being a very wealthy individual or a very big corporation to be able to take advantage of those tricks, to be able to hire a lobbyist who can build that trick into the Tax Code, and to have the revenues and the resources to be able to maneuver through the Tax Code in that way. Ordinary Americans do not do that. You can ask pretty much anybody in Rhode Island, show them the thousands of pages of the Internal Revenue Code and ask them: Who has a special provision in it for you? Nobody does. They are regular Americans. They pay regular taxes. They do things the way they are supposed to be done. The gimmicks and the tricks are all at the upper end, and it is time to clean house, particularly now when we so badly need the revenues to balance our budget. It is simply inexcusable that our tax system permits billionaires to pay lower tax rates than truckdrivers, that it allows the wealthy to avoid taxes by hiding assets in phony offshore corporations. Even if we had no budget deficit, just being fair, honoring the principle of equality would demand that we address these inexcusable discrepancies that favor the wealthy and the well-connected. Our budget crisis, however, brings real urgency to the problem. So as we continue to work to avoid a debt default by the United States of America and to bring down our budget deficits and to reduce our crippling national debt, I hope Senator McConnell and the Republican Conference will revisit the potential to significantly cut the deficit by addressing tax loopholes, tax gimmicks and, frankly, outright injustice to the ordinary American taxpayer that they are now defending here in the Senate. I see the distinguished Senator from Alabama arriving. I yield the floor.

Mr. WHITEHOUSE. I don't want to step on your colleagues' time.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Mr. President, today I wish to reflect on a recent article on one of the most influential heroes from the earliest days of our Nation's history: Roger Williams of Rhode Island. Roger Williams' legacy is well known in my home State of Rhode Island--the State he helped found after being banished from Massachusetts for his beliefs about religious tolerance. Roger Williams argued that religious beliefs should be kept separate from government policies and that government should not impose a specific set of religious beliefs on its citizens. The separation of church and state is widely embraced today, both in the United States and in many countries around the world. But in the 1600s, this was a scandalous idea. The Puritans who colonized the Massachusetts Bay Colony fled England because of religious persecution, but they had no intention of allowing religious freedom in the new colonies. Rather, they established the Massachusetts Bay colony as a theocracy that enforced adherence to their particular religious beliefs with the gallows and the lash. Roger Williams rejected this framework, and was forced to flee Massachusetts. Upon arriving at the northwestern shore of Narragansett Bay in 1636, he negotiated an agreement with the Narragansett Indians to establish a new colony on that land. As Williams wrote, ``. . .having made covenant of peaceable neighborhood with all the sachems and natives round about us, and having, in a sense of God's merciful providence unto me in my distress, called the place Providence, I desired it might be for a shelter for persons distressed for conscience.'' Later on these views would be enshrined in Rhode Island's founding charter, providing ``full liberty in religious concernments.'' Williams' principles of tolerance are the foundation on which our state, and afterwards our nation, were built. To this point, I request to have printed in the Record a recent op-ed from the Providence Journal by Rhode Island College Professor J. Stanley Lemons entitled ``Assessing the global importance of Roger Williams,'' which does an excellent job of capturing this piece of American history. The information follows. [From the Providence Journal, Friday, June 24, 2011] Assessing the Global Importance of Roger Williams (By J. Stanley Lemons) The greatest contribution that the U.S. has made to world religion is the concept and practice of separation of church and state, and that was started in Providence with Roger Williams in 1636. Even if nothing in the rest of the history of the state was remarkable, Providence would still have that one world-class contribution to its credit. It was the first place in modern history where citizenship and religion were separated, where freedom of conscience was the rule. While his ideas were reviled and attacked in the 17th Century, they became embodied in the U.S. Constitution in 1789 and the Bill of Rights, appended to it in 1791. Have you wondered why there is a Roger Williams Lodge of B'nai B'rith? Why the oldest synagogue (Touro Synagogue, in Newport) in America is in Rhode Island? Have you ever wondered why Rhode Island never had a witch trial? Or blasphemy trials? Nor hanged, whipped or jailed people because of religion? All the other colonies executed witches, but not Rhode Island. Most had blasphemy trials, but not Rhode Island. Nearly everywhere else in colonial America, people of faith were persecuted, but not in Rhode Island. Massachusetts hanged four Quakers, and Virginia imprisoned dozens of Baptists. Maryland, which was created as a haven for Roman Catholics, came to outlaw Catholic priests and prohibited Roman Catholics from inheriting property. These things did not happen here because Roger Williams founded Providence to be a ``shelter for those distressed of conscience.'' Rhode Island's freedom