[Congressional Record (Bound Edition), Volume 154 (2008), Part 1]
[Senate]
[Pages 1240-1246]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. CARPER (for himself and Mrs. McCaskill):
  S. 2583. A bill to amend the Improper Payments Information Act of 
2002 (31 U.S.C. 3321 note) in order to prevent the loss of billions in 
taxpayer dollars; to the Committee on Homeland Security and 
Governmental Affairs.
  Mr. CARPER. Mr. President, I rise today to introduce the Improper 
Payments Elimination and Recovery Act of 2008.
  At first glance, a bill with a name like that might not seem too 
exciting. But I can assure my colleagues that it addresses a serious, 
largely unknown problem that is a real threat to our fiscal well being.
  Each year, agencies are required to look at all of their programs and 
activities and determine which are susceptible to significant improper 
payments. For those that are deemed at risk, agencies must produce 
estimated error rates that are included in their year-end financial 
statements. They must also come up with action plans for reducing their 
errors.
  In fiscal year 2007, agencies are estimated to have made nearly $55 
billion in improper payments. That is an astounding number, Mr. 
President.
  We spend so much time around here throwing around numbers like $55 
billion that they begin to lose their meaning. So I want to take a 
minute or so to put that number in perspective.
  I was surprised to learn that $55 billion is more than the total 
budget for the Department of Homeland Security. It is also twice as 
much as we're projected to spend to protect the vehicles our soldiers 
are using in Iraq against roadside bombs.
  To illustrate further the amount of money we are talking about, $55 
billion is just a little bit less than the total GDP of Vietnam. It is 
a little bit more than the GDPs of Croatia and Slovakia. Most 
astoundingly, $55 billion equals the combined GDPs of 44 of the smaller 
countries in the world.
  So our Federal Government is likely wasting more money than the total 
populations of many countries produce in a given year.
  But $55 billion is not even a real number. It is likely just the tip 
of the iceberg. It includes no error estimates for massive programs 
like TANF, SCHIP, and the Medicare Prescription Drug Program. So I 
expect that we will see more than $55 billion in improper payments next 
year and the year after.
  My colleagues and I on the Homeland Security and Governmental Affairs 
Committee's Subcommittee on Federal Financial Management have held six 
hearings focused on this issue now, including one this afternoon. What 
we have learned is that, in some cases, agencies are just not taking 
their responsibility to deal with and address their problems with 
improper payments and the management weaknesses that can cause them. 
The bill I am bringing forward today addresses just about all of the 
failures and deficiencies we've learned about through our oversight.
  My bill starts by improving transparency. OMB right now has set the 
reporting threshold for improper payments too low, meaning millions of 
errors go unreported--and potentially unaddressed--each year. I want to 
lower the reporting threshold so that Congress and the general public 
have a better picture of the problem we face.
  My bill would also help to prevent improper payments from happening 
in the first place by requiring that agencies come up with stronger 
corrective action plans and aggressive error reduction targets. It 
would also implement a recent recommendation from GAO that called on 
OMB to develop a process whereby agencies would receive

[[Page 1241]]

regular audited opinions on the financial controls used to prevent 
improper payments before they happen.
  My bill would also force agencies to be more aggressive in recovering 
improper payments they make. Some agencies--and most private sector 
firms--regularly go over their books to identify payment errors and get 
back overpayments made to contractors and others they do business with. 
We haven't done that enough in the Federal Government. Even as the 
agencies are reporting more and more improper payments, the amount 
recovered remains miniscule. I want to change this by requiring that 
all agencies with outlays of $1 million or more perform recovery audits 
on all of their programs and activities if doing so is cost effective.
  Finally--and perhaps most importantly--my bill would hold agencies 
accountable. Today, as I mentioned, some agencies do not appear to be 
taking improper payments very seriously. I want to force agencies to 
hold top managers accountable for their progress--or lack of progress--
in doing something to take better care of the tax dollars we entrust 
them with.
  I look forward to working with my colleagues to get these important 
reforms enacted. I am sure we can all agree that allowing this level of 
waste to continue unchecked is reckless and unacceptable.
  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. 2583

       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 ``Improper Payments 
     Elimination and Recovery Act of 2008''.

     SEC. 2. IMPROPER PAYMENTS ELIMINATION AND RECOVERY.

