[Congressional Record Volume 150, Number 11 (Tuesday, February 3, 2004)]
[House]
[Pages H284-H291]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
QUESTIONABLE ACTIVITIES DURING AND AFTER MEDICARE PRESCRIPTION DRUG
LEGISLATION PASSED THE HOUSE
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 7, 2003, the gentleman from New Jersey (Mr. Pallone) is
recognized for 60 minutes as the designee of the minority leader.
Mr. PALLONE. Mr. Speaker, tonight I would like to highlight several
questionable activities during and after the Medicare prescription drug
legislation passed the House of Representatives last year, and there is
no doubt that this legislation, which passed here in the House after
the Republican majority kept the vote open more than 3 hours in order
to get the results they want, and it would be one thing, Mr. Speaker,
if the result were beneficial to seniors who desperately need
prescription drug coverage within the Medicare system; however, that is
simply not the case.
The prescription drug legislation is a perfect example of how the
Republican majority has turned the people's House of Representatives
over to the special interests and the wealthy elite. Seniors should not
be forced or, I should say, be fooled into believing that this Medicare
legislation was written for their benefit. How could it have been
considering Republicans forcing seniors to actually get the
prescription drug benefits out of Medicare?
{time} 2100
The bill also provides a minuscule benefit, considering that seniors
with $1,000 in annual prescription drug costs would pay $857 out of
their own pockets and those seniors with prescription drug costs of
$5,000 per year would be forced to pay $3,920. What kind of a benefit
is that if seniors are not getting the money? Where is the more than
$500 billion that now the President and the White House says that this
Medicare prescription drug so-called benefit is going to cost the
Federal Government? Where is the money going?
The answer, Mr. Speaker, is to the special interests. Republicans did
not write this bill to help the seniors; instead, they wrote it to
benefit insurance companies and the pharmaceutical companies.
Now, I could talk all night about why this bill is bad and how it is
not helpful
[[Page H285]]
to seniors, and I think that I and my Democratic colleagues have talked
many times, including last week, about the problems with this bill and
why it should just be repealed. But the amazing thing about it is that
now we are hearing that many of those legislators and members of the
administration who benefited or who were involved in creating this
bill, negotiating this bill, bringing the bill out of committee,
working to put together the language of the bill, are now benefiting
from leaving their jobs within the administration, or possibly within
Congress, in order to join the private sector and working for those
same pharmaceutical companies that they worked with when they were up
on the Hill or they were in Washington working for the government to
put this bill together.
In fact, many of my colleagues have been saying for months that this
legislation was being written not here on Capitol Hill but instead
downtown in the offices of PhRMA, which is the pharmaceutical trade
association, and also written by the insurance companies. Here in the
Republican-controlled House of Representatives the only true voices
that matter, in my opinion, on this bill, are the special interests and
the wealthy elite.
There is no better example of how the lines have been blurred between
Congress writing legislation and legislation being dictated to by
special interests than the latest news that the House Committee on
Energy and Commerce chairman, and this is my committee, the Committee
on Energy and Commerce, the Republican chairman, the gentleman from
Louisiana (Mr. Tauzin), is now flirting with the possibility of leaving
the House in order to lead PhRMA, that very pharmaceutical trade
organization that represents those companies here in Washington. And he
is one of the few House Republicans who negotiated the final
prescription drug bill legislation last year.
We just heard, actually within the last few hours, that the gentleman
from Louisiana (Mr. Tauzin) announced that in fact he is going to be
stepping down as chairman of the House Committee on Energy and Commerce
on February 16, within the next week or so, and that he is seriously
mulling going to work as the head of PhRMA.
Now, I understand, Mr. Speaker, that there is nothing wrong with
Chairman Tauzin deciding to retire and inquiring about future job
opportunities. But one has to seriously question whether discussions
between him and representatives of PhRMA just months after PhRMA
received a cash windfall with the prescription drug legislation are
appropriate. It certainly serves as a perfect example of what I was
saying before of what interests Republicans represent: the special
interests.
There has been no indication from Chairman Tauzin's office that he
was negotiating a job with PhRMA last summer when he was also
negotiating the prescription drug bill, and I hope that is not the
case. However, the bottom line is that he was the main person in the
House of Representatives responsible for this bill. And for him to now
leave Congress and go seek a job with that very trade association that
was benefiting from the bill, I think, is a serious ethical question
and something that has to be looked into.
I see that some of my colleagues are here joining me. We are going to
talk not only about this case but others, and I would yield now to the
gentleman from Massachusetts.
Mr. TIERNEY. I thank the gentleman from New Jersey, Mr. Speaker.
I think people are just outraged by what is going on in this
administration and with the Republican majority in the House and Senate
here. This is a bad bill to begin with, the prescription Medicare bill,
the so-called Medicare reform bill, but when we add to that what can
only be described as an affront or a blow to Congress' credibility, the
aspect of finding the chairman, the man in charge of writing this
legislation, actually closing the doors and excluding Democrats in the
process, kept them out of any way of improving what turned out to be a
terrible bill, ending up being offered over $2 million, if the stories
are correct, $2 million a year from PhRMA, the organization that was
out there lobbying for this bill, the organization that has over 600
lobbyists crawling around the Halls of Congress.
If the rumors are true, then it is $2 million to the person who
excluded Democrats from the process, that closed the doors, that
negotiated the end of the bill, that formulated the bill that ended up
giving, by some estimates, a $139 billion boondoggle to the
prescription drug companies and manufacturers by putting in a provision
that says the government cannot negotiate a better price. And all of
this to the detriment of our seniors.
