"I offered a bill that extended unemployment and COBRA benefits and took care of the Medicare cut that doctors across the country will be hit with if the extension doesn't pass, and I paid for it.  A win-win for everybody.  It's a shame the Democrats are filibustering this much needed help. I also offered this fully-offset package as an amendment to the reconciliation bill that the House just voted on and is now on its way to the President's desk.  But, the majority blocked both opportunities to help those in need without adding to the deficit.   My bill would help those who are still feeling the impact of a down economy and it wouldn't add to the national debt we're leaving to our kids and grandkids.  Unfortunately, the majority decided they would once again rather make a political point than pass a bill and fix the problem."  - Senator Chuck Grassley, R-!A.

WASHINGTON - The U.S. Senate tonight rejected an amendment offered by Senator Chuck Grassley to apply the new health care law to the President, Vice President, cabinet members, top White House staff, and the congressional staff who drafted the proposal.

"As a result, President Obama will not have to live under the Obama health care reforms, and neither will the congressional staff who helped to write the overhaul," Grassley said.  "The message to the people at the grassroots is that it's good enough for you, but not for us."

Grassley said congressional leaders have had other opportunities to fix the double standard but have repeatedly opted not to do so.

The health care reform that was enacted on Tuesday includes an amendment Grassley sponsored and got adopted by the Finance Committee, last September, to have members of Congress and their staffs get their health insurance through the same health insurance exchanges where health plans for the general public would be available.  During subsequent closed-door work on a Senate health care bill, Senate committee and leadership staffs were removed from this requirement.

In December, Grassley and Senator Tom Coburn attempted to offer a floor amendment to restore the requirement, but the Senate Majority Leader would not let their amendment come up for a vote.  In addition to Senate committee and leadership staff, the amendment Grassley and Coburn filed during the Senate debate would have made the President, the Vice President, top White House staff and cabinet members all get their health insurance through the newly created exchanges.  It would not have applied to federal employees in the civil service.

Even after the issue was raised through the month of December, Senator Harry Reid's final manager's amendment to the health care reform bill passed by the Senate on Christ Eve still did not restore Grassley's original language, which the Finance Committee approved unanimously.

Grassley said, "It's only fair and logical that administration leaders and congressional staff, who fought so hard to overhaul of America's health care system, experience it themselves.  If the reforms are as good as promised, then they'll know it first-hand.  If there are problems, public officials will be in a position to really understand the problems, as they should."

Grassley said the motivation for his amendments is simple:  public officials who make the laws or lead efforts to have laws changed should live under those laws.  He offered the amendment that was rejected tonight to the reconciliation bill designed to make changes to the health care reforms that President Obama signed into law today.

"It's the same principle that motivated me to pursue legislation over 20 years ago to apply civil rights, labor and employment laws to Congress," Grassley said.  Before President Clinton signed into law Grassley's long-sought Congressional Accountability Act of 1995, Congress had routinely exempted itself.

The Congressional Accountability Act made Congress subject to 12 laws, including the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the Employee Polygraph Protection Act of 1988, the Fair Labor Standards Act of 1938, the Family and Medical Leave Act of 1993, the Federal Service Labor-Management Relations Statute, the Occupational Safety and Health Act of 1970, the Rehabilitation Act of 1973, the Veteran's Employment and Reemployment Rights at Chapter 43 of Title 38 of the U.S. Code, and the Worker Adjustment and Retraining Notification Act of 1989.

Grassley also is working to make sure Congress lives up to the same standards it imposes on others with legislation such as his Congressional Whistleblower Protection Act.

As it stands, thanks to Grassley's Finance Committee passed amendment, members of Congress and their personal staffs will be required to obtain their health insurance coverage through the newly created health care exchange.  Members and personal staffs will only be able to use their employer contribution to buy health care coverage in the exchange.  Individuals will receive an age-adjusted contribution from the Office of Personnel Management with which to purchase a plan.

However, because the Senate rejected the amendment offered by Grassley last December and tonight, committee and leadership staff in Congress, as well as the President, Vice President, the President's cabinet and White House staff, will continue to be exempt from many of the reforms facing the rest of the country.

Earlier today, the White House announced that the President planned to participate in the health insurance exchanges that the reform law will begin in 2014.

"This is effectively an endorsement of my amendment to make sure political leaders live under the laws they pass for everyone else, and I appreciate it," Grassley said.  "The principle shouldn't be voluntary for political leaders, though."

###

WASHINGTON - Senator Chuck Grassley today asked the Special Inspector General for TARP to investigate why the Treasury Department did not follow through on the mandate from Congress in last year's stimulus bill to require that all TARP recipients, including AIG, meet appropriate standards for executive compensation.