of religion prevented such religious laws and abuses. It is well to recall how this came about. Roger Williams got into serious trouble in Massachusetts when he challenged both the political and religious establishments by asserting that the government had no role in religion. Moreover, he challenged the legitimacy of the colony itself by charging that it had stolen its land from the Indians. So he was tried and convicted of sedition, heresy and the refusal to take an oath of allegiance to the colony that required him to swear in God's name. In October 1635 he was ordered banished to England, whence he had fled in 1630 because of religious persecution. Before the banishment could be carried out, however, he fled from Salem into the snow in January 1636 and trekked to the Narragansett Bay. In June he left the shelter of the Wampanoags and crossed the Seekonk River into the domain of the Narragansetts. From Miantonomi and Canonicus he acquired Providence. His relations with the Narragansetts were so cordial that Providence and the Narragansetts remained allies for the next 40 years against the efforts of Massachusetts, Connecticut and Plymouth colonies to destroy them both. When the householders first gathered in Providence to form their town government, they agreed that they could make rules and laws in ``civil matters only.'' In 1644 when Williams secured his charter for the ``Province of Providence Plantations in Narragansett Bay in New England,'' that charter was for a ``civil government.'' It did not mention religion because Williams did not believe that government had any role to play in religion. ``Soul liberty'' was God's gift to all humanity; it was not something granted by any government. Soul liberty was the freedom of every person to follow the dictates of conscience. A government could only acknowledge this freedom and stand aside to allow full freedom of religion. This meant that one had to have complete separation of church and state. For Roger Williams, separation of church and state was for the protection of the church from the corrupting effects of government. Williams wrote repeatedly that true religion needs no support of the government and that government support invariably corrupts religion. All of the neighboring colonies regarded Providence Plantations with undisguised horror and worked for the first hundred years to dismember and destroy this ``hive of heretics.'' But they failed, and the principle that Roger Williams planted in Providence in 1636 came to be the law of all of Rhode Island and then a basic principle of the United States. And, Roger Williams, whose ideas were roundly rejected by everybody in his lifetime, would be seen by the 20th Century as the quintessential American of the 17th Century. What was the founding principle of Providence-- freedom of religion (which demands separation of church and state)--now holds out a hope for the whole world where religious intolerance is the basis of so much strife. Williams believed that it was God's command that everyone (including people that he regarded as heretics, pagans, atheists, and infidels) had a right to freedom of conscience. He believed that anyone had a right to be wrong, and that only civil debate could be used to change a heart or mind. The only tools of religion were those of the spirit, never the sword. For him, the state had no role to play in religion. He believed that whenever and wherever the government tried to meddle with religion by trying to define it or control it or enforce it, or even to support it, religion was corrupted by such efforts. Williams and his good friend John Clarke, of Newport, shared the view that the key to a peaceful society was complete separation of church and state. Nearly everyone else believed just the opposite: They believed that peace was possible only when everyone was united in a single church in a single state. Williams's core religious principle held that each person had freedom of conscience and freedom to practice their faith. Nearly everyone else thought that the state had to punish and coerce those who had divergent religious beliefs, wrong practices, or wayward ideas. His position on freedom of religion was wildly radical in his day and, nearly four centuries later, this basic principle is still wildly radical in great swathes of today's world. Religious freedom does not exist in most nations on the planet. What would Roger Williams think of the idea that our nation was founded as a Christian nation? Certainly Providence and Rhode Island were not founded as a Christian government. It is deeply troubling to know that a pastor of one of the largest churches in Texas declared on national TV that ``separation of church and state is the product of some infidel's mind.'' To call Roger Williams an infidel reveals profound ignorance of our nation's history. Roger Williams utterly rejected any such concept and regarded the idea of a ``Christian nation'' as ``blasphemy.'' So, he established a government that was confined to ``civil matters only,'' and this has become a model for the world.