       (a) Susceptible Programs and Activities.--Section 2 of the 
     Improper Payments Information Act of 2002 (31 U.S.C. 3321 
     note) is amended by striking subsection (a) and inserting the 
     following:
       ``(a) Identification of Susceptible Programs and 
     Activities.--
       ``(1) In general.--The head of each agency shall, in 
     accordance with guidance prescribed by the Director of the 
     Office of Management and Budget, annually review all programs 
     and activities that it administers and identify all such 
     programs and activities that may be susceptible to 
     significant improper payments.
       ``(2) Annual risk assessment.--
       ``(A) Definition.--In this paragraph the term `significant' 
     means that improper payments in the program or activity in 
     the preceding fiscal year exceeded--
       ``(i) 2.5 percent of all program or activity payments made 
     during that fiscal year; or
       ``(ii) $10,000,000.
       ``(B) Risk assessment.--The review under paragraph (1) 
     shall include a risk assessment that includes--
       ``(i) a systematic process for producing a statistically 
     valid estimate of the level of improper payments being made 
     by the agency; and
       ``(ii) an identification of the risks for each program and 
     activity resulting from the estimates made under clause 
     (i).''.
       (b) Reports on Actions To Reduce Improper Payments.--
     Section 2 of the Improper Payments Information Act of 2002 
     (31 U.S.C. 3321 note) is amended by striking subsection (c) 
     and inserting the following:
       ``(c) Reports on Actions To Reduce Improper Payments.--With 
     respect to any program or activity of an agency with 
     estimated improper payments under subsection (b), the head of 
     the agency shall provide with the estimate under subsection 
     (b) a report on what actions the agency is taking to reduce 
     the improper payments, including--
       ``(1) a discussion of the causes of the improper payments 
     identified, actions planned or taken to correct those causes, 
     and the planned or actual completion date of the actions 
     taken to address those causes;
       ``(2) in order to reduce improper payments to minimal cost-
     effective levels, a statement of whether the agency has--
       ``(A) the internal controls, including information systems;
       ``(B) the human capital; and
       ``(C) other infrastructure the agency needs;
       ``(3) if the agency does not have the internal controls, a 
     description of the resources the agency has requested in its 
     budget submission to establish the internal controls;
       ``(4) a description of the steps the agency has taken to 
     ensure that agency managers (including the head of the 
     agency) are held accountable for establishing the appropriate 
     internal controls, including an appropriate control 
     environment, that prevent improper payments from occurring 
     and promptly detect and collect improper payments made; and
       ``(5) a statement of whether or not the agency has--
       ``(A) conducted annual improper payment risk assessments;
       ``(B) developed and implemented improper payment control 
     plans; and
       ``(C) implemented appropriate improper payment detection, 
     investigation, reporting, and data collection procedures and 
     processes.''.
       (c) Reports on Recovery Actions and Governmentwide 
     Reporting.--
       (1) In general.--Section 2 of the Improper Payments 
     Information Act of 2002 (31 U.S.C. 3321 note) is amended--
       (A) by redesignating subsections (d), (e), and (f) as 
     subsections (f), (g), and (h), respectively; and
       (B) by inserting after subsection (c) the following:
       ``(d) Reports on Actions To Recover Improper Payments.--
     With respect to any improper payments identified in recovery 
     audits conducted under section 2(g) of the Improper Payments 
     Elimination and Recovery Act of 2008, the head of the agency 
     shall provide with the estimate under subsection (b) a report 
     on what actions the agency is taking to recover improper 
     payments, including--
       ``(1) the types of errors from which improper payments 
     resulted;
       ``(2) a discussion of the methods used by the agency to 
     recover improper payments;
       ``(3) the amounts recovered, outstanding, and determined to 
     not be collectable; and
       ``(4) an aging schedule of the amounts outstanding.
       ``(e) Governmentwide Reporting of Improper Payments.--
       ``(1) Department of the treasury.--The Secretary of the 
     Treasury shall include in each report submitted under section 
     331(a) of title 31, United States Code, the improper payment 
     information reported by the agencies on a governmentwide 
     basis.
       ``(2) Office of management and budget.--The Director of the 
     Office of Management and Budget shall--
       ``(A) coordinate with the Secretary of the Treasury in the 
     preparation of the information to be reported under paragraph 
     (1); and
       ``(B) prescribe regulations for--
       ``(i) the information required to be reported; and
       ``(ii) a format of reporting such information on a 
     governmentwide basis to be used by agencies.''.
       (2) Technical and conforming amendment.--Section 331(a) of 
     title 31, United States Code, is amended--
       (A) in paragraph (6), by striking ``and'' after the 
     semicolon;
       (B) in paragraph (7), by striking the period and inserting 
     ``; and''; and
       (C) by adding at the end the following:
       ``(8) the improper payments information required under 
     section 2(e) of the Improper Payments Information Act of 2002 
     (31 U.S.C. 3321 note).''.
       (d) Definitions.--Section 2 of the Improper Payment 
     Information Act of 2002 (31 U.S.C. 3321 note) is amended by 
     striking subsection (g) (as redesignated by this section) and 
     inserting the following:
       ``(g) Definitions.--In this section:
       ``(1) Agency.--The term `agency' means an executive agency, 
     as that term is defined in section 102 of title 31, United 
     States Code.
       ``(2) Improper payment.--The term `improper payment'--
       ``(A) means any payment that should not have been made or 
     that was made in an incorrect amount (including overpayments 
     and underpayments) under statutory, contractual, 
     administrative, or other legally applicable requirements; and
       ``(B) includes any payment to an ineligible recipient, any 
     payment for an ineligible good or service, any duplicate 
     payment, payments for services not received, and any payment 
     that does not account for credit for applicable discounts.
       ``(3) Payment.--The term `payment' means any transfer or 
     commitment for future transfer of cash, in-kind benefits, 
     goods, services, loans and loan guarantees, insurance 
     subsidies, and other items of value between Federal agencies 
     and their employees, vendors, partners, and beneficiaries, 
     and parties to contracts, grants, leases, cooperative 
     agreements, or any other procurement mechanism, that is--
       ``(A) made by a Federal agency, a Federal contractor, or a 
     governmental or other organization administering a Federal 
     program or activity; and
       ``(B) derived from Federal funds or other Federal resources 
     or that will be reimbursed from Federal funds or other 
     Federal resources.
       ``(4) Payment for an ineligible good or service.--The term 
     `payment for an ineligible good or service' shall include a 
     payment for any good or service that is in violation of any 
     provision of any contract, grant, lease, cooperative 
     agreement, or any other procurement mechanism, including any 
     provision relating to quantity, quality, or timeliness.''.
       (e) Guidance by the Office of Management and Budget.--
     Section 2 of the Improper Payments Information Act of 2002 
     (31

[[Page 1242]]

