from Senator Charles Grassley's office:

A new report from the Renewable Fuels Foundation says the expiration of ethanol production tax incentives would result in the loss of more than 112,000 jobs in all sectors of the economy, including those directly involved in ethanol production and all other jobs supported by the industry.  The excise tax credit (the Volumetric Ethanol Excise Tax Credit, or VEETC) and the small ethanol producer tax credit both expire on Dec. 31, 2010.  Sen. Chuck Grassley, ranking member and former chairman of the Committee on Finance, has been instrumental in ensuring the growth and success of ethanol production through tax incentives.  Grassley made the following comment on today's report.

"We hear a lot of talk from the Democratic majority in Congress and the President about green jobs, clean energy, and restoring jobs and income security for the middle-class.  But the kind of policy to support clean energy jobs for the middle-class falls by the wayside under the current leadership.  The Democratic-led Congress easily could have extended the biodiesel tax credit before it expired at the end of 2009.  But the Democratic leaders chose to tangle up the biodiesel tax credit in more controversial debates, at the expense of renewable energy development and production.  As a result, the biodiesel industry has lost 29,000 clean-energy jobs, and 23,000 more jobs will be lost if that tax credit is not extended.  So there's every reason for concern about what could happen with ethanol this year.  That industry supports 400,000 jobs, and more than 112,000 jobs depend on extending the tax incentives.  These jobs are often in rural communities where employment is hard to come by.  And ethanol builds U.S. energy independence from imported oil.  Congress needs to make sure the ethanol tax incentives are extended sooner rather than later."

Sen. Chuck Grassley, ranking member of the Committee on Finance, today made the following comment on the Senate's passage of a $17.6 billion bill described by Democratic sponsors as a "jobs" bill.  The Senate's passage clears the measure for the President.

"I voted against this bill because it gives a healthy share of taxpayer dollars to Wall Street bankers instead of Main Street employers.  The Build America Bonds program got richer on every pass through the House and Senate.  Wall Street loves this program, which ought to be a red flag for taxpayers.  And the Democratic majority was so eager to pass this new spending bill that it violated its own spending guidelines and voted against applying its own budget restrictions to the bill.  For billions of dollars, we should see real bang for the buck in job creation, especially among the small businesses that create 70 percent of all net new jobs.  This bill isn't targeted nearly enough for small businesses."   



WASHINGTON - Chuck Grassley today said that that he will be holding meetings in 25 counties from March 29 - April 6. The visits are part of Grassley's annual meetings in each of Iowa's 99 counties. The Senate will not be in session for a scheduled congressional recess.

"I've met with Iowans in every county, every year I've represented Iowa in the United States Senate. It's this exchange of ideas that gives me important insight directly from Iowans," Grassley said. "Holding a meeting in each of Iowa's 99 counties gives me the opportunity to have an open and honest dialogue with the people I serve in the U.S. Senate."

Grassley's meetings will take him to the counties of Allamakee, Buchanan, Butler, Cerro Gordo, Clay, Clayton, Dallas, Delaware, Dickinson, Dubuque, Emmet, Fayette, Floyd, Franklin, Hancock, Howard, Kossuth, Lyon, Mitchell, Osceola, Palo Alto, Warren, Winnebago, Winneshiek and Worth.

Grassley will hold town hall meetings in Aplington, Calmar, Cresco, Estherville, Forest City, Garner, Independence, Indianola, Manchester, Mason City, Northwood, Ocheydan, Rock Rapids, Strawberry Point, Waukee, Waukon, West Bend and West Union.

He will tour and meet with employees at Eaton Manufacturing in Spencer. He will also attend a ribbon cutting for the new Hormel Foods Plant in Dubuque.

He will meet with students at St. Ansgar Community High School in St. Ansgar, Charles City High School in Charles City and Harris-Lake Park Middle/High School in Lake Park.  In addition, he will speak with the Algona Rotary in Algona, and will meet with members of the Chamber of Commerce in Hampton.

Here is detailed information about Grassley's upcoming county visits.

