National Defense Authorization Act for Fiscal Year 2009 - Motion to Proceed
Floor Speech
NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2009--MOTION TO PROCEED -- (Senate - July 30, 2008)
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TAX EXTENDERS
Mr. GRASSLEY. Madam President, at 2:42 today on the Senate floor, the Senate majority leader made an incorrect statement. In discussing the negotiations last night between the chairman of the Senate Finance Committee and this Senator, the Senate majority leader, who was not present at the meeting, stated: ``The only thing that Senator Grassley wanted to discuss is having all these extenders not paid for.''
I will make a statement of why this statement is wrong. Specifically, I made three proposals to Chairman Baucus. In all three of the proposals, we agreed to use three tax offsets suggested by Chairman Baucus and his staff.
The first offset I agreed to accept is the offset that closes the loophole that allows hedge fund managers to defer compensation in tax haven jurisdictions. However, I mentioned we needed to remove the huge charitable loophole that is contained in both the Democratic House and Senate extenders bill. Closing this charitable loophole will raise about $1 billion in extra revenue from hedge fund managers, according to the nonpartisan Joint Committee on Taxation.
Let me make clear why that is a very important adjustment. If you, the average taxpayer, want to give the maximum the law allows for a charitable deduction, you can only allow 50 percent of your income to be used for that purpose. But if you are under this provision, if you are a hedge fund manager making contributions to a charity, you can have 100 percent deduction. We think that is unfair to the middle-income taxpayer.
The second offset I reluctantly agreed to accept was a version of the worldwide interest allocation offset. We are still waiting on the revenue estimate for this proposal. This was a compromise on my part. That is what it will take from the other side, as well, to get an extenders bill done--some sort of compromise.
The third offset I agreed to accept is a permanent offset regarding basis reporting of securities brokers.
These three offsets that I agreed to accept could--depending on the revised worldwide interest allocation proposal--raise over $50 billion in revenues as offsets.
As I mentioned above, I made three proposals to chairman BAUCUS. I also offered to use all three offsets mentioned above for each of the three separate proposals that I made; therefore, paying for much of the revenue loss generated by the tax extender provisions.
In two out of my last three proposals, I proposed using those three offsets to offset much of the revenue loss that results from extending these tax extender provisions.
So for the majority leader to say that ``the only thing that Senator Grassley wanted to discuss is having all these extenders not paid for'' is simply not accurate.
And it is plain wrong. The majority leader was not in the room, and he must have received a false report from someone who actually was in the room. Chairman Baucus was in the room. So he knows the majority leader's statement that the only thing Senator Grassley wanted to discuss was having all of these extenders not paid for is untrue. I ask everybody to ask Chairman Baucus.
To demonstrate in detail that the majority leader's statement is incorrect, Chairman Baucus and I discussed a number of issues other than offsets in the media. One of these issues was my disaster tax relief package that is needed for the people of Iowa and the Midwest because of the gigantic 500-year floods.
Three other issues we discussed were the three tax offsets I described above. Some other issues that were discussed were provisions in the Democratic leadership's extenders bill that we objected to, such as the provision regarding the train from Manhattan to JFK Airport that accounts for more than 20 percent of the revenue loss in the Democratic leader's disaster tax package.
In addition, I offered to make all three of my proposals revenue neutral by suggesting that we use the three offsets mentioned above and also decrease the amount of new increases in spending that were approved in the budget only 2 months ago.
Let me be clear, we did not suggest any spending cuts. We suggested our colleagues on the other side of the aisle consider decreasing the amount of new unspecified nondefense discretionary spending. The nondefense discretionary spending that has been authorized in the budget is $350 billion greater than the President's fiscal year 2009 budget. This extra $350 billion is like an extra checkbook that Congress is carrying around in addition to the already fat checkbook. This checkbook covers nondiscretionary spending and current levels of discretionary spending. We simply ask they take a few checks out of the extra checkbook over the next 10 years to help pay for part of the needed tax relief provisions in the tax extenders package.
However, this suggestion was summarily dismissed by Chairman Baucus. My colleagues on the other side of the aisle are unwilling to even consider decreasing their increased--and I emphasize ``their increased''--nondefense discretionary spending that is above the President's budget.
In summary, the majority leader's statement at 2:42 this afternoon about my position on our negotiations is flat out wrong, and I cannot be any clearer than that.
Folks across the country must wonder why the Senate cannot pass the popular expiring tax relief provisions. There is no disagreement between the parties on the merits alone. Nearly all Members of this body and the other body support the alternative minimum tax fix and also the other parts we refer to as extenders; in other words, tax provisions that have sunsetted. And, of course, because of the good of these provisions, anybody who opposes it would be crazy.
The problem is the committee and floor process have been disregarded by the Senate Democratic leadership. Debate, exchanges of ideas, up-or-down votes are the essence of how the Senate works. All of that Senate process is now bottled up. The Senate process is quite truncated.
For the first time in this decade--that is, since 2001--the Finance Committee members have not been allowed to exercise their rights in the committee markup with respect to these issues, with one exception--the 2002 stimulus bill.
For the first time in this decade, Senate Members have not had the opportunity to debate and amend extenders in a real Senate floor process. For the first time in this decade, Senators in the minority are being presented with a top-down deal crafted between the Democratic leadership of the House and Senate.