"Since the Treasury Department failed to do this, we now see the multi-million severance payments going to departing TARP executives, such as the $3.9 million paid in severance to AIG's former general counsel, who left the job voluntarily," Grassley said.

Grassley also asked the TARP watchdog to determine if Treasury Department officials with potential conflicts of interest were permitted to draft the Treasury regulations that govern executive compensation, including severance at bailed out companies such as Bank of America, AIG and others.

Grassley described his request of the Special Inspector General in a statement placed in today's Congressional Record. The floor statement text is below. Click here to read Grassley's letter of request to the Special Inspector General.

Last week, Grassley questioned the Treasury Secretary about the failure of the Department to act on the congressional mandate to impose appropriate standards on executive compensation. "It seems as if the Treasury Department unnecessarily tied the hands of the Special Master for Compensation before he even assumed his duties," Grassley said. Click here to read that news release and letter.

Floor Statement of Senator Chuck Grassley

AIG Severance Payments

March 23, 2010

Mr. President. I recently asked Secretary Geithner why the Treasury Department is allowing AIG to pay millions of dollars of severance pay to executives given the billions of dollars of taxpayer assistance AIG has received.

At one point I even said that AIG has the American taxpayer over a barrel and that AIG has outmaneuvered the Administration.

Mr. Kenneth Feinberg, the Treasury Special Master for executive compensation, insisted he was not outmaneuvered by AIG.

As it turns out, he was not outmaneuvered by AIG.

Instead, he was outmaneuvered by Secretary Geithner. Let me explain what I mean.

In February, 2009, we enacted the Recovery Act. The law required Secretary Geithner to take control of the runaway executive compensation at companies that the American taxpayer bailed-out.

Congress provided Mr. Geithner with several tools to accomplish this critical job.

By far the most important and most flexible tool Congress gave Mr. Geithner was a general mandate to require bailed-out companies like AIG to meet "appropriate standards" for executive compensation.

This rule was applicable to compensation already in place, compensation in the future, and compensation for all executives, not just a handful of the most senior executives.

What happened to this tool?

Well, even before the law was passed the bonuses, retention awards, and incentive compensation were "grandfathered."

That means that while one part of the statute banned them for a handful of senior executives, another part said they had to be paid if the payments were based on a contract that existed in February, 2009.

We all remember the outrage when people learned that this provision was quietly added by the Senate drafters on the other side of the aisle because it required AIG to pay massive bonuses in March 2009 and again earlier this year.

Secretary Geithner was quoted in the press at the time saying that "Treasury staff" worked with the Senate drafters on the grandfather carve-out.  Well, the damage was done.

The grandfather loophole was law. You might say the American taxpayer was outmaneuvered by Treasury staff too.

The President instructed Secretary Geithner to "pursue every single legal avenue to block these bonuses and make the American taxpayers whole."

The next step required Treasury to implement the law and use the tools Congress gave Mr. Geithner to put the brakes on runaway executive compensation at firms where taxpayers are footing the bill.

What did Treasury do?

One thing Treasury apparently did was hire a Wall Street executive compensation lawyer from a firm that specializes in helping highly paid executives maximize their pay, but more about that later.

Despite the public outcry over the loophole, which permitted AIG employees and others to walk away with millions, Treasury wrote a regulation that actually expands the loophole even further.

That's right, in the face of overwhelming public outrage, Treasury quietly worked to expand the loophole. Let me explain how they did that.

The grandfather provision in the law that Congress enacted protected three things: bonuses, retention awards, and incentive compensation. It did not protect severance. Let me repeat: it did not protect severance.

But in what appears to be an effort to protect severance agreements despite the statutory language, the regulations Treasury drafted expanded the term "bonus" beyond its normal meaning.

Unlike bonuses, severance payments are intended to ease someone out the door, not reward them for doing a great job.  Severance is basically the opposite of a retention bonus.

But, after Treasury drafted the regulation, suddenly, severance payments were also protected by the grandfather loophole, just like bonuses.  Treasury must have known exactly what it was doing.

AIG had an executive severance plan that dated back to March 2008. It was just the sort of contract the grandfather provision would protect if Treasury expanded the loophole.

And what was the impact of the Treasury regulation on the bottom line? What did American taxpayers have to pay?

Because of this regulation, AIG recently paid two of its executives $1 million and $3.9 million in severance pay. We don't yet know how many others have received severance or may receive it in the future.

As the law was passed, these payments would not have been protected by the grandfather provision because they were not a bonus, retention, or incentive payment.