     U.S.C. 3321 note) is amended by striking subsection (h) (as 
     redesignated by this section) and inserting the following:
       ``(h) Guidance by the Office of Management and Budget.--
       ``(1) In general.--Not later than 6 months after the date 
     of enactment of the Improper Payments Elimination and 
     Recovery Act of 2008, the Director of the Office of 
     Management and Budget shall prescribe updated guidance to 
     implement and provide for full compliance with the 
     requirements of this section. The guidance shall not include 
     any exemptions not specifically authorized by this section.
       ``(2) Contents.--The updated guidance under paragraph (1) 
     shall prescribe--
       ``(A) the form of the reports on actions to reduce improper 
     payments, recovery actions, and governmentwide reporting; and
       ``(B) strategies for addressing risks and establishing 
     appropriate prepayment and postpayment internal controls.''.
       (f) Internal Controls.--
       (1) Report on effectiveness of a-123 implementation.--The 
     President's Council on Integrity and Efficiency shall conduct 
     a study of the effectiveness of implementation of the Office 
     of Management and Budget's Circular No. A-123 (revised), 
     Management's Responsibility for Internal Control at 
     preventing improper payments or addressing internal control 
     problems that contribute to improper payments, and not later 
     than 1 year after the date of enactment of this Act, submit a 
     report on the study to--
       (A) the Committee on Homeland Security and Governmental 
     Affairs of the Senate;
       (B) the Committee on Oversight and Government Reform of the 
     House of Representatives;
       (C) the Director of the Office of Management and Budget; 
     and
       (D) the Comptroller General.
       (2) Consultation and cooperation.--The President's Council 
     on Integrity and Efficiency shall consult and cooperate with 
     the committees and director described under paragraph (1) to 
     ensure the nature and scope of the study under paragraph (1) 
     will address the needs on those committees and the Director 
     of the Office of Management and Budget, including how the 
     implementation of Circular No. A-123 (revised) has helped to 
     identify, report, prevent, and recover improper payments.
       (3) Determination of agency readiness for opinion on 
     internal control.--Not later than 1 year after the date of 
     enactment of the Improper Payments Elimination and Recovery 
     Act of 2008, the Director of the Office of Management and 
     Budget shall develop--
       (A) specific criteria as to when an agency should initially 
     be required to obtain an opinion on internal control over 
     financial reporting; and
       (B) criteria for an agency that has demonstrated a 
     stabilized, effective system of internal control over 
     financial reporting, whereby the agency would qualify for a 
     multiyear cycle for obtaining an audit opinion on internal 
     control over financial reporting, rather than an annual 
     cycle.
       (g) Recovery Audits.--An agency with outlays of $1,000,000 
     or more in any fiscal year shall conduct a recovery audit (as 
     that term is defined by the Director of the Office of 
     Management and Budget under section 3561 of title 31, United 
     States Code) of all programs and activities, if the agency 
     determines that--
       (1) conducting an internal recovery audit would be 
     effective; or
       (2) a prior audit has identified improper payments that can 
     be recouped and it is cost beneficial for a recovery activity 
     to recapture those funds.
       (h) Report on Recovery Auditing.--Not later than 180 days 
     after the date of the enactment of this Act, the Chief 
     Financial Officers Council established under section 302 of 
     the Chief Financial Officers Act of 1990 (31 U.S.C. 901 note) 
     and the President's Council on Integrity and Efficiency 
     established under Executive Order 12805 of May 11, 1992, in 
     consultation with recovery audit experts, shall--
       (1) jointly conduct a study of the potential costs and 
     benefits of requiring Federal agencies to recover improper 
     payments using the services of--
       (A) private contractors;
       (B) agency employees;
       (C) cross-servicing from other agencies; or
       (D) any combination of the provision of services described 
     under subparagraphs (A) through (C); and
       (2) submit a report on the results of the study to--
       (A) the Committee on Homeland Security and Governmental 
     Affairs of the Senate;
       (B) the Committee on Oversight and Government Reform of the 
     House of Representatives; and
       (C) the Comptroller General.

     SEC. 3. COMPLIANCE.