I think people ought to be outraged. I know they are in my district.
I can tell the gentleman from New Jersey that a couple from Beverly,
Massachusetts, told me that they are seniors and they depend on
Medicare; that the bill has to be killed, they said. Means testing,
forcing them into HMOs, destroying Medicare forever was not worth the
meager drug benefit they are going to get at the end of the day.
Nothing was more important for them than to get rid of that bill and
write another bill.
Another couple from Hamilton, Massachusetts, wrote to me. The woman
said, ``My husband and I are retired and our savings are rapidly
declining because of prescription drug costs. To deny Americans the
right to purchase legally prescribed drugs from Canada is
counterproductive. We realize this bill is being driven by special
interests exerting a stranglehold over this Nation's senior citizens,
and that is particularly galling.''
They recognize that this bill should have done something, at least
about reimportations of FDA-approved safely packaged and transported
drugs; and it did nothing. Even though this House passed an independent
bill instructing the FDA to do that in conference, again behind closed
doors, with Democrats excluded, and with the chairman who is now said
to be offered a $2 million-a-year job by the very people who get the
most benefit out of this bill, the special interests, even with that,
it just gets worse and worse.
I had a pharmacist write me: ``Why aren't the pharmaceutical
manufacturers asked to lower their costs to participate in the
program?'' Pharmacies were asked. ``This is one of the reasons
medications are cheaper in neighboring countries.'' Because in
neighboring countries pharmaceutical companies are required to lower
their prices. ``Drug companies must reduce their prices to consumers if
they are going to participate in government programs.''
Unfortunately for him and other constituents in my district and my
colleagues' districts, this is not happening under this bill. The
Medicare reform legislation is nothing more than a cruel hoax on
Americans.
Let us remember back in the State of the Union address when the
President brought with him a woman by the name of Elsie Blanton. He had
Ms. Blanton up there in the gallery; and he said his spokespeople said,
at that time of the State of the Union address, that Ms. Blanton is on
Medicare, a supplemental policy that does not include prescription drug
coverage. Ms. Blanton spends approximately $900 per month on
prescription drugs when unable to obtain free samples from her doctors
or the pharmaceutical companies. Ms. Blanton's prescription drug costs
account for three quarters of her monthly income. Her monthly income is
only $1,190 in Social Security benefits. Ms. Blanton's income is just
above the 150 percent of the Federal poverty level for 2003.
Now, supposedly, Ms. Blanton was there because she was an example of
someone who was to benefit from this terrible bill. But according to
the Center for American Progress, Elsie Blanton will not see any
assistance for years under this bill. The new prescription drug benefit
does not even begin until 2006. Ms. Blanton does not qualify for the
$600 of interim assistance.
So Ms. Blanton will continue to have to spend at least three quarters
of her monthly income on prescription drugs for the next 2 years. In
fact, because prescription drug costs rise faster than Social Security
benefits, she will probably have to spend even more of her income on
her medicines. She is going to have higher costs next year. She will
have to pay more for her Medicare benefits next year, because higher
payments to private plans and other changes are going to cause
everyone's Medicare premium to go up. And the new law also raises the
Medicare deductible.
[[Page H286]]
She will potentially have higher costs when the benefit does begin.
She could save much less than promised once the new prescription drug
benefit begins because premiums and the benefit design are largely left
to private health insurers and pharmaceutical companies. It is at their
discretion, the insurance companies and the pharmaceutical companies,
that they will decide what benefits and what prescription drugs are in
there. So higher premiums.
The President had assumed Ms. Blanton would be able to get a drug
benefit for a premium of $35 a month, but we know by reading the bill
that, in fact, private insurers will set their own premiums, and they
can be much higher than $35 a month. The President assumed that all of
Ms. Blanton's medicines would be covered under the new benefit, but in
fact there is no way to know that because we know that insurance
companies and the pharmaceutical manufacturers will decide what drugs
are covered.
Even if the medicines Ms. Blanton needs are covered when she signs up
for the plan, we know from reading the bill that that list can change
at any time after she originally signs on. And if the medicines she
needs are not covered, any money she spends out of her own pocket on
those medicines will not count toward the benefits' out-of-pocket
limit.
She will go months without assistance, even after it kicks in. With
monthly drug spending of $190 a year, assuming that all of her drugs
are covered, Ms. Blanton will receive no assistance from March and
through June of every year until she hits another higher limit. It is
during that period of time, after March and before June, that she will
be in that so-called donut hole or gap of benefits where she gets
nothing at all, despite the fact that she continues to pay her premiums
during that period.
What will happen to Elsie Blanton should not happen to anybody in
this country, particularly on a bill of this nature. And if that is the
best the people that proposed this bill have to show Ms. Blanton, who
has this terrible result, then this country is in a sorry way and
seniors are being deprived.
Never again should an industry be allowed to come in here and write a
bill; should people that are now being offered $2 million a year by
that industry be able to shut Democrats out of the process so they
cannot improve the bill and write a bill that changes what the Senate
had, changes what the House had; and after a so-called conference comes
out with a bill that actually does worse for seniors, has them paying
more for their prescription drugs and getting less benefits. Nevermore
should that happen.