But Treasury officials took care of that. Rather than setting appropriate standards for executive severance payments generally, as the law passed by Congress required, the regulation leaves AIG free to pay excessive severance payments to many of its executives. Then, the American taxpayer gets the bill.

The Recovery Act told Mr. Geithner that he "shall" require each bailed-out company to meet appropriate standards for executive compensation. This command covers all types of executive compensation for all executives, not just bonuses for the most senior executives.

It is a command, not a suggestion. And the grandfather provision that protects certain bonuses does not apply to this more general provision.

But the Treasury regulation almost completely ignores this mandate. It does address one form of executive compensation. The regulation bars tax gross-up payments for senior executives.

That is the practice of allowing the company to pay the executive's income taxes for him. Now don't get me wrong -- tax gross-up payments should be banned for companies that were bailed-out, and I am glad to see that this was done.

But Congress gave Mr. Geithner a powerful tool that should have been used to curb other types of inappropriate executive compensation as well.

That includes tax gross-ups, extravagant severance payments, and other goodies Wall Street thinks it's entitled to.

Secretary Geithner should have used the tool as it was intended.  It's like using a big tractor to plow a little flower garden.

There's nothing wrong with banning tax gross-ups or planting flower gardens, but you could have done so much more with the tool you had.

If Secretary Geithner had done what he was directed to do in the law, we would not be witnessing this spectacle.

AIG is paying multimillion dollar severance payments at taxpayer expense to executives who chose to resign rather than work for the maximum salary of $500,000 per year set by the Special Master.

This is a scandal as far as I am concerned. The American taxpayer, as well as Mr. Feinberg, was outmaneuvered by Secretary Geithner and his staff. And it all happened before the Special Master's first day on the job.

There is another troubling matter that I must address. I mentioned earlier that the Treasury Department hired at least one Wall Street executive compensation lawyer from a firm that specializes in helping wealthy executives maximize their pay.

There is nothing wrong, as a general matter, with hiring talented people with expertise in technical legal subjects to draft regulations and administer the law.

But there are some red flags here that need a little sunshine.  We need to be sure that the people working on these issues at Treasury have dealt with any potential conflicts of interest carefully and openly.

Recently I learned that at least one Treasury official previously worked for Wachtell, Lipton, Rosen and Katz, a top Wall Street law firm.  Wachtell, Lipton has represented at least two former AIG executives.

The firm's job was to look-out for the interests of the executives, not the shareholders.  They were paid to make sure the compensation contracts, including severance provisions, were as generous as possible for their clients.

Wachtell, Lipton also represented Bank of America on its controversial Merrill, Lynch acquisition in 2008.  A Wachtell attorney who worked on that deal joined Treasury in the spring of 2009.

He said that he then worked on the Treasury executive compensation regulations.  These are the regulations I have been describing: the regulations that were to govern AIG, Bank of America and all of the other bailed-out companies.

This situation raises a host of questions, for example:

• How many other Treasury officials have similar potential conflict issues?

• Why wasn't the attorney recused from participating in the drafting of a regulation that was going to have a direct effect on Bank of America, his former client, and AIG executives, his firm's former clients?

• Did the attorney comply with the revolving door provision of the President's Executive Order, which prevents appointees from working on matters that relate to their former clients?

• The President has committed to publicly disclosing all the waivers issued to exempt appointees from his ethics executive order.  If this attorney recused himself, as he should have, why was that recusal not also disclosed so that the public would know about the potential conflict?

At a minimum there is the potential for an appearance of impropriety here.

What we know so far raises serious questions and red flags.  But there also are facts we do not know.

Therefore, I am asking that the Special Inspector General for TARP investigate these issues and report his findings to Congress and the public as soon as possible.

Specifically, I am asking the Inspector General to examine why Treasury did not set appropriate compensation standards pursuant to Section 111(b)(2) of the Recovery Act sufficient to prevent severance payments like those AIG recently paid to its former General Counsel and Chief Compliance Officer.

I am also asking him to determine whether Treasury officials working on executive compensation matters have fully complied with the revolving door provision of the President's Ethics Executive Order.

In the meantime, there are still numerous documents that I have requested that have not been provided to me despite assurance that I was going to get them.

There are many questions I have asked that remain unanswered, and I will continue to seek information on these issues.

I call on Secretary Geithner to stop stonewalling.  Oversight is important.  Oversight is necessary to protect the American taxpayer.  I take that duty seriously, and I am not going away.  American taxpayers deserve to know where their money is going.