       (a) Definitions.--In this section:
       (1) Agency.--The term ``agency'' has the meaning given 
     under section 2(f) of the Improper Payments Information Act 
     of 2002 (31 U.S.C. 3321 note) as redesignated by this Act.
       (2) Compliance.--The term ``compliance'' means that the 
     agency--
       (A) has published a performance report for the most recent 
     fiscal year and posted that report on the agency website;
       (B) has conducted a program specific risk assessment for 
     each program or activity that--
       (i) is in compliance with section 2(a) the Improper 
     Payments Information Act of 2002 (31 U.S.C. 3321 note); and
       (ii) is included in the performance report;
       (C) publishes program specific improper payments estimates 
     for all programs and activities identified under section 2(b) 
     of the Improper Payments Information Act of 2002 (31 U.S.C. 
     3321 note) in the performance report;
       (D) publishes programmatic corrective action plans prepared 
     under section 2(c) of the Improper Payments Information Act 
     of 2002 (31 U.S.C. 3321 note) that the agency may have in the 
     performance report;
       (E) publishes Office of Management and Budget approved 
     improper payments reduction targets in the performance report 
     for each program assessed to be at risk, and is determined by 
     the Office of Management and Budget to be actively meeting 
     such targets;
       (F) publishes the compliance report under subsection (c) in 
     the performance report; and
       (G) is not subject to the subsection (d)(4).
       (3) Delinquent program.--The term ``delinquent program'' 
     means a program which is partially or wholly responsible for 
     the determination of an agency being not in compliance.
       (4) Performance report.--The term ``performance report'' 
     means the performance and accountability report referred to 
     under section 3516(b) of title 31, United States Code, or a 
     program performance report under section 1116 of that title.
       (b) Annual Compliance Report by OMB.--
       (1) In general.--Each year, the Director of the Office of 
     Management and Budget shall prepare a report with an 
     identification of--
       (A) the compliance status of each agency under this 
     section; and
       (B) the delinquent programs responsible for that status.
       (2) Inclusion in budget submission.--The Director of Office 
     of the Management and Budget shall include the report 
     described under paragraph (1) in the annual budget submitted 
     under section 1105 of title 31, United States Code.
       (c) Annual Compliance Report by Inspector General.--
       (1) In general.--Each fiscal year, the Inspector General of 
     each agency shall determine whether the agency is in 
     compliance with the Improper Payments Information Act of 2002 
     (31 U.S.C. 3321 note) and this Act and submit a report to the 
     head of the agency on that determination.
       (2) Preparation of report.--The Inspector General of each 
     agency may enter into contracts and other arrangements with 
     public agencies and with private persons for the preparation 
     of financial statements, studies, analyses, and other 
     services in preparing the report described under paragraph 
     (1).
       (3) Inclusion in performance report.--The head of each 
     agency shall include the report of the agency Inspector 
     General described under paragraph (1) in the performance 
     report.
       (d) Remediation Assistance.--
       (1) Voluntary remediation assistance.--If an agency is 
     determined by the agency Inspector General not to be in 
     compliance under subsection (c) in a fiscal year, the head of 
     the agency may transfer funds from any available 
     appropriations of that agency for expenditure on intensified 
     compliance for any delinquent program (notwithstanding any 
     appropriations transfer authority limitation in any other 
     provision of law).
       (2) Required remediation assistance.--If an agency is 
     determined by the agency Inspector General not to be in 
     compliance under subsection (c) for 2 consecutive fiscal 
     years, the head of the agency shall transfer funds from any 
     available appropriations of that agency to expend on 
     intensified compliance (notwithstanding any appropriations 
     transfer authority limitation in any other provision of law).
       (3) Remediation rescission.--
       (A) In general.--If an agency is determined by the agency 
     Inspector General not to be in compliance under subsection 
     (c) for a period of 3 consecutive fiscal years and any 
     delinquent program is included in the report under that 
     subsection for 2 consecutive years during that 3-fiscal year 
     period, the head of the agency shall transfer 5 percent of 
     the available appropriations for each of those delinquent 
     programs, as determined by the head of the agency, to 
     miscellaneous receipts of the United States Treasury.
       (B) Continuation of transfers.--The head of an agency shall 
     make transfers under subparagraph (A) until the agency is 
     determined to be in compliance under subsection (b).
       (4) Stop-loss provision.--If an agency is determined under 
     the Improper Payments Information Act of 2002 (31 U.S.C. 3321 
     note) to have an improper payment rate greater than 15 
     percent for 3 consecutive fiscal years (regardless of the 
     whether the program is a delinquent program)--
       (A) not later than 30 days after that determination, the 
     head of agency shall submit to Congress proposals for 
     statutory changes or other relevant actions determined 
     necessary to stop the financial loss by the program; and
       (B) no further appropriations for such program shall be 
     authorized until such time as the inspector general of that 
     agency submits a certification to Congress that sufficient

[[Page 1243]]

     changes in the program (whether those proposed by agency or 
     otherwise) have been implemented to warrant resumed 
     authorization of appropriations.
                                 ______
                                 
      By Mr. REID (for Mrs. Clinton):
  S. 2584. A bill to establish a program to evaluate HIV/AIDS programs 
in order to improve accountability, increase transparency, and ensure 
the delivery of evidence-based services, to the Committee on Foreign 
Relations.
  Mrs. CLINTON. Mr. President, today I rise to introduce the PEPFAR 
Accountability and Transparency Act, a bill that will increase our 
ability to research and identify the most effective interventions in 
combating global AIDS. As we work to increase funding for the 
President's Emergency Plan for AIDS Relief, PEPFAR, I believe we must 
also insure that we maximize our investment in programs that have been 
found effective in preventing infections and delivering care to as many 
people as possible.
  Through the years, the science known as operations research--the 
ability to identify what is working and what is not working in our 
treatment, prevention, and care interventions--has helped to improve 
the effectiveness of the health care delivery system that we have 
established and enhanced with U.S. funding.
  Take, for example, the issue of mother to child transmission of HIV. 
In the U.S., cases of perinatal HIV transmission have dropped 
markedly--from more than 1,000 in 1991 to less than 100 in 2005--
largely due to access to critically needed, life-extending drugs. But 
in the developing world, where fewer than 10 percent of HIV positive 
pregnant women, about 1 out of every 3 children born to mothers with 
HIV end up with the virus--a wholly preventable situation. The field of 
operations research is allowing us to understand how we can, in low 
resource settings, improve testing, education, and treatment options 
that reduce cases of perinatal transmission.
  There are many other areas where the data from operations research 
can transform our ability to maximize the U.S. investment in global 
AIDS funding--through measuring the impact of our prevention education 
efforts, to understanding how addressing gender inequality can reduce 
HIV infection, to ensuring that treatment is delivered in a way that 
extends the lives of people with HIV.
  This legislation will require the Government to develop a strategic 
plan to improve program monitoring, evaluation and operations research. 
With this plan, we can determine the effectiveness of the interventions 
we are funding, so that we can replicate those that are working well, 
and examine ways to improve those that do not have the outcomes that we 
expected. The bill would also increase the dissemination of research 
findings, so that those working in low-resource settings would be able 
to easily learn and implement cost-effective interventions in their 
communities.
  I am proud to support increases for PEPFAR, but I also believe that 
we must ensure that these increases are targeted toward effective 
programs that reach as many people as possible. This legislation will 
help us achieve that goal. I look forward to working with my colleagues 
in the Senate to support this legislation and operations research as we 
move forward with PEPFAR reauthorization.
  Mr. President, I ask unanimous consent that a letter of support be 
printed in the Record.
  There being no objection, the material was ordered to be placed in 
the Record, as follows:

                                        Elizabeth Glaser Pediatric


                                              AIDS Foundation,

                                                 January 28, 2008.
     Hon. Hillary Rodham Clinton,
     Washington, DC.
       Dear Senator Clinton: On behalf of the Elizabeth Glaser 
     Pediatric AIDS Foundation, I would like to express our strong 
     support for the PEPFAR Accountability and Transparency Act. 
     We appreciate your leadership in expanding the important role 
     of operations research, program monitoring, and impact 
     evaluation research in the President's Emergency Plan for 
     AIDS Relief (PEPFAR) and applaud your efforts in maximizing 
     U.S. financial commitment to the global AIDS pandemic.
       Significant advances have been made over the last twenty-
     five years in HIV/AIDS prevention, care, and treatment to 
     improve the lives of children and families affected by HIV/
     AIDS across the globe. Yet, while scientists and doctors have 
     learned a great deal about HIV, how to prevent the spread of 
     HIV, and how to treat those already infected, insufficient 
     focus has been placed on putting many of those advances into 
     action on the frontlines of the pandemic. Operations research 
     is becoming increasingly important in determining what 
     approaches work best in the field and ensuring that this 
     knowledge is applied on a broader scale.
       Your legislation will help ensure that we maximize the 
     lifesaving impact of PEPFAR resources by elevating operations 
     research as a priority in PEPFAR, improving accountability, 
     and strengthening transparency. Specifically, the legislation 
     directs the Office of the Global AIDS Coordinator to work in 
     collaboration with federal agencies, country governments, and 
     implementing partners to develop a five-year strategic plan 
     to prioritize operations research, program monitoring, and 
     impact evaluation research projects and establish timelines 
     for action.
       Thank you for your leadership and commitment to this issue. 
     We look forward to working closely with you to ensure that 
     children, women, and families worldwide benefit from this 
     important piece of legislation.
           Sincerely,
                                                 Pamela W. Barnes,
                            President and Chief Executive Officer.
                                 ______
                                 
      Mr. ROCKEFELLER:
  S. 2586. A bill to provide States with fiscal relief through a 
temporary increase in the Federal medical assistance percentage and 
direct payments to States; to the Committee on Finance.
  Mr. ROCKEFELLER. Mr. President, I rise today to introduce a critical 
piece of legislation, the State Fiscal Relief Act of 2008. This 
legislation builds upon the $20 billion State fiscal relief model 
passed by Congress and signed into law by President Bush as part of the 
Jobs and Growth Tax Reconciliation Act of 2003. It would provide $12 
billion in State aid, equally divided between an increase in Federal 
Medicaid matching payments and general revenue sharing grants to 
States.
  Many of my colleagues may wonder why I am introducing a $12 billion 
State fiscal relief bill instead of a $15 billion State fiscal relief 
bill--the approach I have consistently supported. The reason is simple. 
I want to build on the strong, bipartisan support of our Nation's 
Governors, who have repeatedly endorsed a $12 billion fiscal relief 
package--with $6 billion in additional Medicaid assistance to States 
and $6 billion in targeted grants to States. I still worry that State 
deficits will only grow in the coming days, weeks, and months, but I am 
willing to start with $12 billion and continue my work with our 
Nation's Governors, health care providers, advocates, and others to get 
this aid to States immediately.
  I want to begin my remarks with the fact that leading economists 
support State fiscal relief. Earlier this month, Mark Zandi, chief 
economist of Moody's Economy.com, examined the effectiveness of the 
various stimulus options that Congress is considering. Dr. Zandi's 
analysis found that targeted State aid would generate increased 
economic activity of $1.36 for each dollar of cost, because it would 
lessen State and local government budget cuts that ``are sure to become 
a substantial drag on the economy later this year and into 2009.''
  As a former Governor, who survived the tough times of the 1980s, I 
strongly believe that States deserve to be a part of the economic 
stimulus package currently before the Senate. State and local 
governments are an integral part of our national economic engine. They 
provide health care and a wealth of social services to millions of 
Americans, particularly when the economy is weak. We should act 
immediately to provide States with relief before they are faced with 
the harsh decision to cut children and families off of Medicaid.
  States experience enormous budget pressures when the economy slows. 
State revenues can evaporate rapidly during an economic downturn. 
Unlike the Federal Government, States cannot borrow infinite amounts of 
debt from China and other countries. By law, 49 States including West 
Virginia--are required to balance their budgets and, in times of 
economic downturn, this task becomes significantly more difficult.
  A delayed Federal response to the growing impact of this downturn on 
States is an invitation to disaster. We

[[Page 1244]]