If this continues to happen, and if what I heard earlier tonight, and
what I think our colleague from Illinois is going to talk about, if
this administration now has the audacity to take millions of dollars in
taxpayer money and go out on the stump and on the TV and try to
convince seniors who got a bad deal that they actually got a good deal,
then we should have an investigation done and talk about the propriety
of that, possibly violations of campaign laws, certainly violations of
taxpayer rights, and get to the bottom of this.
This is a bad bill, done in a bad way, by people benefiting from it
getting too involved and people on the floor of this House potentially
having an interest now in working for those same countries that made
billions of dollars of benefits. It does not sound good, it does not
look good, the American people do not feel it is right, and they have
every right to be concerned.
Mr. Speaker, I thank the gentleman for his time.
Mr. PALLONE. Before I yield to the gentlewoman from Illinois, I just
wanted to highlight two things the gentleman said that I think are so
important.
One is that whole thing about how there really is no set premium, set
deductible, set anything really in this bill. The Republicans go out
there and they say, oh, your premium is going to be $35 a month, your
deductible, I think they say, is going to be $250 a year, the
government is going to pay 75 percent of the cost, you are going to pay
25 percent. There is nothing in the bill about any of that.
I have to stop using the term Medicare prescription drug benefit when
I talk about this because this is not even under Medicare. The people
that are in Medicare are eligible for it, but there is no guarantee
that they are going to get it. And none of these things are guaranteed.
They can charge $85 a month, they could have a $1,000 deductible, they
could, as the gentleman says, not cover certain drugs. We do not even
know if it is going to be available in most areas.
So this is why they are out there talking about advertising and
trying to promote this thing, because there is nothing to it. It is
like an empty suit.
The other thing the gentleman pointed out, which is very special
interest-oriented, is the fact there is this specific prohibition in
the bill on any kind of negotiation on the price. The Medicare
administrator, the Secretary of Health and Human Services, cannot
negotiate lower prices.
This is an excerpt from last Sunday's New York Times where they talk
about how bad the bill is and they specifically say that ``the ban on
government intervention with regard to negotiated price reflects the
Republicans' aversion to government price controls, but it is also a
testament to the lobbying clout of the drug industry, a major patron of
the Republican Party.'' Then of course they talk about how the
Democrats have tried to introduce legislation that would allow for
negotiated prices.
This is the very kind of special interest we are talking about. This
is what was put in by PhRMA, and now we have the chairman of our
committee that was negotiating this bill and bringing this bill on the
floor and through the committee with this prohibition on any kind of
price controls or negotiated prices going to work to be the chief
lobbyist for PhRMA.
Mr. TIERNEY. Mr. Speaker, if the gentleman will yield for just a
minute, and then I will give the floor back.
While PhRMA was busy trying to contact the chairman's office to make
an offer of some millions of dollars a year to work for them, the
American people were having the deal cut out from underneath them. When
we talk to seniors and say, look, if this is a good bill, when do you
think it would start? Their answer is, immediately. This bill does not
start until 2006, well after the next election. We know what that is
all about.
Negotiations for lower prices? Common sense. Why do people think the
pharmaceutical companies have resisted prescription drugs in Medicare
all this time? Because they thought for sure the next common-sense
thing would be for that large group of 37 million people to be used as
bargaining leverage to get a fairer price, as the free market would
dictate and is done elsewhere.
But with this majority in the House, the Republican majority in the
House, the Republican majority in the Senate, and a Republican in the
White House they can have it all. They can have all these new customers
and clients and not have to worry about it because they got them to put
in the bill that there would be no negotiation for a lower price.
People can see right through that.
{time} 2115
They see through the gap, the fact that there is going to be a period
of time when they are paying premiums and getting nothing in return,
the so-called gap or doughnut hole. To figure out whether or not this
bill is good for them, they need a calculator. And when they apply this
bill to their circumstances, they find out it is not a good bill for
them unless they are desperately poor or have such catastrophic costs
it is unbelievable.
To top it all off, about a third of today's retirees who get their
health insurance and prescription coverage through their employer, the
CBO assumes they are going to be dropped back to this plan and get less
coverage for more cost than they did when they had their employers
covering it.
Mr. Speaker, that is why we are hearing that the administration is
going to try to spend millions of dollars of taxpayer money to try to
make a silk purse out of this cow. Again, they should not be allowed to
use taxpayer money to sell them a bad deal which they know is bad and
try to change their mind.
Mr. PALLONE. Mr. Speaker, I yield to the gentlewoman from Illinois
(Ms. Schakowsky).
[[Page H287]]
Ms. SCHAKOWSKY. Mr. Speaker, I thank both gentlemen for their vivid
description on what is wrong with the so-called Medicare bill that
passed, the nonprescription drug benefit bill that passed the House,
but I want to tell Members my reaction to the chairman talking about
now and very seriously looking at going to work for the pharmaceutical
companies and how the Medicare administrator is going to benefit. I
feel that very personally and very deeply, for this reason. This kind
of breach of trust is something that really affects me because it
confirms the worst nightmares of the public about what we as Members of
Congress do here.
I think all too many people have this view that Members of Congress
come here and they try and line their own pockets for their own
benefit, working with special interests. And then what they find is the
smoking gun, a guy like the chairman of the Committee on Energy and
Commerce, on which the gentleman and I both sit, taking a job and
saying he is going to negotiate a job with the pharmaceutical industry,
PhRMA, the lobbying organization. He has announced he is going to give
up his chairmanship on February 16 and not run again, and that he is
looking at this offer. We know he has turned down a million dollar
offer already from another organization. We have heard it is between $2
million and $3 million, and go to work for PhRMA, the very industry
that stands now to benefit the most from this so-called senior citizen
prescription drug benefit.
