[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
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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
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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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