know from experience that Medicaid is consistently the first program 
slated for cuts during a State budget squeeze. This is not only a 
problem for current Medicaid enrollees; it is also a problem for hard-
working Americans who have lost their jobs because of the economic 
slowdown.
  In the last year, our unemployment rate has increased to 5.0 percent 
with nearly 900,000 more Americans without jobs. The loss of a job is 
hard enough financially on an individual or family, but since the 
majority of Americans get their health insurance through their jobs, 
the loss of a job often results in a simultaneous loss of health 
insurance coverage. Medicaid fills the gap for working families when 
they lose access to private coverage. For every 1 percent increase in 
the unemployment rate, Medicaid enrollment increases by 2-3 million 
people.
  During the last economic downturn, the number of uninsured Americans 
would have been millions more if Medicaid and CHIP had not responded to 
the twin challenges of an economic downturn and a sharp drop-off in 
private health insurance coverage. A critical factor in helping States 
sustain Medicaid enrollment during those difficult times was the $20 
billion in State fiscal relief that Congress enacted in 2003. The 2003 
fiscal relief provisions went a long way to preserve health care 
coverage for millions of working Americans. However, we cannot discount 
the fact that one million low-income people had already lost Medicaid 
coverage because we waited two years into the recession to pass State 
fiscal relief. We should not make the same mistake twice. We must act 
quickly.
  There is no question that health care is economic stimulus. Insuring 
jobless workers encourages consumption of health care services and 
provides an economic boost to the health care sector. People without 
insurance seek treatment less often than people who are insured. 
Uninsured Americans not only have greater problems accessing needed 
care but often spend more out-of-pocket on health care, making it 
harder for them to spend on other things.
  The grants to States are also stimulative. For example, they can be 
used to finance unfunded Federal mandates like child support 
enforcement. Six economists recently wrote that ``restoring funding to 
the child support program will produce well-targeted stimulus to the 
economy because child support redistributes income toward lower-income 
families who are more likely to use the income to meet their 
consumption needs. Restoring funding to the child support program would 
also mean that the State and county governments would not have to lay 
off child support workers and reduce the level of services that they 
provide families in the child support program.''
  One of the arguments against State fiscal relief that I continue to 
hear is the argument that State fiscal conditions are not that bad. We 
have to be very cautious about that type of argument because State 
fiscal situations are changing rapidly. The recent CBO report on the 
economy alludes to this very fact. It reads, ``Recent evidence 
indicates that many States respond relatively quickly to a downturn in 
the economy, even if it occurs after their budgets have been enacted 
for the year.''
  We already know from the National Governors Association that 18 
States have reported budget shortfalls totaling $14 billion for 2008 
and 17 States project shortfalls totaling $31 billion for 2009. 
However, we cannot simply take a snapshot of the economy today and 
argue that this is not a crisis waiting to happen. The fact of the 
matter is that a dozen more States could be in deficit situations very 
soon if the downturn continues. This is especially true given the 
significant decline in property tax revenues in many States and the 
impact of the bonus depreciation provisions included in the stimulus 
bill in several States.
  As proud as I am of the 2003 fiscal relief package, I want to remind 
my colleagues that the $20 billion in relief was nearly too late. One 
million low-income people had already been cut off of Medicaid by the 
time that legislation finally passed because we waited two years into 
the recession to enact it. History does not have to repeat itself. We 
know that working families are at risk of becoming uninsured now and 
into the near future, so we must act swiftly to protect them.
  I urge my colleagues to support this important legislation. We have a 
real opportunity to proactively address a looming health care crisis. 
This approach is supported by the National Governors Association as 
well as hundreds of provider and health advocacy groups nationwide. We 
should not allow this opportunity to pass. Too much is at stake.
  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. 2586

       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 ``State Fiscal Relief Act of 
     2008''.

     SEC. 2. TEMPORARY STATE FISCAL RELIEF.

       (a) Temporary Increase of the Medicaid FMAP.--
       (1) Permitting maintenance of fiscal year 2007 fmap for 
     last 3 calendar quarters of fiscal year 2008.--Subject to 
     paragraph (5), if the FMAP determined without regard to this 
     subsection for a State for fiscal year 2008 is less than the 
     FMAP as so determined for fiscal year 2007, the FMAP for the 
     State for fiscal year 2007 shall be substituted for the 
     State's FMAP for the second, third, and fourth calendar 
     quarters of fiscal year 2008, before the application of this 
     subsection.
       (2) Permitting maintenance of fiscal year 2008 fmap for 
     first 2 quarters of fiscal year 2009.--Subject to paragraph 
     (5), if the FMAP determined without regard to this subsection 
     for a State for fiscal year 2009 is less than the FMAP as so 
     determined for fiscal year 2008, the FMAP for the State for 
     fiscal year 2008 shall be substituted for the State's FMAP 
     for the first and second calendar quarters of fiscal year 
     2009, before the application of this subsection.
       (3) General 1.225 percentage points increase for last 3 
     calendar quarters of fiscal year 2008 and first 2 calendar 
     quarters of fiscal year 2009.--Subject to paragraphs (5), 
     (6), and (7), for each State for the second, third, and 
     fourth calendar quarters of fiscal year 2008 and for the 
     first and second calendar quarters of fiscal year 2009, the 
     FMAP (taking into account the application of paragraphs (1) 
     and (2)) shall be increased by 1.225 percentage points.
       (4) Increase in cap on medicaid payments to territories.--
     Subject to paragraphs (6) and (7), with respect to the 
     second, third, and fourth calendar quarters of fiscal year 
     2008 and the first and second calendar quarters of fiscal 
     year 2009, the amounts otherwise determined for Puerto Rico, 
     the Virgin Islands, Guam, the Northern Mariana Islands, and 
     American Samoa under subsections (f) and (g) of section 1108 
     of the Social Security Act (42 U.S.C. 1308) shall each be 
     increased by an amount equal to 2.45 percent of such amounts.
       (5) Scope of application.--The increases in the FMAP for a 
     State under this subsection shall apply only for purposes of 
     title XIX of the Social Security Act and shall not apply with 
     respect to--
       (A) disproportionate share hospital payments described in 
     section 1923 of such Act (42 U.S.C. 1396r-4);
       (B) payments under title IV or XXI of such Act (42 U.S.C. 
     601 et seq. and 1397aa et seq.); or
       (C) any payments under XIX of such Act that are based on 
     the enhanced FMAP described in section 2105(b) of such Act 
     (42 U.S.C. 1397ee(b)).
       (6) State eligibility.--
       (A) In general.--Subject to subparagraph (B), a State is 
     eligible for an increase in its FMAP under paragraph (3) or 
     an increase in a cap amount under paragraph (4) only if the 
     eligibility under its State plan under title XIX of the 
     Social Security Act (including any waiver under such title or 
     under section 1115 of such Act (42 U.S.C. 1315)) is no more 
     restrictive than the eligibility under such plan (or waiver) 
     as in effect on December 31, 2007.
       (B) State reinstatement of eligibility permitted.--A State 
     that has restricted eligibility under its State plan under 
     title XIX of the Social Security Act (including any waiver 
     under such title or under section 1115 of such Act (42 U.S.C. 
     1315)) after December 31, 2007 is eligible for an increase in 
     its FMAP under paragraph (3) or an increase in a cap amount 
     under paragraph (4) in the first calendar quarter (and 
     subsequent calendar quarters) in which the State has 
     reinstated eligibility that is no more restrictive than the 
     eligibility under such plan (or waiver) as in effect on 
     December 31, 2007.
       (C) Rule of construction.--Nothing in subparagraph (A) or 
     (B) shall be construed as