The good news is that the seniors get how bad this bill is. But what
I fear that they do not get is that there are Members of Congress who
are sincere about trying to provide a real benefit to them and think
that all that we are doing here is trying to line our own pockets,
trying to rig the system so it helps the pharmaceutical companies, so
it helps the HMOs, and that is pretty much what they have seen.
This bill is about an estimated $140 billion windfall for the drug
companies, $140 billion windfall for the drug companies, because it is
prohibited now from trying to negotiate. Like the Veterans
Administration, we do not have to look far to see where an agency
negotiates for lower prices. The Veterans Administration gets for
veterans sometimes half the cost that other Americans pay when they go
to the pharmacy, and about half the cost we are going to have to pay
for under this bill because there will be no negotiation.
The Washington Post had an editorial on January 29 that said for the
gentleman from Louisiana (Mr. Tauzin) to leave so soon afterward to
work for the pharmaceutical association whose companies reaped
substantial benefits from that bill provides a particularly pungent
example of how quickly the ``revolving door'' between Congress and K
Street is now revolving, and how lucrative this game has become for its
participants.
The only thing I would disagree with, this is not about a revolving
door, this is about a locked door. This was happening while the
gentleman from Louisiana (Mr. Tauzin) is still in the Congress and
still chairman of the Committee on Energy and Commerce. This is about a
locked door where he kept out the gentleman from Michigan (Mr.
Dingell), the ranking member on his committee, who was here when
Medicare was passed in 1965, an expert on the subject, locked out of
the conference committee.
I hope the public understands how extraordinary that is for the
appointed members of a conference committee to be locked out of the
process.
Also locked out, the gentleman from New York (Mr. Rangel), the
ranking member on the Committee on Ways and Means. And let us be clear,
when the gentleman from New York (Mr. Rangel) got locked out, it meant
that the only possible representative of people of color in this
country who have a lot at stake in this issue, were also locked out of
that conference committee, which is now an all-white committee, I
guess. We do not know. Who knows who they invited in from the
pharmaceutical industry or the HMOs because the leading Democrats in
the House of Representatives were locked out of that process.
And coming out of that locked door is, number one, a bill that is
just a payoff to the HMOs and the pharmaceutical companies; and what
comes out of that committee are job offers, big job offers. So what we
have is now the gentleman from Louisiana (Mr. Tauzin) we think getting
between $2-3 million, which is actually a pretty good deal for the
pharmaceutical industry which stands to gain $140 billion. That is not
too bad a deal to get a clever man like the gentleman from Louisiana
(Mr. Tauzin).
They also got a guy named Tom Scully who was the Medicare
administrator, the guy behind the scenes, who as a staffer helped write
the bill and negotiate the whole bill. Where has Mr. Scully gone? Mr.
Scully has gone to be a top health care lobbyist for the Washington
firm of Alston & Bird. While serving as President Bush's director of
Medicare and helping to craft the Medicare deal, Scully was actively
negotiating with the lobbying firm. Recognizing the conflict of
interest, the Bush administration granted Scully a special waiver
to negotiate with the lobbying firm while serving in the Bush
administration.
Here he is, he is with Medicare, he is the head man, he wants to look
for another job, and Health and Human Services grants him a waiver
while he is working on the Medicare bill to start negotiating for his
next job. A waiver. Well, there was such an uproar over that, now they
have said agencies cannot do that, only the White House can grant those
sorts of waivers. So Scully is out the door.
Then there is the top aide on the Committee on Ways and Means, John
McManus, who was negotiating this bill as well. He left and he is going
to have a job outside helping him make some money from the
pharmaceutical industry. Here is what he said. ``We accomplished what
we set out to do. Helping people figure out how this gets implemented,
that is what is interesting to me.'' Who are the people is he talking
about that he wants to help figure it out? Is he going to help the
seniors? I have not heard that he is going to go work for a senior
citizen organization.
Mr. PALLONE. Mr. Speaker, the amazing thing to me, the fact that the
White House, I guess because of the public pressure, because of people
speaking out about what Scully did, are now saying that the department
cannot grant the waiver, but the White House can. It seems to me the
goal should be that there not be any waivers at all. Under what the
Bush administration is now saying, they can still grant another waiver
to somebody else to negotiate a bill, and then go work for the very
company that they were negotiating with. I cannot believe that they
said no more waivers by the department, but we can still grant the
waiver.
Ms. SCHAKOWSKY. Mr. Speaker, the words that we want to come out of
their mouths is that there will not be any more waivers, and that
seeking a job in the private sector, particularly with an industry that
you are now regulating in a sense or making decisions about, is not
right. It is not right. It smells. People know that. They do not like
it. This is why the public loses faith in government, and that is why I
feel so strongly about it.
Mr. PALLONE. Mr. Speaker, that is exactly why the ethics law says you
cannot do it, it is wrong. So why should any waivers be granted? And
there is no basis for the waiver. I asked in the case of Scully why and
if there were any special circumstances, and the answer was there was
nothing of that nature, they just granted the waiver.
Ms. SCHAKOWSKY. Mr. Speaker, there are some aspects of revolving door
that apply here, although I still believe that was about a locked door.