Monday, March 29, 2010

7:30 - 8:30 a.m.- hold Warren County Town Hall Meeting, Warren County Administration Building, Board Room, Second Floor, 301 North Buxton Street, Indianola

9:30 - 10:30 a.m.- hold Dallas County Town Hall Meeting, Maple Street Community Center, 445 Maple Street, Waukee

Tuesday, March 30, 2010

8:30 - 9:30 a.m.- hold Buchanan County Town Hall Meeting, Buchanan County Courthouse, Assembly Room, 210 5th Avenue NE, Independence

Noon - 1:45 p.m.- Attend Hormel Foods Plant Ribbon Cutting, Progressive Processing, LLC, 1205 Chavenelle Court, Dubuque

3 - 4 p.m. - hold Delaware County Town Hall Meeting, Regional Medical Center, Veterans Memorial Event Center, Third Floor, 709 West Main Street, Manchester

4:45 - 5:45 p.m.- hold Clayton County Town Hall Meeting, Strawberry Point Public Library, 401 Commercial Street, Strawberry Point

Wednesday, March 31, 2010

7:30 - 8:30 a.m. - hold Fayette County Town Hall Meeting, Fayette County Courthouse, Assembly Room, 114 North Vine Street, West Union

9:45 - 10:45 a.m. - hold Allamakee County Town Hall Meeting, Farmers & Merchants Savings Bank, Community Room, 201 West Main Street, Waukon

Noon - 1 p.m. - hold Winneshiek County Town Hall Meeting, Calmar Public Library, Community Room, 101 South Washington Street, Calmar

2:15 - 3:15 p.m. - hold Howard County Town Hall Meeting, Cresco Bank and Trust, Community Room, 126 Second Avenue SE, Cresco

5:30 - 6:30 p.m. - hold Worth County Town Hall Meeting, Worth County Courthouse, Magistrate Room, 1000 Central Avenue, Northwood

Thursday, April 1, 2010

7:30 - 8:30 a.m. - hold Cerro Gordo County Town Hall Meeting, North Iowa Area Community College, Muse-Norris Conference Center, Rooms 180 A, B and C, 500 College Drive, Mason City

9:45 - 10:45 a.m. visit St. Ansgar Community High School, 206 East 8th Street, St. Ansgar

Noon - 1:15 p.m. - visit Charles City High School, #1 Comet Drive, Charles City

2:30 - 3:30 p.m. - Deliver keynote speech and answer questions at the Hampton Chamber Spring Meeting, Windsor Theatre, 103 Federal Street North, Hampton

4:30 - 5:30 p.m. - hold Butler County Town Hall Meeting, Aplington Community Center, Corner of 10th Street and Parriott Street, Aplington

Monday, April 5, 2010

8 - 9 a.m. - hold Winnebago County Town Hall Meeting, Winnebago County Courthouse, Courtroom, 126 South Clark Street, Forest City

9:45 - 10:45 a.m. - hold Hancock County Town Hall Meeting, Garner Education Center, 325 West 8th Street, Garner

Noon - 1 p.m. - speak with Algona Rotary, Algona Country Club, 400 Country Club Road, Algona

2 - 3 p.m. - hold Palo Alto County Town Hall Meeting, West Bend Golf Course, Club House, 4829 580th Avenue, West Bend

4:30 - 5:30 p.m. - hold Emmet County Town Hall Meeting, Iowa Lakes Community College, Auditorium, Room 16, 300 South 18th Street, Estherville

Tuesday, April 6, 2010

7:30 - 8:30 a.m. - Tour and answer questions from employees at Eaton Manufacturing, Power Division, Hydraulics Business, 803 32nd Avenue West, Spencer

9:30 - 10:30 a.m. - Visit Harris-Lake Park High School, Harris-Lake Park Middle/High School, 905 South Market, Lake Park

Noon - 1 p.m. - Hold Osceola County Town Hall Meeting, Senior Activities Center, 845 Main Street, Ocheydan

2:45 - 3:45 p.m. - Hold Lyon County Town Hall Meeting, US Bank, Community Room, 203 South 2nd Avenue, Rock Rapids

***Senator Grassley will be available for 15 minutes to the press following each of these events. Grassley is a guest of the service clubs, schools, businesses and events. Please contact those organizations with any questions about availability during those meetings.