[[Page 1245]]

     affecting a State's flexibility with respect to benefits 
     offered under the State medicaid program under title XIX of 
     the Social Security Act (42 U.S.C. 1396 et seq.) (including 
     any waiver under such title or under section 1115 of such Act 
     (42 U.S.C. 1315)).
       (7) Requirement for certain states.--In the case of a State 
     that requires political subdivisions within the State to 
     contribute toward the non-Federal share of expenditures under 
     the State medicaid plan required under section 1902(a)(2) of 
     the Social Security Act (42 U.S.C. 1396a(a)(2)), the State 
     shall not require that such political subdivisions pay a 
     greater percentage of the non-Federal share of such 
     expenditures for the second, third, and fourth calendar 
     quarters of fiscal year 2008 and the first and second 
     calendar quarters of fiscal year 2009, than the percentage 
     that was required by the State under such plan on December 
     31, 2007, prior to application of this subsection.
       (8) Definitions.--In this subsection:
       (A) FMAP.--The term ``FMAP'' means the Federal medical 
     assistance percentage, as defined in section 1905(b) of the 
     Social Security Act (42 U.S.C. 1396d(b)).
       (B) State.--The term ``State'' has the meaning given such 
     term for purposes of title XIX of the Social Security Act (42 
     U.S.C. 1396 et seq.).
       (9) Repeal.--Effective as of October 1, 2009, this 
     subsection is repealed.
       (b) Payments to States for Assistance With Providing 
     Government Services.--The Social Security Act (42 U.S.C. 301 
     et seq.) is amended by inserting after title V the following:

               ``TITLE VI--TEMPORARY STATE FISCAL RELIEF

     ``SEC. 601. TEMPORARY STATE FISCAL RELIEF.

       ``(a) Appropriation.--There is authorized to be 
     appropriated and is appropriated for making payments to 
     States under this section--
       ``(1) $3,600,000,000 for fiscal year 2008; and
       ``(2) $2,400,000,000 for fiscal year 2009.
       ``(b) Payments.--
       ``(1) Fiscal year 2008.--From the amount appropriated under 
     subsection (a)(1) for fiscal year 2008, the Secretary of the 
     Treasury shall, not later than the later of the date that is 
     45 days after the date of enactment of this Act or the date 
     that a State provides the certification required by 
     subsection (e) for fiscal year 2008, pay each State the 
     amount determined for the State for fiscal year 2008 under 
     subsection (c).
       ``(2) Fiscal year 2009.--From the amount appropriated under 
     subsection (a)(2) for fiscal year 2009, the Secretary of the 
     Treasury shall, not later than the later of October 1, 2008, 
     or the date that a State provides the certification required 
     by subsection (e) for fiscal year 2009, pay each State the 
     amount determined for the State for fiscal year 2009 under 
     subsection (c).
       ``(c) Payments Based on Population.--
       ``(1) In general.--Subject to paragraph (2), the amount 
     appropriated under subsection (a) for each of fiscal years 
     2008 and 2009 shall be used to pay each State an amount equal 
     to the relative population proportion amount described in 
     paragraph (3) for such fiscal year.
       ``(2) Minimum payment.--
       ``(A) In general.--No State shall receive a payment under 
     this section for a fiscal year that is less than--
       ``(i) in the case of 1 of the 50 States or the District of 
     Columbia, \1/2\ of 1 percent of the amount appropriated for 
     such fiscal year under subsection (a); and
       ``(ii) in the case of the Commonwealth of Puerto Rico, the 
     United States Virgin Islands, Guam, the Commonwealth of the 
     Northern Mariana Islands, or American Samoa, \1/10\ of 1 
     percent of the amount appropriated for such fiscal year under 
     subsection (a).
       ``(B) Pro rata adjustments.--The Secretary of the Treasury 
     shall adjust on a pro rata basis the amount of the payments 
     to States determined under this section without regard to 
     this subparagraph to the extent necessary to comply with the 
     requirements of subparagraph (A).
       ``(3) Relative population proportion amount.--The relative 
     population proportion amount described in this paragraph is 
     the product of--
       ``(A) the amount described in subsection (a) for a fiscal 
     year; and
       ``(B) the relative State population proportion (as defined 
     in paragraph (4)).
       ``(4) Relative state population proportion defined.--For 
     purposes of paragraph (3)(B), the term `relative State 
     population proportion' means, with respect to a State, the 
     amount equal to the quotient of--
       ``(A) the population of the State (as reported in the most 
     recent decennial census); and
       ``(B) the total population of all States (as reported in 
     the most recent decennial census).
       ``(d) Use of Payment.--
       ``(1) In general.--Subject to paragraph (2), a State shall 
     use the funds provided under a payment made under this 
     section for a fiscal year to--
       ``(A) provide essential government services;
       ``(B) cover the costs to the State of complying with any 
     Federal intergovernmental mandate (as defined in section 
     421(5) of the Congressional Budget Act of 1974) to the extent 
     that the mandate applies to the State, and the Federal 
     Government has not provided funds to cover the costs; or
       ``(C) compensate for a decline in Federal funding to the 
     State.
       ``(2) Limitation.--A State may only use funds provided 
     under a payment made under this section for types of 
     expenditures permitted under the most recently approved 
     budget for the State.
       ``(e) Certification.--In order to receive a payment under 
     this section for a fiscal year, the State shall provide the 
     Secretary of the Treasury with a certification that the 
     State's proposed uses of the funds are consistent with 
     subsection (d).
       ``(f) Definition of State.--In this section, the term 
     `State' means the 50 States, the District of Columbia, the 
     Commonwealth of Puerto Rico, the United States Virgin 
     Islands, Guam, the Commonwealth of the Northern Mariana 
     Islands, and American Samoa.
       ``(g) Repeal.--Effective as of October 1, 2009, this title 
     is repealed.''.
                                 ______
                                 