These individuals were servants of the public while they are
negotiating or figuring out their next move with the pharmaceutical
industry. But we have got the door going the other way, too. We have a
situation where an HMO lobbyist turns up as a Bush Medicare official. A
woman named Julie Goon was just hired by the Bush administration. She
is the former vice president of legislative affairs for an HMO trade
association in Washington, and she is now the new Director of Medicare
Outreach. Congress Daily reported that Goon will be in charge of
``getting the word out to seniors, health care professionals, consumer
groups and others about how the program works, HHS' progress in
implementing it and what its impact on them will be, and for apprising
the department of their reaction.''
[[Page H288]]
Before she got this job, Goon was named one of Washington's top
lobbyists in Washington in 2002. Now she is head of explaining this
Medicare bill and why it is such a great deal as Director of Medicare
Outreach.
Mr. PALLONE. Mr. Speaker, the gentlewoman probably remembers within
the last week or two that the President announced that he was
significantly increasing the reimbursement for HMOs. The reason that
was given was because so many of the HMOs dropped out of Medicare, did
not want to cover seniors within the Medicare program, that they needed
to provide significantly more resources to the HMOs if they wanted to
get them back into the Medicare program.
It is obvious that under this bill that the HMOs are going to get
significantly more money in terms of reimbursement rate than
traditional Medicare. Again, that is just a function of the fact that
the HMO industry was basically calling the shots at the White House,
and here we go again with an example of someone within the industry now
working at the White House on the very program that is increasing the
amount of money that the HMOs will get.
Ms. SCHAKOWSKY. This is not only disgusting, but it is also very
costly. We know now that this bill which helps seniors little and
pharmaceutical companies and HMOs a lot, is going to cost not $400
billion but about $540 billion. Now is that additional cost meaning
that we are going to help seniors more, that we are going to provide a
more generous benefit, that they are going to be able to buy their
prescription drugs any cheaper? No. The reason that the cost of the
Medicare bill has been reassessed is because the cost of prescription
drugs are going to go up, so taxpayers are going to have to take more
money out of their pocket.
{time} 2130
The cost to get the HMOs to keep providing the care, because HMO
costs go up every year, is going to raise the price of this bill.
The other thing that was not talked about that I think a lot of
seniors do not get is that the premium can go up every year, the
copayment can go up every year. So what may start out as $35 could end
up being $85 or even more in a few years.
Mr. PALLONE. If I could just throw this in a second, in that New York
Times editorial that I mentioned, they specifically say, ``Less well
known is the likelihood that the drug coverage will actually become
worse with each passing year. The premiums, deductibles and out-of-
pocket expenditures will all increase rapidly, tied to increases in per
capita drug expenditures under Medicare. By 2013, for example, the out-
of-pocket spending required before a person qualifies for catastrophic
coverage will probably be $6,400, well above the $3,000 required in the
first year. That could be devastating for those struggling to survive
on these benefits.'' It is built into the bill, but it keeps going up.
Ms. SCHAKOWSKY. It is built into the bill, but it is quite remarkable
that before the ink is even dry on this bill, the price has gone up
more than 25 percent, from $400 billion to $540 billion, and it has not
even started yet. Not one dollar in benefits, so-called, has even gone
out.
The seniors know that this is a bad deal. The seniors who pay more
attention than anybody else already know. In polls that have asked
them, they do not think that they are going to benefit sufficiently.
But it is important that it be explained. This comes from today, from
the Associated Press:
``The Bush administration launched a $9.5 million television
advertising campaign Tuesday to rebut criticism of the new Medicare
law. Understand, this is not a political commercial paid for by a
campaign. You and I and all of our constituents are paying for a $9.5
million television advertising campaign to rebut criticism of the new
Medicare law. The ad is to run on network and cable television through
March, clustered around soap operas, game shows and news programs. Its
theme is, 'Same Medicare, More Benefits.' ''
Mr. PALLONE. Can I ask you again, you said that this is paid for by
taxpayers?
Ms. SCHAKOWSKY. That is correct.
Mr. PALLONE. Explain that to me again?
Ms. SCHAKOWSKY. I am reading to you this. This is not a campaign
expenditure:
``The administration is spending another $3.1 million for a
newspaper, radio, and Internet effort in both English and Spanish. The
30-second ad addresses some of the major criticism of the law,
including assertions that it will force seniors out of traditional
Medicare and into managed care plans and that savings will be paltry
from drug discount cards and prescription drug insurance starting in
2006.''
Mr. PALLONE. I find that incredible. I have never heard of a
situation where the government pays to rebut criticism of the program.
Ms. SCHAKOWSKY. This is correct. Quoting from the article:
``Health and Human Services Secretary Tommy Thompson played the
commercial Tuesday for reporters. Four actors who portray Medicare
beneficiaries ask how the law is changing Medicare. `Can I keep my
Medicare just how it is?' one asks. The announcer replies, `Yes, you
can always keep your same Medicare coverage.' At the end of the ad,
another senior says, `So my Medicare isn't different, it's just more?'
The announcer, `Right.'
``Several Democratic Senators already have criticized as propaganda a
two-page flyer that HHS plans to make the basis of a letter to be sent
later this month to the 40 million older and disabled Americans who are
enrolled in Medicare. Asked whether he had consulted those Democrats
about the accuracy of the ad, Thompson said, `It's accurate.' ''
Mr. PALLONE. So we now are standing here and basically pointing out
why this bill does not benefit seniors, and the administration is going
to spend taxpayers' money to say the opposite.
Ms. SCHAKOWSKY. Exactly.
Mr. PALLONE. That is unheard of. I have never heard of that
happening.
