[Congressional Record Volume 148, Number 137 (Thursday, October 17, 2002)]
[Senate]
[Pages S10604-S10606]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  FINISHING THE PEOPLE'S BUSINESS: COMPLETION OF BIPARTISAN TAX RELIEF

  Mr. GRASSLEY. Mr. President, I wish to brief my colleagues on 
Democratic gridlock in the Senate, and the only reason I feel 
comfortable using that word is that in 1993, I remember the headlines 
in the papers referred to ``Republican gridlock'' in the Senate when 
certain provisions and portions of President Clinton's program were not 
being acted upon, at least the way the newspapers believed they should 
be, in the Senate. It seems to me we have a similar situation now, but 
I do not see the newspapers writing about Democratic gridlock in the 
Senate.
  I wish to address my colleagues on a few provisions on the Senate 
calendar that are not being enacted, and these are the ones which I 
feel some expertise in talking about because they come from the Senate 
Finance Committee and deal with the legislative tax agenda.
  I am ranking Republican on the Finance Committee, and I am pleased to 
report that the committee has completed action on a number of 
bipartisan tax relief measures. The items I am going to discuss happen 
to have cleared the committee unanimously, which ought to say something 
about why they should be acted upon on the floor of the Senate, and I 
raise the question then: Why are they being held up?
  I will refer to two of many pieces of legislation about which I could 
talk.
  The first is a charitable tax reform bill known by the acronym CARE. 
By the way, this bill was introduced as a bipartisan bill. Senator 
Lieberman on the Democratic side and Senator Santorum on the Republican 
side worked closely with the White House because it is very high on the 
President's agenda.
  The second item I am going to refer to is one that is Enron related.
  Starting about a year ago, until about 3 months ago, Enron was voiced 
by everybody in the Senate as reason for doing certain actions--
corporate governance, pension reform, 401(k) reform, et cetera. For 
some reason, we do not hear anything about it now, particularly from 
the other side of the aisle, because there is some legislation on the 
agenda that is Enron related that reforms the pension statute that 
would help protect future Enron employees from losing their retirement 
nest egg.
  Again, both of these items--the charitable tax reform bill and the 
pension reform bill--were passed out of our committee unanimously. That 
is quite a reputation for a bill to have, considering how difficult it 
is to get even a majority view sometimes on the Senate Finance 
Committee.
  I wish to briefly describe the merits of this legislation. The 
charitable tax reform act is part of the President's compassionate, 
conservative initiative. The CARE Act has been carried forward on a 
bipartisan basis under the very energetic leadership of Democratic 
Senator Lieberman and Republican Senator Santorum. Others, including 
our own leaders of the Democratic and Republican Parties, Senator 
Daschle and Senator Lott, have pledged their efforts to pass this bill. 
The House passed this bill over a year ago, and did it on a bipartisan 
vote. Several months ago, the Senate Finance Committee reported this 
bill to the full Senate.
  Most of the focus on the bill has been on provisions that reduce 
taxes. For instance, those who take the standard deduction--and that is 
about 70 percent of our taxpayers--will for the first time under this 
legislation be encouraged to contribute more to charities, and the 
incentive for doing that is the deductibility of these small 
contributions from their income taxes regardless of the fact that they 
take the standard deduction.
  As we know, people who tend to take the standard deduction are in the 
middle or lower income tax brackets. So the key provision of this bill 
provides a broad-based tax benefit to lower income taxpayers.
  This provision and others are obviously meant to, and will, enhance 
resources for charities to do their good work. This empowers people who 
are taxpayers to help charities, to empower the private sector of our 
economy to do more in humanitarian ways, and to have the resources to 
do what these organizations are already inclined to do.
  Even though this is a tax reduction measure, because obviously there 
is some lost revenue when these deductions are taken, we have offsets 
in this bill so there is not a net reduction in revenue to the Federal 
Treasury. The Finance Committee, on a bipartisan basis as well, decided 
this should be done so that it was not subject to a point of order 
requiring 60 votes, or that we would be fiscally irresponsible in 
putting this tax benefit for charities into the individual tax law.
  I say to my fellow Senators, unlike a lot of spending legislation, 
the appropriations bills that have come before this body recently, this 
proposal does not add to the deficit. The Finance Committee found two 
important tax policy initiatives to offset this bill. All of these are 
related to corporate or individuals doing things to avoid taxes that 
may, in fact, be legal but are not necessarily moral or ethical. So we 
use these income-raising measures to offset the revenue loss in the 
Charitable Contribution Act.
  The first offset shuts down what are called corporate expatriations, 
also known as inversions. Let me explain to my colleagues that what we 
are talking about is corporations that over a long period of time have 
paid their taxes into the Federal Treasury exactly the way they were 
intended to be paid but there has been a recent trend of some 
corporations setting up a shell corporation in a place such as Bermuda 
for the sole purpose of avoiding taxes.
  We do not have any problems with people using our tax laws the way 
they were intended to meet international competition, but we are very 
chagrined at the act of people setting up a shell corporation for the 
sole purpose of avoiding taxes.
  On the one hand, we have corporations that have traditionally abided 
by the laws and not tried to finesse those laws to their own benefit. 
They basically stayed here and they paid. Then on the other hand, there 
is the whole trend of corporate tax filings to avoid paying taxes. They 
basically have dashed from the country, and they have stashed the cash 
somewhere else to avoid taxation. That is what is called an inversion.
  Passing the CARE Act will use the inversions as an offset so the 
money that would not be paid by corporations because they dashed and 
stashed the cash will still come to the Federal Treasury and will, in 
fact, offset revenue loss through the Charitable Tax Reform Act.
  I started talking about these inversions in January. I made my 
intention very clear then, and ever since, to shut down shell 
corporations being set up in Bermuda for the sole purpose of avoiding 
legitimate taxation. For me, it is critical that we act on inversions 
before we shut down this place this fall. Now is our chance on the CARE 
Act.
  We have people holding up this bill. They have to understand that 
they are responsible for holding up action on inversions. There are no 
two ways about it. They are not willing to shut down the immoral and 
unethical trend of corporate accounting by setting up shell 
corporations, going overseas to avoid taxation.