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Mr. President, yesterday afternoon I spoke in this Chamber, and I quoted former Comptroller General David Walker saying that we as a country face ``large, known and growing structural deficits that could swamp our ship of state.'' To get our ship of state in trim, we need to make adjustments; we need to reduce the deficit and the debt. I also discussed that when Republicans demand that all ``revenue raisers'' be taken off the table in our discussions about how we reduce that deficit and that debt, as the Republican leader has done just this week, what they are really defending is tax subsidies for profitable big oil companies; what they are really defending is corporations that dodge their U.S. taxes by setting up phony business locations in the Cayman Islands and elsewhere; what they are really defending is ultra- high-income individuals--the highest 400 income earners in the country--paying a lower actual tax rate than ordinary working Americans, in some years lower than truckdrivers, in some years as low as a hospital orderly. Just last month, Republicans filibustered a measure that would have ended $21 billion in completely unnecessary subsidies for the largest oil companies. We know those oil companies are enjoying record multibillion-dollar profits, the highest, in some cases, profits any corporation has ever made, and they do not need continued support from the American taxpayer--they just do not, not when these other cuts are being thought of. But our Republican friends went to bat for the big oil companies, and they fought back our attempt and they protected that bill oil subsidy. To keep our ship of state afloat, Republicans are willing to end Medicare, kick children out of Head Start early education, knock down Pell grants, and eliminate PBS. But they will fight to protect special subsidies and tax breaks for big corporations and billionaires. Today, I rise to discuss one such unjustifiable tax giveaway--a tax break for private jets for the use of CEOs and other top corporate executives that has no public policy benefit whatsoever. The way this works, under current law companies that buy private jets--planes which can cost upward of $50 million each--can deduct the value of that jet from their taxes over 5 years. There is a 5-year depreciation schedule. Airline carriers, on the other hand, the folks who carry 99 percent of the American public through the air, must depreciate the value of their planes over 7 years--2 years longer than for the private executive jets. Now, this may sound like a minor accounting anomaly, and I am sure that is what the corporate lobbyists who got this through and stuck into our Tax Code said when they got it done, but this is one that may cost the government $3 billion in lost tax revenue over the next decade. The special treatment of corporate jets, its advantage relative to jets that regular people fly on when they take to the air, is just one more example of a Tax Code that is riddled with custom-made provisions, earmarks in the Tax Code that benefit corporations and the wealthy. While middle-class families struggle to make car payments and face ever higher prices at the gas pump, our Tax Code subsidizes the private jet travel of millionaires and billionaires. In a time of austerity, when we are being asked to cut education, when we are being asked to cut science, when we are being asked to cut health care, it is no time to be protecting a private jet subsidy that ordinary taxpayers have to make up for through their own taxes, and we should repeal it as part of a package to lower our budget deficits. I was disappointed when Senate Republicans rejected our attempt to repeal Big Oil giveaways, and I hope they will not do the same when we bring up a corporate jet loophole repeal for a vote. As we continue to debate ways to close the budget gap, I hope my Republican colleagues will rethink their determination to defend tax loopholes for corporations and the wealthy while they are trying to get rid of Medicare. That is a terrible set of priorities. It is simply unconscionable for them to talk about cutting education and research and health programs while they are fighting on the floor to protect, at all costs, special interest tax subsidies that are on the books. I yield the floor.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Madam President, our Nation asks a lot of our troops. In return, we must give them the best possible equipment to fulfill their vital missions and come home safely. We have a powerful obligation to them to ensure the proper performance of weapons systems, body armor, aircraft parts, and countless other mission-critical products. Today, however, America's military faces a significant and growing threat from counterfeit products entering the military supply chain. I rise to speak about a bill I have introduced with Senator McCain, Senator Graham, and Senator Coons: the Combating Military Counterfeits Act of 2011. This bill will enhance the ability of prosecutors to keep counterfeit goods out of the military supply chain. In so doing it will help protect America's Armed Forces from the risk of defective equipment. These counterfeit products do not meet military standards. As a result, they put troops' lives at risk, compromise military readiness, and cost the country enormous sums in replacement costs. In the case of microelectronics, counterfeit parts also provide an avenue for cybersecurity threats to infiltrate military systems, possibly enabling hackers to track or even disable crucial national security applications. With troops from Rhode Island and all over the United States serving overseas in Iraq and Afghanistan, we cannot accept criminals selling fake versions of products used by our troops. Unfortunately, however, this unacceptable threat to troop safety and national security is growing. A report by the Government Accountability Office provides examples that demand stiff criminal punishment. It explains that the Defense Department found out in testing that what it thought was Kevlar body armor was in fact nothing of the sort and could not protect our troops