Ms. SCHAKOWSKY. This is taxpayer advertising: $9.5 million on
television; $3.1 million for newspaper, radio and Internet; and a
mailing to 40 million seniors and persons with disabilities, all at
taxpayers' expense to explain why this lousy bill is, in fact, good for
them.
Mr. PALLONE. There has to be some way to stop that. It sounds to me
like it is blatantly illegal. But we will have to look into it. I thank
the gentlewoman.
Ms. SCHAKOWSKY. If I can go on for just a minute, when President Bush
ran for office, he said our first priority will be to restore honor and
dignity to the White House. But when you look at President Bush's top
official in charge of Medicare getting issued a waiver to pursue
employment in the health care industry while he continues to serve as
administrator of Medicare, how can we call that honor and dignity? This
confirms the worst of what people think about the way government is
run.
When this first happened, I along with our colleague, the gentleman
from California (Mr. Stark), wrote a letter to the Secretary of Health
and Human Services, Tommy Thompson. A part of the letter says, ``For 7
months Members of Congress who relied on Mr. Scully for information
were kept in the dark about the fact that he was actively engaged in
looking for employment with firms that have significant interests in
the issues at stake. Financial conflicts of interest are designed to
assure Members of Congress, entities with interests pending before CMS,
and the public that Federal executive branch employees are independent
and unbiased in their behavior. While we strongly believe that this
waiver should never have been granted, at a bare minimum knowledge of
it would have been valuable to us in weighing the advice provided by
Mr. Scully.''
This is just shameful. I think in order to restore the confidence
that the American public should have in Members of Congress that we are
operating in the public interest, in their interest, that when we come
up with a bill, it is because it is going to help them get their
prescription drugs, then we cannot allow this kind of behavior to
continue. No waiver should be granted. An advertising campaign, paid
for by the taxpayers, should not be allowed. If the gentleman from
Louisiana (Mr. Tauzin) takes this job with PhRMA, for 1 year he will
not be able to lobby Members of Congress and staffers, but he can still
lobby the executive branch,
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the people that are writing all the regulations that have to do with
implementing this particular piece of legislation that he crafted
behind a locked door. I think that this notion of restoring honor and
dignity to the White House, that is an important goal; but that goal
has been undercut and betrayed by this administration and the conduct
by the chairman of the Committee on Energy and Commerce.
Mr. PALLONE. I want to thank the gentlewoman for what she has
presented tonight. It is incredible to me that this advertising
campaign, I just assumed that it was being paid for by the Republican
National Committee, that it is actually being paid for by the
taxpayers. That is unheard of. What she brought out about Scully, who
was the Medicare administrator, now we have an example with Tauzin of a
Member of Congress who was the chairman of the committee that dealt
with the Medicare issue and then we have the head of the Medicare
administration within the White House, both of them getting jobs now,
purporting, in Tauzin's case, it seems likely, to get a job working for
the very pharmaceutical industry or the law firm representing the
pharmaceutical industry. It is just such a blatant example of special
interests.
I know that my colleague from Ohio wants to talk about another
example. We mentioned before you were on the floor on the night when
this vote was taken, that actually the board was left open for almost 3
hours because there was actually a majority of both Democrats and
Republicans that were against the bill. Then the President started
making calls and Secretary Thompson of Health and Human Services was in
a back room there, I saw him, twisting arms. We got to the point where
activities were taking place which, in my opinion, were bribery that I
know the gentleman wants to talk about. I appreciate his being here.
I yield to the gentleman from Ohio.
Mr. STRICKLAND. I thank my friend from New Jersey. I think the
American people need to know that under this President and under the
leadership of this Congress that this government is for sale. It is for
sale. It is for sale to the highest bidder. The fact is that
Halliburton was fined, I think, over 60-some-million dollars for
overcharging for fuel that they were supplying in Iraq, and now in the
New York Times today there is a story about Halliburton having
overcharged for the meals they are providing to our soldiers some $24
million. Halliburton has overcharged for the meals they are providing
or should be providing or said they are providing to our troops in
Iraq.
In most other circumstances, this kind of behavior would be called
criminal behavior. Why would this government continue to do business
with Halliburton that has been fined 60-some-million dollars and
overcharges $24 million for meals? It is almost beyond belief that we
would continue to let this rogue corporation that Vice President Dick
Cheney, I understand, is still getting compensation from, from getting
these contracts. What is going on with this government? When are we
going to stop and say, wait a minute, this is just unacceptable for a
corporation to act like this?
Mr. PALLONE. If the gentleman would yield, I was thinking about what
you said today with the meals and Halliburton. I would venture to say
if this were another time, say it was World War II and something like
that happened, Halliburton would be out of business the next day.
Mr. STRICKLAND. They are profiteering on this war. That is what they
are doing. They are profiteering on the war, and it is time the people
in this country and those of us who serve in this Chamber say enough is
enough. We are not going to continue to allow this rogue corporation to
act in this behavior and to continue to get government contracts.
I talk to my folks back home in Ohio, especially my seniors, very
frequently about this so-called Medicare bill. When I describe to them
what happened in this Chamber, the people's House, they are appalled.
We got that Medicare bill, as you will recall, I think it was over 800
pages long, and we received it on a Friday morning. That debate started
Friday evening. We debated in this House back and forth until 3 o'clock
in the morning, at a time when most Americans are asleep. At 3 o'clock
in the morning, they finally called the vote, and the vote which
normally lasts 15 minutes, at the end of that voting period, the bill
had lost.
