[Congressional Record Volume 158, Number 9 (Monday, January 23, 2012)]
[Senate]
[Pages S44-S45]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. DURBIN (for himself and Mr. Harkin):
  S. 2032. A bill to amend the Higher Education Act of 1965 regarding 
proprietary institutions of higher education in order to protect 
students and taxpayers; to the Committee on Health, Education, Labor, 
and Pensions.
  Mr. DURBIN. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2032

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Protecting Our Students and 
     Taxpayers Act'' or ``POST Act''.

     SEC. 2. 85/15 RULE.

       (a) In General.--Section 102(b) of the Higher Education Act 
     of 1965 (20 U.S.C. 1002(b)) is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (D), by striking ``and'' after the 
     semicolon;
       (B) in subparagraph (E), by striking the period and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(F) meets the requirements of paragraph (2).'';
       (2) by redesignating paragraph (2) as paragraph (3); and
       (3) by inserting after paragraph (1) the following:
       ``(2) Revenue sources.--
       ``(A) In general.--In order to qualify as a proprietary 
     institution of higher education under this subsection, an 
     institution shall derive not less than 15 percent of the 
     institution's revenues from sources other than Federal funds, 
     as calculated in accordance with subparagraphs (B) and (C).
       ``(B) Federal funds.--In this paragraph, the term `Federal 
     funds' means any Federal financial assistance provided, under 
     this Act or any other Federal law, through a grant, contract, 
     subsidy, loan, guarantee, insurance, or other means to a 
     proprietary institution, including Federal financial 
     assistance that is disbursed or delivered to an institution 
     or on behalf of a student or to a student to be used to 
     attend the institution, except that such term shall not 
     include any monthly housing stipend provided under the Post-
     9/11 Veterans Educational Assistance Program under chapter 33 
     of title 38, United States Code.
       ``(C) Implementation of non-federal revenue requirement.--
     In making calculations under subparagraph (A), an institution 
     of higher education shall--
       ``(i) use the cash basis of accounting;
       ``(ii) consider as revenue only those funds generated by 
     the institution from--

       ``(I) tuition, fees, and other institutional charges for 
     students enrolled in programs eligible for assistance under 
     title IV;
       ``(II) activities conducted by the institution that are 
     necessary for the education and training of the institution's 
     students, if such activities are--

       ``(aa) conducted on campus or at a facility under the 
     control of the institution;
       ``(bb) performed under the supervision of a member of the 
     institution's faculty; and
       ``(cc) required to be performed by all students in a 
     specific educational program at the institution; and

       ``(III) a contractual arrangement with a Federal agency for 
     the purpose of providing job training to low-income 
     individuals who are in need of such training;

       ``(iii) presume that any Federal funds that are disbursed 
     or delivered to an institution on behalf of a student or 
     directly to a student will be used to pay the student's 
     tuition, fees, or other institutional charges, regardless of 
     whether the institution credits such funds to the student's 
     account or pays such funds directly to the student, except to 
     the extent that the student's tuition, fees, or other 
     institutional charges are satisfied by--

       ``(I) grant funds provided by an outside source that--

       ``(aa) has no affiliation with the institution; and
       ``(bb) shares no employees with the institution; and

       ``(II) institutional scholarships described in clause (v);

       ``(iv) include no loans made by an institution of higher 
     education as revenue to the school, except for payments made 
     by students on such loans;
       ``(v) include a scholarship provided by the institution--

       ``(I) only if the scholarship is in the form of monetary 
     aid based upon the academic achievements or financial need of 
     students, disbursed to qualified student recipients during 
     each fiscal year from an established restricted account; and
       ``(II) only to the extent that funds in that account 
     represent designated funds, or income earned on such funds, 
     from an outside source that--

       ``(aa) has no affiliation with the institution; and
       ``(bb) shares no employees with the institution; and
       ``(vi) exclude from revenues--

       ``(I) the amount of funds the institution received under 
     part C of title IV, unless the institution used those funds 
     to pay a student's institutional charges;
       ``(II) the amount of funds the institution received under 
     subpart 4 of part A of title IV;
       ``(III) the amount of funds provided by the institution as 
     matching funds for any Federal program;
       ``(IV) the amount of Federal funds provided to the 
     institution to pay institutional charges for a student that 
     were refunded or returned; and
       ``(V) the amount charged for books, supplies, and 
     equipment, unless the institution includes that amount as 
     tuition, fees, or other institutional charges.

