[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.
____________________