Most Members of this Chamber recognized that it was a bad bill, that
it would not provide adequate benefits for our seniors, that there were
no cost controls, that we were prohibiting cheaper drugs from being
imported from Canada, that the Secretary of Health and Human Services
could not negotiate discounts, and the bill had failed. And so they
just kept the vote open, not for 10 minutes, not for 30 minutes, not
for an hour, but for 3 hours they kept the vote open, until 6 o'clock
in the morning. And the news reports indicate that they got President
Bush out of bed, or woke him up about 4 o'clock in the morning, so that
he could start making calls and try to twist arms and get people to
change their votes. The gentleman from Michigan (Mr. Smith), a
Republican, a man who is retiring from this Chamber and whose son is
running in a contested Republican primary to replace him, shared with a
columnist, Robert Novak, that he was approached on the floor of this,
the people's House, and that he was told if he would change his vote
that his son would be provided about $100,000 from certain business
interests if he would change his vote.
I am not an attorney, I am a psychologist by training, but that
description sounds a lot like bribery to me; and if it is and if it
happened on the floor of this House, it ought to be investigated and
those responsible ought to be held accountable. But to his credit, the
gentleman from Michigan (Mr. Smith), as I said, who is a Republican,
refused to change his vote. And then it is reported that another
Republican Member approached him and said to him, ``Your son is dead
meat. He will never be able to serve in the House of Representatives.''
{time} 2145
That behavior is beneath the dignity and the honor of this, the
people's House, and the Speaker of the House of Representatives ought
to call for an investigation. We ought to determine if something
illegal was done on this House floor, or at least something unethical
or something that violated the rules of this House. And that is how
that bill actually became law, because at 6 o'clock in the morning, as
the sun was coming up, a couple of Members were finally persuaded to
change their votes.
That is not the way to create public policy in a democracy; certainly
not in the American democracy. It is shameful behavior.
Mr. DELAHUNT. If the gentleman will yield, I think it is important to
note that in the aftermath of that vote, some of our colleagues on the
other side of the aisle in private conversations absolutely deplored
what occurred.
I think that as colleagues of the gentleman from Michigan (Mr.
Smith), it is important that we commend him for his courage, and
acknowledge the fact that as he leaves this Chamber, his legacy and his
contribution to this institution and to the people in his district has
no stain, no blemish. He can leave as a man with his dignity, pride
and, I think, good wishes from all of us.
What occurred to the gentleman from Michigan (Mr. Smith) I think
underscores the fact that within this House there is a perversion of
the democratic process that has made this particular institution so
strong and such a viable component in our democracy, and it is
incumbent on all of us, Republican and Democrat, to insist on
transparency, to insist on fighting for the process, so that the
American people understand what is going on here in Washington, so that
the truth be revealed.
The gentleman was talking earlier about profiteering, and maybe the
gentleman from New Jersey (Mr. Pallone) can inform the audience here
tonight, maybe he knows, but I have a clear and vivid memory of during
the debate on the $87 billion supplemental, which was for the
occupation, the additional occupation in Iraq and Afghanistan, that
there was a clause in the bill which specifically addressed the issue
of profiteering. It was in conference, and somehow it became deleted.
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It is my memory, and you can amplify on this, that that particular
provision would have increased substantially the criminal penalties for
profiteering on the blood of American soldiers. I do not know if the
gentleman has a comment or a memory, but I found that so shocking.
Mr. STRICKLAND. I had several members of school boards in my office
today from Ohio. They were here because they are concerned about the
fact that we are underfunding the No Child Left Behind legislation and
passing unfunded mandates over to our States, and they told me there is
an effort underway to require an audit of 12 or 13 percent of all of
the school lunches that are fed to needy children in this country.
Currently I think the audit requires a sample of 2 or 3 percent to be
audited, but there is concern apparently that maybe we are feeding
children who somehow do not deserve to be fed, so they want to increase
the audit size to 12 or 13 percent.
Then I pick up the New York Times, and I read about Halliburton and
the fact that they overcharged our government $24 million, saying they
had provided food to our troops that they had not in fact provided. I
mean, when are we going to get real around here and go after the real
culprits?
Now, I am not in favor of fraud in the school lunch program
certainly, and we ought to do whatever we can to stop fraud wherever it
exists, but I am a lot more concerned about Halliburton ripping off the
American taxpayer than I am the fact that some needy child may be
getting food that does not meet the specific criteria.
That is just an example of how our priorities are really out of
kilter up here. We ought to be going after the big guys, the big
offenders, those who are really ripping off the American taxpayer,
whether it is Enron and the Ken Lays of this world, or it is
Halliburton that has been fined, I think, $64 million or $65 million
for overcharging for fuel that they provided in Iraq. And now we find
out that Halliburton, this corporation that used to be headed by Vice
President Dick Cheney, has overcharged $24 million for food that they
should have provided to our troops.
When is this madness going to stop? When are we going to get serious
about stopping this war profiteering? I am just sick. I think the
American people are getting fed up with their tax dollars being used in
these kinds of ways.
Mr. PALLONE. Reclaiming my time, I just want to add that I think my
colleague from Massachusetts brought up the main point, which is that
the problem is that Halliburton is doing all these things, now
admitting, I guess, in two or maybe three cases they have done the
wrong thing, but the penalty is not sufficient for them to stop doing
it.
Mr. STRICKLAND. And they continue to get the contracts.
Mr. PALLONE. The oil contracts, they were charged a $64 million
penalty, but they are making billions, almost a trillion dollars I
think in terms of the amount of money they are taking in.