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Grassley Urges Japan to Address Trade Barriers to U.S. Beef and Gelatin;

Insurance, Banking, and Express Delivery Services

WASHINGTON - Sen. Chuck Grassley, ranking member of the Committee on Finance, with Sen. Max Baucus, chairman, today urged the Japanese government to remove scientifically unfounded barriers to U.S. beef and bovine-origin gelatin imports and the preferential treatment that Japan Post entities have received in Japan's insurance, banking, and express delivery markets at the expense of private sector competitors.

"Millions of Americans eat U.S. beef every day without any health problems," Grassley said.  "The scientific evidence put forward by international arbiters confirms the safety of U.S. beef.  Also, Japan continues to block exports of U.S. bovine-origin gelatin, most of which is produced in Iowa, although this product is safe.  Every country that enjoys the benefits of international trade is obligated to follow the rules, whether the issue is product safety or fair competition in the financial services sector."

Grassley and Baucus sent a letter to the Japanese ambassador to the United States.  The text of their letter follows.  The Committee on Finance has jurisdiction over international trade.

March 16, 2010

Ambassador Ichiro Fujisaki

Embassy of Japan

2520 Massachusetts Avenue, N.W.

Washington, D.C.  20008

 

Dear Ambassador Fujisaki:

We are writing with regard to certain long-standing barriers imposed by Japan to imports of U.S. goods and services.

Japan continues to place restrictions on imports of U.S. beef due to alleged concerns about bovine spongiform encephalopathy (BSE) that are scientifically unwarranted.  The World Organization for Animal Health (OIE) determined in 2007 that U.S. beef derived from cattle of all ages is safe due to safeguards undertaken by the United States.  Moreover, millions of Americans consume U.S. beef from cattle of all ages every day, so the safety of this product cannot seriously be in doubt.  Yet Japan still limits imports of U.S. beef to beef from animals aged twenty months or younger.  This scientifically unfounded barrier to imports of U.S. beef is causing economic hardship for cattle and beef producers in Montana and Iowa.  We urge Japan to base its beef trade policies on science and to open its market to all U.S. beef.

Also citing BSE concerns, Japan has prohibited imports of U.S.-produced bovine-origin gelatin for human consumption since 2004.  Japan's policy is at direct odds with OIE recommendations, which provide that this U.S. product can be traded safely.  The Japanese ban on imports of this bovine product is negatively impacting Montana and Iowa cattle producers, and it has led to job losses in Iowa's gelatin manufacturing sector.  We urge Japan to lift its scientifically unjustified prohibition on imports of U.S.-produced bovine-origin gelatin for human consumption.

Finally, we understand that Japan is in the final stages of drafting legislation on Japan Post to submit to the Diet.  We have long been concerned about the preferential treatment that Japan Post entities have received in Japan's insurance, banking, and express delivery markets and the negative impact of that treatment on Japan Post's private sector competitors.  We urge Japan to address these concerns in its legislation so that U.S. and other private sector suppliers receive the equal treatment that Japan's international obligations require.

We look forward to improved economic relations between the United States and Japan once these serious trade concerns are resolved.

Sincerely,

Max Baucus, Chairman and Charles E. Grassley, Ranking Member

Floor Speech by Senator Grassley on the Build America Bonds provision in the HIRE Act

Delivered Tuesday, March 16, 2010

One of the few provisions the Democratic leadership decided to put in the HIRE bill is an expansion of Build America Bonds.  Build America Bonds is a very rich spending program disguised as a tax cut.

One Democratic Senator was asked why the Build America Bonds program is viewed differently than appropriations, and she replied, "It has a good name."  Ironically, the Finance Committee is returning to its roots of doing appropriations bills.

When it was established in 1816, the Finance Committee handled the major appropriations bills that came before the Congress.  I ask unanimous consent that a portion of the document outlining the history of the Finance Committee be printed in the record.

Bloomberg News reported that large Wall Street investment banks were charging 37 percent higher underwriting fees on Build America Bonds deals than on tax-exempt bond deals.

Therefore, American taxpayers appear to be funding huge underwriting fees for large Wall Street investment banks as part of the Build America Bonds program.