the way proper Kevlar can. Our troops going out on patrol in fake body armor is simply unacceptable. In another example, a supplier sold the Defense Department a part that it falsely claimed was a $7,000 circuit that met the specifications of a missile guidance system. Military grade chips are called that for a reason: they are required to withstand extreme temperature, force, and vibration. Chips that don't meet those specifications are prone to fail; for example, when a jet is at high altitude, when a missile is launching, or when a GPS unit is out in the rugged field. The possible consequences of such equipment failing are dire. A January 2010 study by the Commerce Department quoted a Defense Department official as estimating that counterfeit aircraft parts were ``leading to a 5 to 15 percent annual decrease in weapons system reliability.'' The Commerce Department study, which surveyed military manufacturers, contractors, and distributors, reported approximately 2\1/2\ times as many incidents of counterfeit electronics in 2008 as in 2005. The high price of military grade products is going to attract more and more counterfeiters. On a related matter, one source of the problem has been the often illegal dumping of U.S. electronic waste in countries such as China. Business Week reported in 2010 that used computer chips from old personal computers are fraudulently remarked in China as ``military grade'' chips and sold to U.S. military suppliers. A bill I introduced last week, the Responsible Electronics Recycling Act, would help address that issue by cracking down on the profligate dumping of electronic waste. We should also evaluate this combating military counterfeits bill in the context of the relentless cyber attacks America weathers every day. The chip might not only be counterfeit, it might be the carrier for dangerous viruses and malware that may create windows our enemies can enter to sabotage our military equipment or to steal our military secrets. I applaud those of my colleagues who have worked with the Department of Defense to ensure that it can keep counterfeits out of the supply chain. I particularly appreciate the leadership of Chairman Carl Levin and Ranking Member John McCain of the Armed Services Committee. I am also pleased that the administration, and particularly its intellectual property enforcement coordinator, Victoria Espinel, is working hard to protect our military from counterfeits. I am also pleased that the National Intellectual Property Rights Coordination Center recently began Operation Chain Reaction, a new initiative targeting counterfeit items entering the military supply chain. I strongly believe that strengthened criminal provisions should be part of our strategy going forward. As a former U.S. attorney I know the significant deterrent effect criminal sanctions can provide. The Department of Justice has a vital role to play in using criminal investigations and prosecutions to identify and deter trafficking in counterfeit military goods. To that end, the administration has endorsed increasing penalties for trafficking in counterfeit military goods as part of recent recommendations to Congress for better protecting American intellectual property. I am glad the administration has recognized the need for legislation, and I look forward to working with them to see the necessary changes made. Our laws currently do not impose any special punishment for trafficking in counterfeit military goods. 18 U.S.C, section 2320, the counterfeit trafficking statute, provides heightened penalties for trafficking and counterfeits that result in bodily injury or death. But out on the battlefield it is not clear that the part will ever be recovered, and it is impossible sometimes to tell them the counterfeit caused the bodily injury or death. As a result, traffickers in military counterfeits are less likely to face penalties that reflect the unacceptable risk their counterfeits impose on our soldiers, our military readiness, our cybersecurity, and our national security. The legislation I am introducing today with Senators McCain, Graham, and Coons addresses this inadequacy in our laws. I urge my colleagues to join me in seeing it passed into law soon. Traffickers should pay a heavy price if they knowingly sell the military a piece of counterfeit body armor that could fail in combat, a counterfeit missile control system that could short-circuit at launch, or a counterfeit GPS that could fail on the battlefield. Our troops deserve Kevlar that is Kevlar, and military grade chips that are military grade. By creating an enhanced offense for an individual who traffics in counterfeits and knows that the counterfeit product either is intended for military use or is identified as meeting military standards, this bill will help. It doubles the statutory maximum penalty for such offenses, and it directs the sentencing commission to update the sentencing guidelines as appropriate to reflect Congress's intent that trafficking in counterfeit military items be punished sufficiently to deter this wrongful endangerment of our servicemembers. The bill targets only particularly malicious offenders--those who already are guilty of trafficking in counterfeit goods and know they are selling military counterfeits. This approach means the bill will not affect legitimate military contractors who might be unaware that a counterfeit chip has been entered into one of their products. It will not apply to makers of products that unintentionally fall short of military specifications. This bill is intended to help military suppliers by deterring the criminals who sell