SEN. CHARLES E. GRASSLEY, R-IOWA, HOLDS A NEWS TELECONFERENCE

MARCH 23, 2010

GRASSLEY:  Tomorrow, our Agriculture Committee is going to start consideration of what's called the child nutrition bill.  This bill is a -- is going to bring into consideration a number of improvements and heavy investment in programs that gives kids healthier meals and learn more nutritious habits.  Some of the improvements that are expected in the bill, changes in current law include making science-based nutrition standards based on dietary guidelines for all foods sold in the schools.  It encourages wellness, physical activity at child care centers, a nice improvement to help get kids off of the couch and actively take part in their own health.  And the bill would give the first increase in reimbursement rates to schools in more than 30 years.  There are some concerns about using EQIP money as an offset to pay for nearly half the bill.  Some will argue that not all the EQIP dollars were spent last year, but the problem with that argument is that the funds are lost from the baseline for the 2012 farm bill yet to be negotiated.  I look forward to seeing amendments offered in committee to improve the bill without increasing the deficit.

Tom Rider?

QUESTION:  Good morning, Senator.  Senator, I was visiting with the Iowa cattlemen.  They're quite concerned about that EQIP money.  Will you be offering any amendments yourself to try to restore that funding?

GRASSLEY:  I don't -- I haven't reached a decision on that yet, but my guess is that I probably would not, but I think that others are, and then I've got to look at what they substitute as a source of revenue on that point to whether or not it'd be EQIP or other dollars.

Tom Steever?

QUESTION:  Good morning, Senator.  Even though the House-passed version of health care came on Sunday, there is still some more work to be done in the Senate on health care.  What -- do you see any problems coming up with -- with that?

GRASSLEY:  Well, I hope there's a lot of problems coming up with it, because I don't support the bill.  You know, I voted -- the bill the president's going to sign today I voted against just before Christmas.   Now, this reconciliation bill is supposedly changing some things in that bill that got it enough votes so the bill the president's signing could pass the House.  And so I don't see things in this bill changing my mind and probably would vote against it, but I intend to offer some amendments.  One amendment I would offer is that this bill, the president's a very strong proponent of it, but he's not covered by it.  So I'm going to offer an amendment that the president, cabinet members, not executive branch civil servants, but political appointees and their staff and the president, the White House be covered by it.  And that's a follow-on to my amendment that I got adopted in the Finance Committee that will be in the bill the president's signing this morning that members of Congress and their staff get their health care insurance through the exchange.  It should be the same for the president.  The president thinks this is such a good program, then shouldn't he get his health care the same way that members of Congress would get their health care under this bill, through the exchange?  I just think it's -- that's one of the things.  Then there are some things on rural health care and reimbursement for low reimbursement states that I'm going to be offering amendments on, as well.  And naturally, I hope that these amendments carry, and that's why they're being offered.

Bob Quinn?  Dan Skelton?

QUESTION:  Good morning, Senator.  The administration has become more active on trade.  We've seen the deals with Russia on pork and China on pork in recent weeks.  Can you give us an update?  What's the status of Isi Siddiqui as chief ag negotiator?  Is there any movement on that nomination?

GRASSLEY:  No.  And there isn't.  It's being held up.  But I can tell you this, that a real litmus test of the president moving on trade ought to be judged from the standpoint, is he pushing Colombia, Panama, and South Korea?  Those are all negotiated.  They're all under fast track.  That's a real litmus test.  Now, I know he's put out a lot of other things.  And I don't oppose what the president wants to do in these other areas, including what you just give him credit for accomplishing, but a real test of the seriousness of this administration ought to be -- the benchmark ought to be Panama, Colombia, and South Korea.  Until I see those being pushed by this administration -- and I'm going to help them -- I have serious doubts about whether or not they ought to be given much credit for pushing trade.

Stacia?  Gary, Arkansas?

QUESTION:  Senator, first, I would like to go back, again, to the Child Nutrition Act and EQIP.  Why isn't all the EQIP money being spent?

GRASSLEY:  I would only guess that it's getting approval.  I wouldn't say that there's not enough applications.  But -- but it's -- it's crimped by appropriations.

QUESTION:  My theory has always been that, in particular, Stenholm and Combest had sought a large amount of EQIP money because they feared EPA was going to clam down on large livestock operations.  This would have been, you know, 2002.  EPA didn't do that, and the EQIP money wasn't needed.  Do you see any -- any reason to believe that?

GRASSLEY:  Well, that may be the reason, but you can't count on this EPA in this administration, not in the future, being tough on -- on any livestock operation, large or small, and -- and so consequently, the need for more EQIP money.

QUESTION:  OK.

GRASSLEY:  Jean?  Oh, go ahead.