For me, the irony of all of this is very compelling because I found myself within the last 2 years, when Republicans were in the majority, condemning Republicans for trying to get around letting the Senate work its will. Almost 2 years ago today, we faced an attempt to end run the natural order of the committee and floor process by the bicameral Republican leadership of the House and Senate; meaning when we were in the majority. I referred to it at that time as wrongheaded. If it was wrongheaded when we had a Republican majority and the Democratic majority is doing it, it is just as wrongheaded, as far as I am concerned, because 2 years ago it was doomed to fail.
I don't know how many times I told the Republican leadership: It ain't going to work. And right now we are faced with it when we have a new majority and that new majority is Democratic. Two years ago, it was envisioned as some sort of unicameral, not a bipartisan, bicameral tax-writing committee process. The unicameral tax-writing committee process 2 years ago ignored the rights and the privileges of both political parties. I used sharp words and directed them at my side's leadership of the House and Senate.
I am sure some on my side thought my comments were over the top. I don't care. I didn't care then, at least. Then-Health, Education, Labor and Pensions Chairman Enzi stood shoulder to shoulder with me in this process. My friends on the Democratic side criticized my leadership for the harm it was doing to the rights of the Members of this body that is supposed to be the greatest deliberative body in the entire world of any parliamentary bodies.
That is why I find today's actions bitterly ironic. I am sorry to say today we find the Democratic leadership attempting to do much the same thing. Like the failed trifecta jam then, today's jam will not work.
Let me make clear, when I refer to the ``trifecta jam then,'' I mean 2 years ago when Republican leaders thought they could stuff something down the throats of Democrats in this body. It failed then, and that sort of jam is not working when Democrats are in the leadership position.
It is part of a larger problem with the Senate because we are not going
through the regular order at the committee and floor levels. Issues are building up, tempers are flaring, and most importantly, nothing is getting done and the people are mad about it. The people back home are mad about it.
I reiterate what I said this morning. The fourth vote failed. That failed cloture vote had the effect of Kaopectate. It further constipated the Senate. This legislative body needs to function. Legislation needs to circulate through this body in the usual form. We need real debate and real amendments. We need a legislative laxative.
Another alternative to resolution is an informal bipartisan process. Either way, repeated cloture partisan jams do not lead to an agreement that can pass the House, the Senate, and be signed by the President. And don't forget about that because that is an important part of the process. I think the White House spoke out on some of the AMT and extender legislation we have been considering.
I have my pencil sharpened, a note pad out. I am ready to engage in our bipartisan process with my friend Chairman Baucus. I am hopeful the Democratic leadership will relieve the constipation on the tax extenders legislation. The Finance Committee and Senate need to function.
On behalf of Leader McConnell, I am going to propound a unanimous consent request about which I already informed the other side. The agreement, if accepted by the majority, would set in motion a process that would lead to resolution of these expired provisions. If accepted by the majority, we would have real debate, real votes, and a resolution that matters.
Madam President, I ask unanimous consent that upon the conclusion of the energy speculation bill, the Senate proceed en bloc to the consideration of the Baucus extender bill, S. 3335, and a bill introduced by Senator Grassley on the same subject of extenders; provided further, that there be 2 hours of debate equally divided in the usual form to run concurrently on both measures; and that following that time, the bills be read a third time, en bloc, and the Senate proceed to vote on passage of S. 3335, followed by a vote on passage of the Grassley bill. I further ask unanimous consent that if either bill does not receive 60 votes in the affirmative, the bill be returned to the calendar.
Mr. DURBIN. Madam President, reserving the right to object, what the Senator from Iowa proposes is that we pay for these tax extenders for energy by reducing domestic discretionary spending. To put that in layman's terms, for the last 4 years, we have frozen the increases of spending at the National Institutes of Health for medical research. Senator Grassley would say, let's continue freezing those increases in spending for medical research so we don't have to impose taxes on American businesses doing business overseas. I disagree with that. It is far better that those businesses pay those taxes than we cut back on medical research. I object.
The PRESIDING OFFICER. Objection is heard.
The Senator from Iowa.
Mr. GRASSLEY. Madam President, I wish to correct the Senator on a couple of respects, and he has exercised the right I expected. First, we accept the provisions that were in the Baucus bill for offsets. We did suggest a modification on the provision that the Senator said we don't want. He is wrong on that point. We will accept it. There is a slight modification in it that would give an election. We go along with that provision, and I think I made that clear in the remarks I proposed.
The second place the Senator from Illinois is wrong is we are not proposing the cutting of spending. We are proposing the $350 billion increase that their budget has suggested for additional spending be reduced by a very small percentage.
Mr. DURBIN. Madam President, if the Senator from Iowa will yield.
Mr. GRASSLEY. Yes.
Mr. DURBIN. Madam President, so any proposal to increase spending at the National Institutes of Health for medical research will be reduced by the proposal of the Senator from Iowa?
Mr. GRASSLEY. If my colleague wants to figure that all the $350 billion is going to go to the National Institutes of Health, he is right. But all $350 billion, obviously, is not going to go to the National Institutes of Health.
I yield the floor.
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