  We have another important offset in this CARE Act. It is also an 
important bipartisan Finance Committee initiative. It deals with tax 
shelters. This bipartisan proposal--and it was drafted in concert with 
the Treasury Department--is a result of over 3 years of work. It is a 
result of careful consultation with key professional organizations such 
as the American Bar Association, the New York State Bar Association, 
the American Institute of Certified Public Accountants, and the Tax 
Executive Institute. This proposal was developed methodically and puts 
a premium on enhanced disclosures of tax shelter transactions. It also 
imposes tough penalties on those who undertake abusive tax shelter 
transactions.
  So as in the case of inversions, those who are right now blocking the 
Senate, under this Democrat gridlock, from considering the CARE Act are 
also blocking action to shut down tax shelters.
  I am pleased my colleagues on the Republican side are ready to 
proceed. Unfortunately, it is being blocked from

[[Page S10605]]

the other side of the aisle. I am hopeful we will see cooperation from 
the Democratic side and get a chance to debate this bill, but time is 
running out. If we do not act on the Charitable Reform Act, called the 
CARE Act, including shelters being shut down and including 
expatriations from being stopped, it will be clear where responsibility 
lies. It lies with those who are blocking the bill now.
  A second piece of tax legislation that is caught in this Democratic 
gridlock is the pension reform bill. The pension reform bill is because 
of Enron-like corporate mismanagement, corporate greed, corporate 
fraud, corporate felons doing what they should not be doing, and that 
is mismanaging the money entrusted to them by stockholders and 
bondholders.
  What happens when there is this sort of corporate mismanagement? 
Thousands of Enron employees see their 401(k)s decimated. I know Enron 
is basically a Texas corporation, but there were 150 Enron employees in 
my State of Iowa who found that to have happened to their 401(k)s. How 
did it happen under their 401(k)s? Because under corporate laws there 
are corporate rules that do not allow a 401(k) holder to actually 
control their own account; for instance, having to be 55 years of age 
before someone can get rid of their stock or control their stock. 
Through this legislation, we want to protect people from Enron-like 
occurrences in the future. We do that through the legislation we call 
the pension reform bill, with the acronym NESTEG. That was considered 
by the Finance Committee over the spring and the summer subject to 
hundreds of hours of bipartisan staff discussion.