As our colleague from Massachusetts said, they are not going to stop
doing it, because what do they care if they pay a few million dollar
penalty when they are making billions of dollars? That is the problem.
As I said before, if this had been a different time, like World War II,
they would have been out of business; that would have been it. Now,
twice, and it is probably going to be more. It is just unbelievable.
Mr. STRICKLAND. Why do we continue to do business with a company like
this that has shown such bad faith? Sixty-four million dollars or $65
million is a lot of money; $24 million is a lot of money. Yet we
continue to allow this company to suck up tax dollars in contracts, and
it is a shameful set of circumstances.
I think the President and the Vice President ought to disassociate
themselves from this company and say they are out of here. There are
honest companies, there are honest corporate leaders that we can do
business with. Why are we continuing to do business with Halliburton? I
just cannot understand it.
Mr. PALLONE. We were talking before about the gentleman from Michigan
(Mr. Smith) and the allegations that there were efforts to bribe him.
We talked about it, but I do not know if we mentioned that he talked
about this in his own words. I just want to read a couple of sentences.
This was from the column the gentleman mentioned in the newspaper,
where he said after the vote, and this is his quote, ``The House passed
a deeply flawed Medicare prescription drug bill by a vote of 220 to 215
at 6 a.m. Votes in the House usually last 15 minutes plus a traditional
2-minute cushion. But because the leadership did not have the votes to
prevail, this vote was held open for a record 2 hours and 51 minutes as
bribes and special deals were offered to convince Members to vote
yes.''
This is Congressman Smith's quote. He continued: ``I was targeted by
lobbyists and the congressional leadership to change my vote. Other
Members and groups made offers of extensive financial campaign support
and endorsements for my son Brad who is running for my seat. They also
made threats about working against Brad if I voted no.''
These are his own words. Just so there is no doubt here about what
the gentleman said or our colleague from Massachusetts said, he is
saying this himself.
Mr. DELAHUNT. I would just like to interject for a moment. I do not
know if either of you had the opportunity to see a recent broadcast of
60 Minutes, but you are surely aware that U.S. law does ban virtually
all commerce with rogue nations. But there is a loophole, and
Halliburton has exploited that particular loophole.
The law does not apply to any foreign or offshore subsidiary, so long
as it is run by nonAmericans. So what has happened? In the case of
Halliburton, they have an offshore subsidiary. Guess where? In the
Cayman Islands. That subsidiary is doing business with Iran.
The name of that particular subsidiary is Halliburton Products and
Services. It is wholly owned by the U.S.-based Halliburton and is
registered in a building in the capital of the Cayman Islands. In a
building owned by the local Caledonian Bank, Halliburton and other
companies set up in this Caribbean island because of tax and secrecy
laws that are corporate-friendly.
Mr. STRICKLAND. Can I comment on that? If I understand what the
gentleman is saying, Halliburton, a company that is getting billions of
dollars in contracts, is doing business through an offshore subsidiary
with a nation that the President has labeled one of the ``axis of
evil'' nations.
Mr. DELAHUNT. That is correct.
Mr. STRICKLAND. So this company is benefiting from the American
taxpayer through the contracts, doing business with a country that the
President stood at that platform and labeled a part of the ``axis of
evil.'' Why is this happening?
Mr. DELAHUNT. Today, again, if the 60 Minutes piece is accurate, and
I presume it is, it certainly has not been challenged, and Halliburton
has declined to be interviewed by them; today, today, to this member of
the ``axis of evil'' club, it sells about $40 million a year worth of
field services to the Iranian Government so that it can obviously
support its oil infrastructure to gather the needed revenue to support
whatever programs, whether they be weapons of mass destruction
programs, whether they be supporting terrorist organizations anywhere
in the Middle East or all over the world, whatever programs the Iranian
Government funds through its oil revenue.
But that, as that famous radio commentator is wont to say, is only
half the story. The subsidiary, Halliburton Products and Services, and
I am reading again from the transcript of this CBS piece, was
registered at this address. It was in name only. There is no actual
office here or anywhere else in the Cayman Islands, and there are no
employees on the site.
Mr. STRICKLAND. So it is a sham.
Mr. DELAHUNT. It is a sham. And I intend this week, maybe early next
week, to consult with my colleagues on the Committee on the Judiciary
and send a letter to the Attorney General, and I think it would be
appropriate to request a special prosecutor to conduct an investigation
into these allegations by 60 Minutes. I would hope that the gentleman
from Ohio (Mr. Strickland), the gentleman from New Jersey (Mr.
Pallone), and the gentleman from Pennsylvania (Mr. Hoeffel) would
support that particular letter.
I think that this is something that has to be examined by an
independent
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prosecutor, not an independent counsel, to again reveal the truth to
the American people. Were there violations of the intent of the
existing legislation that would prohibit these companies from dealing
with so-called rogue nations? I think that this is absolutely essential
to do, just simply out of respect for the rule of law. But also, if it
is true, to demonstrate the moral deficit on the part of some and the
hypocrisy on the part of some when it comes to this particular issue.
I yield back to the gentleman from New Jersey.
Mr. PALLONE. I want to thank my colleagues for not only raising these
issues with regard to Medicare, but also with regard to Halliburton. I
would certainly say to the gentleman from Massachusetts, I would be
glad to join in that effort that the gentleman described tonight.
I want to thank the gentleman from Ohio and the gentleman from
Massachusetts for participating in this special order tonight.
____________________