QUESTION:  I also wanted to ask about climate change, because you're hearing talk that the three senators working on a compromise proposal may release it by the end of the month.  Are there any items in it that you find appealing?

GRASSLEY:  I will wait until it's released and then answer your question at that time.  But if you -- if it is released and you anticipate a question like that down the road here, after we get back from spring break, let my staff know so I'm prepared to answer it for you, because I -- I do want to be able to answer that for you.

QUESTION:  OK.  Do you see any likelihood that any climate legislation...

GRASSLEY:  No.

QUESTION:  ... may pass this year?

GRASSLEY:  No.

QUESTION:  Thank you.

GRASSLEY:  And, obviously, that's what I hope for, Gary.

Jean, Agrinews?  Matt Wilde, Waterloo Courier?

QUESTION:  Morning, Senator.  I have a question dealing with flooding issues and farm policy.  In northeast Iowa, we've endured two major floods in 15 years.  And the Cedar River and other waterways, as you know, are out of their banks again (ph).  Some people believe that modern grain production, farm policy, and intensive tiling of farm ground is to blame or partly -- or mostly to blame for floods.  It's suggested to me that the government payments force farmers to predominantly raise corn and beans, which don't exactly help hold back the water, and -- and then, of course, we don't have the native grasses like we used to have.  So are lawmakers in Washington concerned about this?  Is that -- is ag policy partly to blame?  And what can be done to change this?

GRASSLEY:  I don't policy-makers in Washington are concerned about that for the most part.  And to some extent, not necessarily just answering the hypotheticals that you bring up, but I would have to say that any government program, whether it's a farm program or some other program, whether it's an expenditure or which you could call a subsidy or whether it's a tax incentive, they -- they do tend to influence the marketplace.  Some of them are meant to influence the marketplace.  Most cases are meant to influence it positively.  In -- in -- in the case of agricultural programs, I would say that -- that I doubt if you would say the northern half of Iowa that this would apply to, but I think in the 1960s, '70s and the '80s, you had a lot of grassland that would be better used for cow calf operations in southern Iowa, probably plowed up because of the incentives of the farm program.  But I believe that -- that the extent to which the concept of a safety net for agriculture is very important.  And by safety net, I mean just a minimum amount to get people, farmers over humps that are beyond their control, like natural disaster, international politics, you know, war, a lot of things that affect farming, that the farmer has no control over, that -- that we have a safety net to protect those farmers from catastrophic drops (ph) in prices beyond their own control.  But the extent to which farm programs have gone beyond that and helped a very small percentage of the farmers that maybe don't need subsidy because of high income and big operations, they can get over these humps themselves.  It has subsidized them to get bigger.  But except for within the -- then getting back to within the concept of a safety net for small- or medium-sized farmers, I think that -- that you can't take these considerations that cause your -- your question to be raised very seriously because what we're talking about is a farm program to maintain the continuity of food supply.  And -- and that's done for two reasons, one, for the national security of our country, and the other one is for the social cohesion of our society, because you've got to have food for your military, and Germany and Japan learned in World War II they didn't have enough food, so that's why they protect their farmers to a great extent.  The United States ought to learn that lesson.  And then social cohesion.  You know the old saying, you're only nine meals away from a revolution.  So if we don't have a stable food supply, we'd have a more chaotic society.  So those two considerations have to override the issues that you brought up.

QUESTION:  OK.

GRASSLEY:  Are you plowing up -- are we growing too much grain?  I'll bet some of these very people that raise those questions would be the first to cry out that if we didn't have enough food when they go to the supermarket.

QUESTION:  OK.  Thank you, Senator.

GRASSLEY:  All right.  Hey, I see Ken Root down here.  Ken, are you on there?

QUESTION:  Yes, but nothing to get excited about, sir.  I'm not on the air until next week on WHO-TV, so I'm just monitoring this week, but I want you to be prepared for a question next week, sir.

GRASSLEY:  Well -- well, I'll be prepared.  You bet.

QUESTION:  OK.  And I may have the WHO people ask it to you again on the television piece that you do.  Don't you do that at 1 o'clock on the same day?

GRASSLEY:  Yes, I do.  I do.

QUESTION:  OK, so sharpen up your -- you know, your wit, if you wouldn't mind, sir.

GRASSLEY:  Well, I welcome you back.

QUESTION:  Well, thank you very much.

GRASSLEY:  And just in case the rest of you people didn't know Ken Root was still alive, he's alive.  OK.  Anybody else want to jump in?  OK.  Thank you all very much.

QUESTION:  Thank you, Senator.

END