counterfeits to them or to their subcontractors. Manufacturers, such as the many high-tech innovators in Rhode Island, will actually benefit from the protection of their intellectual property. I am grateful to have the support of the Chamber of Commerce, the Semiconductor Industry Association, the International Anti- Counterfeiting Coalition, and others. I look forward to working with them and other interested stakeholders to make this legislation as effective as possible at deterring this particularly reprehensible form of criminal activity. Let me close by thanking Senator Graham, Senator McCain, and Senator Coons for joining me in introducing this bill today. As my colleagues know, Senator McCain and Senator Graham both have long stood out as champions for our troops. Senator Coons has already become a staunch defender of our national security and our Nation's intellectual property. I very much look forward to working with them and other colleagues on this important bill. All of us in the Senate have the privilege of visiting with and supporting our troops. We all know the sacrifices they make for our country. We all want to do everything we can to ensure that their equipment functions properly and that counterfeits do not compromise our Nation's military readiness or security. Passing the Combating Military Counterfeits Act of 2011 will be a valuable step toward these important goals.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Madam President, I ask unanimous consent to speak for 10 minutes.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Mr. President, I rise today to join again in the debate occurring in Washington on bringing our Federal budget into balance and facing up to our looming debt limit. Our Nation right now is like an overburdened ship wallowing in the seas. We are in danger as a nation of foundering if we don't sort this out. As former Comptroller General David Walker testified to us in the Budget Committee over a year ago, we face ``large, known and growing structural deficits that could swamp our ship of state.'' To get the ship in trim, we need to make adjustments. We need to reduce the deficits and ultimately reduce the debt. We agree on a lot. We need to cut spending. Democrats and Republicans agree on that. We need to protect ordinary families who enjoy ordinary levels of income from tax increases. Democrats and Republicans agree. The disagreement here in Washington is whether we also need to raise some revenues for our Nation in other areas to help balance our national budget--areas such as oil and gas and ethanol subsidies that we could close and contribute to fixing our budget deficit, closing corporate tax loopholes, bringing to an end high-income, tax-dodge schemes. The Republicans are threatening that they would rather sink the boat than raise revenues in those areas. Just this week, Senate Republican Leader Mitch McConnell called on President Obama to take any revenue raisers ``off the table'' and to focus only on spending cuts. In an opinion piece on CNN.com, the Republican Leader, Senator McConnell, proclaimed ``tax hikes can't pass the Congress.'' Let's start with the fact that, as I said a minute ago, we are not talking about tax hikes on ordinary Americans. When Leader McConnell is talking about tax hikes, he is talking about the rates that the wealthiest Americans pay in taxes, often lower than ordinary American families, believe it or not, gas and oil and other subsidies that go to big industries, and tax loopholes that generations of corporate lobbyists have wangled into the Tax Code. That is what they are talking about when they talk about tax hikes in this context. Let's take a specific look at what the Republicans are fighting so hard to protect. Last month, Republicans filibustered a measure that would have ended $21 billion in unnecessary tax subsidies for the largest oil companies in the Nation--companies that have enjoyed record multibillion-dollar profits and do not need continued support from the American taxpayer. When we tried to break the Republican filibuster, Republicans voted to protect those big oil subsidies, even though they add to the deficit. That happened right here on the Senate floor a short time ago. To keep our American ship of state afloat, the Republicans are demanding that we cut early childhood education while at the same time they fight to protect big oil subsidies. Here is a building in the Cayman Islands. It is called Ugland House. This nondescript building does not look like much, but over 18,000 corporations claim that this building is their place of business. Mr. President, 18,000 corporations claim this building is their place of business. It gives a whole new meaning to the phrase ``small business'' to imagine 18,000 corporations fitting into that little building. As Budget Committee Chairman Conrad has pointed out, the only business going on down there in the Cayman Islands is funny business, monkey business with the Tax Code. It is corporations getting out of paying their responsibilities to this country by hiding behind phony shell corporations down in the Cayman Islands. It is estimated to cost us as much as $100 billion each year to put up with this offshoring tax shelter of income. To keep our ship of state afloat, the Republicans are asking us to cut investments in science and technology that will cure disease for Americans and for mankind, and at the same time they are fighting to protect corporations that hide in offshore tax havens so the honest American taxpayer has to carry the burden in their place. Here is another building with a story to tell. This is