       ``(D) Report to congress.--Not later than July 1, 2012, and 
     by July 1 of each succeeding year, the Secretary shall submit 
     to the authorizing committees a report that contains, for 
     each proprietary institution of higher education that 
     receives assistance under title IV and as provided in the 
     audited financial statements submitted to the Secretary by 
     each institution pursuant to the requirements of section 
     487(c)--
       ``(i) the amount and percentage of such institution's 
     revenues received from Federal funds; and
       ``(ii) the amount and percentage of such institution's 
     revenues received from other sources.''.
       (b) Repeal of Existing Requirements.--Section 487 of the 
     Higher Education Act of 1965 (20 U.S.C. 1094) is amended--
       (1) in subsection (a)--
       (A) by striking paragraph (24);
       (B) by redesignating paragraphs (25) through (29) as 
     paragraphs (24) through (28), respectively;
       (C) in paragraph (24)(A)(ii) (as redesignated by 
     subparagraph (B)), by striking ``subsection (e)'' and 
     inserting ``subsection (d)''; and
       (D) in paragraph (26) (as redesignated by subparagraph 
     (B)), by striking ``subsection (h)'' and inserting 
     ``subsection (g)'';
       (2) by striking subsection (d);
       (3) by redesignating subsections (e) through (j) as 
     subsections (d) through (i), respectively;
       (4) in subsection (f)(1) (as redesignated by paragraph 
     (3)), by striking ``subsection (e)(2)'' and inserting 
     ``subsection (d)(2)''; and
       (5) in subsection (g)(1) (as redesignated by paragraph 
     (3)), by striking ``subsection (a)(27)'' in the matter 
     preceding subparagraph (A) and inserting ``subsection 
     (a)(26)''.
       (c) Conforming Amendments.--The Higher Education Act of 
     1965 (20 U.S.C. 1001 et seq.) is amended--
       (1) in section 152 (20 U.S.C. 1019a)--
       (A) in subsection (a)(1)(A), by striking ``subsections 
     (a)(27) and (h) of section 487'' and inserting ``subsections 
     (a)(26) and (g) of section 487''; and
       (B) in subsection (b)(1)(B)(i)(I), by striking ``section 
     487(e)'' and inserting ``section 487(d)'';
       (2) in section 153(c)(3) (20 U.S.C. 1019b(c)(3)), by 
     striking ``section 487(a)(25)'' each place the term appears 
     and inserting ``section 487(a)(24)'';
       (3) in section 496(c)(3)(A) (20 U.S.C. 1099b(c)(3)(A)), by 
     striking ``section 487(f)'' and inserting ``section 487(e)''; 
     and

[[Page S45]]

       (4) in section 498(k)(1) (20 U.S.C. 1099c(k)(1)), by 
     striking ``section 487(f)'' and inserting ``section 487(e)''.
                                 ______
                                 