  That is how we get bills out of the Senate Finance Committee, through 
consensus. Every Member of the committee and even Members not on the 
committee with interests in this issue had input. It took several 
weeks. The discussions bore fruit. The chairman's markup with some 
amendments passed out of committee without opposition. This was all as 
a result of Members of this body saying Enron problems had to be 
solved. A lot of the people on the other side of the aisle were trying 
to fault President Bush's administration. They have not succeeded in 
doing that.
  That is intellectual dishonesty. If you look at a lot of the 
corporate mismanagement problems and follow the calendar back to when 
the first decisions were being made to do some of these things, they go 
well back into the Clinton administration.
  Our constituents, my 150 Enron employees, do not care who is to 
blame--Clinton, Bush, or whether nobody is to blame--except the 
corporate mismanager. The point is, they expect us to do something 
about it. A lot of this discussion was started on the other side of the 
aisle that brought us where we are now. There does not seem to be any 
interest on the part of the Democrat majority moving the pension reform 
and 401(k) bills that are so necessary to make sure future Enron-
decimated 401(k)'s do not occur.
  I described how this bill was voted out of the Senate Finance 
Committee. There was another committee, the Health, Education, Labor 
and Pensions Committee, known as the HELP Committee, chaired ably by 
Senator Kennedy, also working on some legislation in this direction. 
Chairman Kennedy took a little different route. He decided, for 
whatever reason, to refuse to engage Republicans on his committee, and 
the result was a raucous markup and a party-line vote. As I have said 
so many times, contrasting the work of the Senate Finance Committee, 
which was very bipartisan, from the work of the HELP Committee, which 
was more partisan, we cannot get anything done in a Senate that is 
divided 50 Democrats, 49 Republicans, and 1 independent on a partisan 
plan. If you try to do that, the whole product is doomed. That was and 
is the fate of the HELP Committee bill on pension reform that came out 
of committee on a partisan vote.
  I digress for a minute. We are all legislators. Our job is to 
legislate. It is our responsibility, especially in these times, to use 
our legislative resources to actually accomplish something for the 
American people. However, I am the ranking minority Member on the 
Senate Finance Committee. Republicans are in a minority in this bed. 
The Democratic leadership runs the Senate. Like a point guard in 
basketball or a quarterback in football, the Democratic leadership has 
the ball. They call the plays. Unfortunately, serious legislating is 
not a game. When the Democratic leadership puts legislating the 
people's business ahead of partisan interests, they will get a product 
out.
  By the way, to be fair, that applies to Republican leadership, as 
well.
  Two examples come to mind. One is the bipartisan tax relief 
legislation of last year. The Republican leadership cleared the way for 
the bipartisan Finance Committee package, cleared the floor, became law 
June 7, 2001.
  Another example is the Sarbanes-Oxley corporation accountability 
bill. The Democratic leadership let Senators Sarbanes and Enzi craft a 
bipartisan compromise that cleared the Senate floor and became law.
  On the other hand, if the Democratic leadership wants to score 
political points and send a bill into the Senate ditch, that is their 
choice. Do not work with the other side, do not recognize that 49 of 
100 Members of the Senate; somehow they do not exist. Do not respect 
100 Senators. Do not respect Republican input on issues at hand. Just 
try to program your caucus poll-driven agenda down the throats of 100 
Members.
  In the words of the distinguished majority leader, politicize it. The 
path is clear on pensions. The Democratic leadership is facing a fork 
in the road. The left fork is to play the partisan card. Pursuing that 
path means bringing up a bill that is designed to be controversial. It 
means bringing up a bill like the bill that came out of the Health, 
Education, Labor and Pensions Committee on a partisan vote. Then there 
is the right fork, bring up the Finance Committee bill, perhaps even 
with some bipartisan measures from the Health, Education, Labor, and 
Pensions Committee. Frankly, Senators Baucus, Gregg, Kennedy, and 
myself made good progress. There is a bipartisan basis for proceeding. 
If the Democratic leadership follows this fork in the road, we can get 
a bill through the Senate, the very sort of thing people on the other 
side of the aisle have been clamoring for since last fall and for sure 
since January.
  Where are we? The Enron bankruptcy occurred about a year ago. Enron 
employees' retirement accounts have been devastated. People across the 
country rightly demand action. Shortly after the new year, the 
President proposed a multipoint plan to reform retirement plans. I 
don't know how many times I have heard since the President made that 
statement last spring from the other side of the aisle that the White 
House needs to be engaged. The White House engaged the Congress is the 
way I look at it. I did not hear much talk about doing anything about 
pension retirement plans until after the President said we ought to be 
working on it. The House acted very quickly in April on pension reform. 
But the full Senate has not acted. We cannot send the President a bill 
until the Senate acts. Choosing a partisan course means the Senate has 
default. That is very regrettable.
  Let me be clear. Republicans stand ready to work on this priority, 
and as we have already done, as indicated by the bill coming out of our 
committee on a unanimous vote, in a bipartisan manner, and even doing 
that in conjunction with committees that have tried to do the same 
thing in a partisan way.
  I ask unanimous consent to have printed in the Record a copy of a 
letter dated August 30 this year from the Finance Committee Republicans 
to Senator Daschle, on pension reform.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                      U.S. Senate,


                                         Committee on Finance,

                                  Washington, DC, August 30, 2002.
     Hon. Tom Daschle,
     Majority Leader, U.S. Senate,
     Washington, DC.
       Dear Mr. Leader: We understand that you intend to bring 
     pension protection legislation to the floor soon after the 
     Senate reconvenes in September. As you know, both the Finance 
     Committee and the HELP Committee have produced differing 
     versions of pension protection legislation. Although both 
     committees have acted, only one committee has acted in a 
     bipartisan fashion and produced a bipartisan product: the 
     Finance Committee. The Finance Committee's bill, S. 1971, was 
     reported out unanimously. By