the Helmsley Building on Park Avenue in New York City. We remember Leona Helmsley who famously said: Taxes are for the little people to pay. Well, we know something about the Helmsley Building and its taxes because this building is large enough to have its own ZIP Code. The IRS compiles tax information by ZIP Code. So we know from IRS actual information what the wealthy and successful individuals and corporations that call this building home pay in Federal tax each year. Guess what we know. We know that in the last year that was recorded, for which this has been pulled out--which was 2007--the occupants, together, of this building--the Helmsley Building--paid a 14.7-percent total Federal tax rate. They actually paid 14.7 percent. The average American taxpayer, the average middle-class American, pays far higher than that. We hear a lot of talk about how high tax rates are for wealthy Americans. In real life, when you go to actual examples--14.7 percent, how does that compare, for instance, to the people who work in that building, the average New York City janitor or doorman or security guard? Well, far, far lower. They all pay tax rates in the 20 to 25-percent range, even higher in some cases, on average--far higher than the high-income occupants of the building. It is not just because this is the Helmsley Building that this is true. This is not some anomaly. Each year, the Internal Revenue Service publishes a report that details the taxes paid by the highest earning 400 Americans. I spoke earlier this year on last year's report, which was based on that same year's data, 2007. In that year, these superhigh income earners, earning nearly a third of a billion dollars--with a ``B''--in income in 1 year, 2007, on average--all 400 of them in that year--the superhigh income earners paid a lower tax rate than an average hospital orderly, who is a single filer, pushing a cart down the hallways at midnight, of a Rhode Island hospital. They paid a lower tax rate on their income than that hospital orderly. In May, the IRS published data on the top 400 taxpayers for 2008. Let's take a look at what happened in this most recent year they have categorized. In 2008, the top 400 took home an average of $270 million each--more than a quarter of a billion dollars each. We can and do applaud the success of these individuals. It is the American dream to make more than a quarter of a billion dollars in a single year. But, on average, these 400 extremely wealthy Americans paid an average Federal tax rate of 18.2 percent. We spend a lot of time around here debating whether the top income tax rate should be 35 percent or 39.6 percent. Folks, that is not what they paid. The Tax Code is filled with special provisions that tend to exclusively or disproportionately benefit the wealthy, so the top 400 income earners paid an average of 18.2 percent. A single filer, at $39,350 of income, pays the same tax rate. Mr. President, $39,350, that is where you hit 18.2 percent and match the rate people making a quarter of a billion dollars pay. Those of us who are in between the truckdriver and those ``uber'' billionaires pay far, far higher rates. The average truckdriver in Rhode Island, according to the Bureau of Labor Statistics, is paid $40,200, which means the average truckdriver is paying as high or higher rate than these top 400 income earners earning over a quarter of a billion dollars. To keep our ship of state afloat, the Republicans are asking us to cut employment and training support at a time of record joblessness while they continue to fight to make sure people making a quarter of a billion dollars a year pay lower Federal tax rates than middle-class American families. When all is said and done, everyone agrees that there needs to be cuts, and everyone agrees there should be no tax increases on middle- class American families making up to $250,000 a year. That is already agreed to. Those concerns are not an issue. What is at issue is that the Republicans are willing to sink the ship of state to defend tax rates for billionaires that are lower than those paid by regular, hard-working Americans. The Republicans are willing to sink the ship of state to defend special interest loopholes in the Tax Code won by big corporate lobbyists, in effect earmarks--earmarks that happen to be in the tax side of the budget rather than in the spending side of the budget. The Republicans are willing to sink the ship of state to defend offshore havens for corporations and high-income earners to dodge taxes. That is where they have chosen to stand and fight. That is where the disagreement is--not for the middle class that is the backbone of our Nation but for the special interests, the big corporations and the ultrarich. When you say that revenues cannot be on the table, that is who you are protecting. That is just a fact. They say it is tax increases they are protecting against. The question Americans should ask, when they hear that, is: Tax increases for whom? For the corporate lobbyists who drove down corporate taxes to the point where significant numbers of American corporations do not pay a dollar in taxes? Yes, there should be tax increases there. We should close those loopholes. Tax increases for people making more than a quarter of a billion dollars, who pay less than the average working- class family as a rate? Yes, there should be tax increases there. But that is just in the spirit of fairness. It is simply inexcusable that our tax system permits billionaires to pay lower tax rates than truckdrivers and allows some of the most profitable companies in the world to pay little or no taxes to support our Nation. Even if we had no budget deficits, fairness and equality would demand that we address these inexcusable discrepancies. Our budget crisis, however, brings new urgency to the problem. As we continue to debate ways to close the budget gap, I hope the Republican leadership and the Republican Conference will revisit the potential to significantly cut the deficit by addressing the tax loopholes, tax gimmicks, and, frankly, outright injustice to the ordinary taxpayer that they are now defending. I thank the Chair and yield the floor.