      By Mr. LEVIN:
  S. 2033. A bill to amend the Internal Revenue Code of 1986 to end the 
costly derivatives blended rate loophole, and for other purposes; to 
the Committee on Finance.
  Mr. LEVIN. Mr. President, the coming year is certain to be focused on 
two problems: the need to restore prosperity for American working 
families, and the need to reduce our budget deficit. Our challenge is 
to accomplish these goals together, and not to pursue one at the 
expense of the other. As I have said repeatedly to this Senate, I 
believe the only way we can successfully achieve both goals is to 
pursue deficit reduction strategies that do not rely solely on slashing 
federal spending and attacking programs that help build opportunity for 
the middle class. We must recognize that revenue, as well as spending 
cuts, must be part of our strategy, and we must ensure that the 
sacrifices that surely will be needed to reduce the deficit fall not 
just on middle-class Americans, but are spread equitably, and ask for 
contributions from those who have benefitted so greatly from policies 
enacted in the past.
  Today I introduce the Closing the Derivatives Blended Rate Loophole 
Act. This bill meets the twin tests of helping to reduce the deficit 
while promoting the interests of American families. It would put an end 
to a tax loophole that epitomizes how our tax code too often favors 
short-term speculation over investment in economic growth and job 
creation. This loophole showers benefits on short-term traders of 
certain financial instruments, but does nothing to promote economic 
growth and raises the tax burden on American families.
  What is the derivatives blended rate? It's an example of how the 
complexities of the tax code can grant breaks for the few at the 
expense of the many. Here is how it works.
  Generally speaking, taxpayers are allowed to claim the lower long-
term capital gains tax rate on earnings only if those earnings come 
from the sale of assets that they have held for more than a year. The 
reason is simple: we tax longterm capital gains at a lower rate because 
we want to encourage the long-term investment that helps our economy 
grow.
  But under Section 1256 of the Internal Revenue Code, traders in 
certain derivatives contracts have managed to win themselves an 
exemption from the distinction between short-term and long-term capital 
gains. Under this section, traders in those derivatives can claim 60 
percent of their income as long-term capital gains, no matter how 
briefly they hold the asset. This ``blended'' tax rate applies if the 
trader holds the asset for 11 months or 11 hours.
  The details may be complex, but the bottom line is that this 
treatment bestows a substantial tax break on those who typically hold 
the covered derivatives for only a brief period. It encourages and 
rewards short-term speculation in complicated financial products and 
does little, if anything, to help our economy grow and create jobs. In 
fact, the increasing focus of our financial markets on short-term 
profit through trades that last just minutes or seconds threatens real 
damage to our economy. This speculation is hardly the sort of activity 
that our tax code should subsidize.
  We also lose significant tax revenue by allowing this tax break--a 
revenue loss that means we must either ask for more from American 
families, or add to the deficit. What's more, this misguided policy 
contributes to the basic unfairness that characterizes too much of our 
tax code, by providing an unusual and unnecessary tax break to a small 
group of financial speculators. Instead of encouraging growth and 
investment, these loopholes contribute to what Warren Buffett has 
called the ``coddling'' of the wealthy and well-placed.
  Closing this loophole is a common-sense, mainstream idea. I ask my 
colleagues to heed the advice of the tax experts at the American Bar 
Association's Tax Section, who wrote in December to the tax-writing 
committees of the House and Senate:

       We are aware of no policy reason to provide preferential 
     treatment for these gains and losses. Lower capital gains 
     rates are intended to encourage long-term investments in 
     capital assets such as stock. Whatever the merits of 
     extending preferential rates to derivative financial 
     instruments generally, we do not believe that there is a 
     policy basis for providing those preferential rates to 
     taxpayers who have not made such long-term investments.

  Ending this loophole by passage of the Closing the Derivatives 
Blended Rate Loophole Act would not solve all the problems in our tax 
code, nor end our deficit dilemma. But it would be another important 
step toward a saner, fairer tax code. It would demonstrate that 
Congress shares the concerns of so many Americans that the tax system 
is too often stacked against the interests of working families and in 
favor of the privileged few. It would end a policy that encourages 
short-term speculation over long-term investment in growth. It would 
provide a down-payment on the revenue we need to restore if we are to 
engage in serious deficit reduction and avoid slashing critical 
programs. I urge my colleagues to join me in the effort to pass it.
                                 ______
                                 
      By Mr. McCONNELL (for himself, Mrs. Hutchison, Mr. Lee, Mr. 
        Hatch, Mr. Barrasso, Mr. Cornyn, Ms. Ayotte, Mr. Moran, Mr. 
        Alexander, Mr. Crapo, Mr. Rubio, Mr. Coats, Mr. Enzi, Mr. 
        Sessions, Mr. Burr, Mr. Vitter, Mr. Isakson, Mr. Blunt, Mr. 
        Boozman, Mr. Kyl, Mr. McCain, Mr. Shelby, Mr. Wicker, Mr. 
        Chambliss, Mr. Lugar, Mr. Risch, Mr. Roberts, Mr. Inhofe, Mr. 
        Grassley, Mr. Kirk, and Mr. Graham):
  S.J. Res. 34. A joint resolution relating to the disapproval of the 
President's exercise of authority to increase the debt limit, as 
submitted under section 3101A of title 31, United States Code, on 
January 12, 2012; placed on the calendar.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the text 
of the joint resolution be printed in the Record.
  There being no objection, the text of the joint resolution was 
ordered to be printed in the Record, as follows:

                              S.J. Res. 34

       Resolved by the Senate and House of Representatives of the 
     United States of America Congress assembled, That Congress 
     disapproves of the President's exercise of authority to 
     increase the debt limit on January 12, 2012, as exercised 
     pursuant to the certification under section 3101A(a) of title 
     31, United States Code.

                          ____________________