      By Mrs. FEINSTEIN (for herself, Mrs. Hutchison, Mrs. Boxer, Mr. 
        Kyl, Mr. Schumer, Mr. Cornyn, Mr. Durbin, Mr. McCain, Mr. 
        Bingaman, Mr. Craig, Ms. Cantwell, Mr. Domenici and Mr Crapo):
  S. 2587. A bill to amend the Immigration and Nationality Act to 
provide for compensation to States incarcerating undocumented aliens 
charged with a felony or 2 or more misdemeanors; to the Committee on 
the Judiciary.
  Mrs. FEINSTEIN. Mr. President, today Senator Hutchison and I are 
introducing two bills that will significantly alleviate the burden of 
illegal immigration on State and local governments: the SCAAP 
Reimbursement Protection Act of 2008 and the Ensure Timely SCAAP 
Reimbursement Act. We are joined by Senators Boxer, Kyl, Schumer, 
Cornyn, Durbin, McCain, Bingaman, Craig, Cantwell, Domenici, and Crapo.
  These bills will amend the State Criminal Alien Assistance Program, 
SCAAP, statute to ensure that states and localities receive more 
funding for costs associated with incarcerating criminal aliens, and 
that these reimbursements are given out in a timely manner.
  The cost of incarcerating criminal aliens is high. In California 
alone, the State spent more than $900 million in 2007 to house over 
20,000 criminal aliens.
  Congress enacted SCAAP in 1994 to help reimburse States and 
localities for the cost of arrest, incarceration, and transportation of 
these aliens.
  However, in 2003, the Department of Justice, DOJ, reinterpreted the 
statute. Now States are only reimbursed for what they spend 
incarcerating convicted criminal aliens and only when the arrest and 
conviction occur in the same fiscal year.
  The DOJ reinterpretation has significantly cut the reimbursement 
local governments are eligible to receive for incarcerating and 
processing illegal aliens.
  This reinterpretation is even more devastating because SCAAP is 
consistently under-funded. The President has zeroed out SCAAP funding 
in his budget proposal over the past 6 years. Through bi-partisan 
support, Congress was only able to partially fund the program.
  As a result, SCAAP only reimburses States for a fraction of the costs 
of incarcerating criminal aliens. For example, in fiscal year 2007, 
SCAAP reimbursed only $109.5 million of the more than $912.5 million 
spent by the California Department of Corrections that year. That means 
the State paid $803 million of its own funds to house criminal aliens.
  This cut has had a domino effect on public safety funding. Every 
dollar less that SCAAP reimburses States means a dollar less to spend 
on critical public safety services. For example, after the SCAAP 
funding cuts in 2003, the Los Angeles County Sheriff's Department 
implemented an ``early release'' policy for prisoners convicted of 
misdemeanors.
  I believe it is the Federal Government's responsibility to control 
illegal immigration. The funding cuts imposed by this administration 
have let our local public safety services down, and have made our 
communities less safe.
  The SCAAP Reimbursement Protection Act of 2008 would restore the 
original intent of SCAAP so that States are

[[Page 1246]]

reimbursed for the costs of incarcerating aliens who are either charged 
with or convicted of a felony or two misdemeanors. States would also be 
reimbursed regardless of the fiscal year of the incarceration and 
conviction.
  This bill has been endorsed by the National Sheriffs' Associate, 
California State Association of Counties, CSAC, the U.S./Mexico Border 
Counties Coalition, the Virginia Sheriffs' Association, the Los Angeles 
County Sheriff Lee Baca, and the Sheriffs' Association of Texas.
  Our colleagues on the House Judiciary Committee unanimously passed a 
companion bill, H.R. 1512, and I urge you to do the same.
  Another problem with SCAAP is the significant delay in reimbursement. 
Recently, State and county governments that foot the bill for holding 
criminal aliens between July 2004 and June 2005 had to wait until June 
21, 2007, before they were reimbursed.
  For example, Los Angeles County, San Bernardino County, and Riverside 
County waited 2 years to receive their reimbursement--totaling $85.9 
million. While they were waiting, public safety offices had to cut back 
on critical services. This delay is worse when one considers that even 
when localities receive the federal funds, they are only reimbursed for 
pennies on every dollar spent.
  Delays place unreasonable budgetary burdens on States, counties, and 
municipalities that already shoulder most of the costs of housing 
criminal aliens.
  California is not alone. Every other State depends on these funds to 
perform what is ultimately a federal responsibility--to control illegal 
immigration and its effects in our communities. These delays affect 
every State.
  The Ensure Timely SCARP Reimbursement Act would help ease this burden 
on States and localities by requiring the Justice Department to 
disburse funds within 6 months of the application deadline.
  I ask my colleagues to join me in supporting these much needed 
amendments to the SCAAP statute. Mr. President, I ask unanimous consent 
that the text of these two bills be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2587

       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 ``SCAAP Reimbursement 
     Protection Act of 2008''.

     SEC. 2. ASSISTANCE FOR STATES INCARCERATING UNDOCUMENTED 
                   ALIENS CHARGED WITH CERTAIN CRIMES.

       Section 241(i)(3)(A) of the Immigration and Nationality Act 
     (8 U.S.C. 1231(i)(3)(A)) is amended by inserting ``charged 
     with or'' before ``convicted''.
                                  ____


                                S. 2588

       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 ``Ensure Timely SCAAP 
     Reimbursement Act''.

     SEC. 2. DISTRIBUTION OF SCAAP COMPENSATION.

       Section 241(i) of the Immigration and Nationality Act (8 
     U.S.C. 1231(i)) is amended by adding at the end the 
     following:
       ``(7) Any funds awarded to a State or a political 
     subdivision of a State, including a municipality, for a 
     fiscal year under this subsection shall be distributed to 
     such State or political subdivision not later than 120 days 
     after the last day of the application period for assistance 
     under this subsection for that fiscal year.''.

                          ____________________