[Congressional Record (Bound Edition), Volume 150 (2004), Part 1]
[House]
[Pages 935-942]
[From the U.S. 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 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.

[[Page 936]]

  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.
  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

[[Page 937]]

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).
  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

[[Page 938]]

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.''
  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.

[[Page 939]]

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, 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

[[Page 940]]

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.
  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

[[Page 941]]

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 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

[[Page 942]]

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.

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