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Mr. President, with the unemployment rate hovering above 9 percent nationwide, and at almost 11 percent in my home State of Rhode Island, job creation must continue to be our No. 1 priority as lawmakers. It disappoints me that Republicans chose politics over job creation yesterday when they filibustered legislation that would have reauthorized the Economic Development Administration, an agency dedicated to restoring economically distressed regions to prosperity. In the past, this bill has been reauthorized and supported broadly, indeed, by unanimous consent. It is the fourth jobs bill the minority has chosen to obstruct, and I hope my colleagues on the other side of the aisle will reconsider their tactics. If not, we may have to reconsider ours and force some votes on job creation measures without this litany of irrelevant amendments that have bogged down and obstructed the previous jobs bill we have tried to get action on. Out- of-work Americans are hurting right now, and they want us to act to help create jobs. I rise today to introduce a measure that will do just that. I have heard from dozens of Rhode Island business owners that business is picking up a bit, but they are still concerned the recovery may be temporary and that discourages them from hiring additional workers. I spoke with one such small business owner on Monday. I visited Dona Vincent during a tour of her Cranston, RI company, Tedco. Tedco makes and stamps metal components for the automotive, aerospace, and communications industry. It employed 13 people before the recession struck in 2008. Now it is down to eight employees. Dona and Ted's co- general manager Barbara Galonio wishes to start hiring more workers, but they worry that business could slow down again. They told me they have been waiting to hire, wanting to hire, and for months saying to themselves: Well, what if this? What if that? They have been on the border of hiring. The legislation I have introduced today, the Job Creation Tax Credit Act of 2011, would give Dona and thousands of other business owners nationwide greater security as they look forward to building their workforces. The bill would provide refundable tax credits for employers to hire new workers now. The way it would work is that for each qualified hire made in 2011, the business would receive a tax credit equal to 15 percent of the wages paid to the new employee. If the new employee remains employed or if the business were to hire additional employees in 2012, the business would be eligible for a 10-percent tax credit on those employees' wages next year. Because these tax credits would be refundable, businesses would benefit from them even if they are not currently profitable. One of the problems with struggling businesses that are not sure how much profit they are going to make if they are right on the edge is giving them a tax credit doesn't help because they have no tax against which to take the credit. A refundable tax credit comes to the business in spite of that. The higher credit in 2011 I expect would encourage employers to hire new workers as soon as possible, and the additional credit in 2012 would encourage retaining those employees and additional workforce expansion. To help those Americans who are struggling to find work, qualified hires would be defined as new employees who have been unemployed for at least 60 days prior to getting hired. The Job Creation Tax Credit Act would continue the job creations sparked by the HIRE Act of 2010 which included somewhat different tax incentives for new hiring. Economist Mark Zandi has estimated that the HIRE Act created 250,000 new jobs, a quarter of a million families with a paycheck coming in. The larger financial incentives in this new bill would continue to dent the unemployment numbers in Rhode Island and nationwide. The previous HIRE Act, sponsored by Senator Schumer and Senator Hatch, received wide bipartisan support, and I hope my colleagues on both sides of the aisle will support the Job Creation Tax Credit Act as well because right now we cannot forget that too many unemployed Americans are hurting. Too many are out of work. Too many are out of work through no fault of their own. Indeed, too many of them are still out of work because of the cascade of misery that washed across this country from the Wall Street meltdown. There may be a lot of blame to go around on that, but none of it attaches to the workers who got caught in that cascade of misery. Of course, too many families are struggling to make ends meet week to week. We must continue fighting for them by using every tool at our disposal, including these new tax incentives, to get our economy moving and to help businesses start hiring. Again, this is a bill with a proven successful strategy, that has been approved by this body in the past, that has had bipartisan support in the past, and that addresses the most important issue facing our country right now, and that is putting people back to work, rekindling our economy, and getting folks into jobs.