[[Page S10606]]

     contrast, the HELP Committee reported a partisan product, S. 
     1992 on a party-line vote of 11-10.
       We do not believe that a partisan approach is the way to 
     proceed on such important legislation that will affect the 
     retirement savings of tens of millions of Americans.
       In the spirit of bipartisanship, therefore, we respectfully 
     request that you call up the Finance Committee bill to serve 
     as the underlying bill for the Senate's debate on American's 
     retirement security. This good-faith gesture would expedite 
     the Senate's action. Furthermore it would solve concerns due 
     to the limited scope of S. 1992, which was due to HELP 
     Committee's restricted jurisdiction in the retirement 
     security area.
       Using the Finance reported bill would facilitate, not 
     preclude, the full Senate's involvement in the retirement 
     security debate. It would send an important signal of 
     bipartisanship to American workers and retirees who will be 
     keenly watching this debate and would reassure them that we 
     are working together in their best interests. And, as you 
     said in your press conference with Senator Kennedy, ``this 
     isn't about political points.'' We agree with you, Senator 
     Daschle. This shouldn't be about political points. It should 
     be about good public policy and good pension policy for all 
     Americans.
           Sincerely,
         Chuck Grassley, Don Nickles, Craig Thomas, Orrin Hatch, 
           Jon Kyl, Fred Thompson, Frank H. Murkowski, Phil Gramm, 
           Olympia Snowe.

  Mr. GRASSLEY. I implore the Democratic leadership to get in gear. The 
American people deserve action on this charitable tax reform action 
called the CARE Act. We should not forbear on curtailing tax shelters 
and corporate expatriations, which all may be legal, but in a time 
during the war on terrorism for a corporation to flee the country to 
Bermuda and not do anything more than set up a shell corporation is 
unethical and immoral--tax shelters, where the people who write the tax 
shelters sell them on the basis of how much money you will save the 
corporation in taxes, and where the people who write them do not even 
have to defend them. That seems to me to be professionally unethical as 
well. In other words, sell your product to a corporation and then let 
them hold the bag.

  We are losing a lot of revenue that can be used for charitable 
purposes under the CARE Act. Workers rightly expect a debate and action 
on a bipartisan retirement security package. Let's do the right thing. 
Let's do the people's business. Let's undo the gridlock on these 
important bills. Let's bring up the CARE Act. Let's bring up the NESTEG 
Act.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. BOND. Mr. President, I came to talk about another subject, but I 
think what my distinguished neighbor and colleague, the ranking member 
of the Finance Committee, said is very important and bears repeating.
  Yesterday we passed, 92 to 2, an election reform bill. I think that 
bill proves what Senator Grassley just said. That was a bipartisan 
bill.
  Senator Dodd, the chairman of the committee, worked very closely with 
Senator McConnell, the ranking member, and with me. We worked for about 
18 months. It was not easy. But it was always done in a bipartisan 
fashion and we got the bill done.
  The distinguished ranking member of the Finance Committee has pointed 
out other measures in the Finance Committee where they could work 
together. Sometimes they do--and then sometimes they bring legislation 
to the floor, report it out on a bipartisan basis, that the majority 
leader will not bring up.
  If we had really wanted a prescription drug Medicare reform bill, we 
could have relied on the work of the bipartisan group on the Finance 
Committee. If we had wanted an energy bill, we should have relied on 
the bipartisan Energy Committee, with interest and expertise in the 
area, to report out a bill. It was taken away, for political purposes, 
from the Energy Committee by the majority leader. As a result, we got 
nowhere.
  As I understand it, the Banking Committee reported out a good, 
strong, bipartisan terrorism risk reinsurance bill to provide terrorism 
insurance, a backup by the Federal Government so buildings and 
construction could get the insurance they needed to obtain financing to 
carry forward with some $16 billion of construction in this country. 
That bipartisan bill was not the one that was brought to the floor. 
That is the reason we have gridlock.
  When those people tried to bring up measures purely for partisan 
advantage, they did not get very far. That is why this Senate is known 
by everybody who watches it as the most dysfunctional Senate that 
anybody has seen in recent history. We have not even brought up a 
budget. I have labored long and hard on the Budget Committee, and we 
felt the product that came out on a party line, which proposed cutting 
defense spending and raising taxes in a time where we are at war and 
coming out of a recession, was not a good thing to do. It has not even 
been brought up. We could have come to a bipartisan agreement on a 
Budget Act that would have allowed us to move forward on 
appropriations.
  We have inflicted ourselves with the wound of not being effective 
because, unfortunately, the majority leader has chosen to go with more 
political and nonbipartisan measures coming to the floor.

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