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Mr. President, with the unemployment rate hovering above 9 percent nationwide, and at almost 11 percent in my home State of Rhode Island, job creation must continue to be our No. 1 priority as lawmakers. It disappoints me that Republicans chose politics over job creation yesterday when they filibustered legislation that would have reauthorized the Economic Development Administration, an agency dedicated to restoring economically distressed regions to prosperity. In the past, this bill has been reauthorized and supported broadly, indeed, by unanimous consent. It is the fourth jobs bill the minority has chosen to obstruct, and I hope my colleagues on the other side of the aisle will reconsider their tactics. If not, we may have to reconsider ours and force some votes on job creation measures without this litany of irrelevant amendments that have bogged down and obstructed the previous jobs bill we have tried to get action on. Out- of-work Americans are hurting right now, and they want us to act to help create jobs. I rise today to introduce a measure that will do just that. I have heard from dozens of Rhode Island business owners that business is picking up a bit, but they are still concerned the recovery may be temporary and that discourages them from hiring additional workers. I spoke with one such small business owner on Monday. I visited Dona Vincent during a tour of her Cranston, RI company, Tedco. Tedco makes and stamps metal components for the automotive, aerospace, and communications industry. It employed 13 people before the recession struck in 2008. Now it is down to eight employees. Dona and Ted's co- general manager Barbara Galonio wishes to start hiring more workers, but they worry that business could slow down again. They told me they have been waiting to hire, wanting to hire, and for months saying to themselves: Well, what if this? What if that? They have been on the border of hiring. The legislation I have introduced today, the Job Creation Tax Credit Act of 2011, would give Dona and thousands of other business owners nationwide greater security as they look forward to building their workforces. The bill would provide refundable tax credits for employers to hire new workers now. The way it would work is that for each qualified hire made in 2011, the business would receive a tax credit equal to 15 percent of the wages paid to the new employee. If the new employee remains employed or if the business were to hire additional employees in 2012, the business would be eligible for a 10-percent tax credit on those employees' wages next year. Because these tax credits would be refundable, businesses would benefit from them even if they are not currently profitable. One of the problems with struggling businesses that are not sure how much profit they are going to make if they are right on the edge is giving them a tax credit doesn't help because they have no tax against which to take the credit. A refundable tax credit comes to the business in spite of that. The higher credit in 2011 I expect would encourage employers to hire new workers as soon as possible, and the additional credit in 2012 would encourage retaining those employees and additional workforce expansion. To help those Americans who are struggling to find work, qualified hires would be defined as new employees who have been unemployed for at least 60 days prior to getting hired. The Job Creation Tax Credit Act would continue the job creations sparked by the HIRE Act of 2010 which included somewhat different tax incentives for new hiring. Economist Mark Zandi has estimated that the HIRE Act created 250,000 new jobs, a quarter of a million families with a paycheck coming in. The larger financial incentives in this new bill would continue to dent the unemployment numbers in Rhode Island and nationwide. The previous HIRE Act, sponsored by Senator Schumer and Senator Hatch, received wide bipartisan support, and I hope my colleagues on both sides of the aisle will support the Job Creation Tax Credit Act as well because right now we cannot forget that too many unemployed Americans are hurting. Too many are out of work. Too many are out of work through no fault of their own. Indeed, too many of them are still out of work because of the cascade of misery that washed across this country from the Wall Street meltdown. There may be a lot of blame to go around on that, but none of it attaches to the workers who got caught in that cascade of misery. Of course, too many families are struggling to make ends meet week to week. We must continue fighting for them by using every tool at our disposal, including these new tax incentives, to get our economy moving and to help businesses start hiring. Again, this is a bill with a proven successful strategy, that has been approved by this body in the past, that has had bipartisan support in the past, and that addresses the most important issue facing our country right now, and that is putting people back to work, rekindling our economy, and getting folks into jobs.

Mr. WHITEHOUSE

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

Mr. WHITEHOUSE

Mr. WHITEHOUSE. Mr. President, it would be unimaginable there be objection to such good news. I ask unanimous consent that the resolution be agreed to, the preamble be agreed to, and the motions to reconsider be laid upon the table.