A Wall Street Journal article dated March 10, 2010, stated that Wall Street investment banks have made over $1 billion in underwriting fees on Build America Bonds in less than one year.

And the Wall Street Journal article, based on data from Thomson Reuters, stated that the underwriting fees on Build America Bonds deals are higher than those for tax-exempt bond deals.  That sounds like a great deal for the fat cats on Wall Street, but how about the taxpayers from Main Street who have to pick up the tab?

The Democratic leadership has said the Build America Bonds program is about creating jobs, but I want to know whether it's about lining the pockets of Wall Street executives.  Recently, I asked the CEO of a large Wall Street investment bank a number of questions about these larger underwriting fees that are subsidized by American taxpayers.

He confirmed that the underwriting fees for Build America Bonds deals are larger than those for tax-exempt bond deals.  The Senate and House have recently passed different versions of the bill we're currently debating, which includes a provision that expands the Build America Bonds program, created in the stimulus bill, to four types of tax-credit bonds.

These four types of tax-credit bonds are Qualified School Construction Bonds, Qualified Zone Academy Bonds, Clean Renewable Energy Bonds, and Qualified Energy Conservation Bonds.  The Build America Bonds program contains an option for the issuer of the bonds, which is a non-taxpaying entity, to receive a check from the Treasury Department based on a percentage of the interest cost incurred by the issuer.

Some refer to this option as the direct-pay option.  The percentage of the interest cost on the four tax-credit bonds subsidized by American taxpayers under the direct-pay option in the Senate bill is 45 percent, and is increased to 65 percent for small issuers.  Small issuers are defined as those issuing less than $30 million in bonds per year.

The House version increased the direct-pay subsidy to 100 percent for Qualified School Construction Bonds and Qualified Zone Academy Bonds, and increased the subsidy to 70 percent for Clean Renewable Energy Bonds and Qualified Energy Conservation Bonds.

To put this in context, the Build America Bonds program created in the stimulus bill contains a 35 percent direct-pay subsidy.  And the President has proposed in his fiscal year 2011 budget that it be lowered to 28 percent.

It was reported in a March 11, 2010, Bond Buyer article that a senior House staffer asserted that no issuers would opt to issue direct-pay bonds under the lower Senate rates of 45 percent and 65 percent.  When I read that assertion, I asked Finance Committee Republican staff to reconcile that assertion with the scoring of the Build America Bonds proposal in the Senate-passed bill.

Finance Committee Republican staff reviewed the Joint Committee of Taxation's final estimate of the Senate-passed bill and found that the senior House staffer's assertion was directly contradicted by the estimate provided by the Joint Committee on Taxation, which is the nonpartisan official scorekeeper for Congress on tax matters.

In fact, footnote 2 of the estimate of the Senate Build America Bonds provision states that the Joint Committee's estimate of the Senate direct-pay bonds option includes an increase in outlays of $8.006 billion.  This means that the Joint Committee on Taxation's estimate assumed that a large number of issuers would elect to use the direct-pay option, contrary to the staffer's assertion.

The Bond Buyer also reported that the senior House staffer stated, "There's nobody that I know who does not view the Build America Bonds program as an enormous success with the possible exception of one person."  I assume that staffer was referring to me.  There are many federal taxpayers who do not view the Build America Bonds program as an enormous success.

To understand why, let's see which states benefit the most from Build America Bonds.  In looking at data from Thomson Reuters on the ten-largest Build America Bonds deals, California alone issued 73 percent of those bonds.

Between California and New York together, those two states alone issued 92 percent of the bonds from the ten-largest Build America Bonds deals.

So California and New York are the biggest winners under Build America Bonds, while American taxpayers from the remaining 48 states subsidize these states.

As Senator Kyl pointed out in his Dear Colleague letter on Build America Bonds circulated on March 15, the Build America Bonds program actually rewards states for having a riskier credit rating by giving them more money.

Build America Bonds create a perverse incentive that causes state and local governments to borrow more than they otherwise would.  This is especially true regarding the school tax-credit bonds.  This bill creates incentives where states and local governments should not care what the interest rate is.  The American taxpayers are picking up 100 percent of the interest costs.

And actually, the cost borne by American taxpayers is more than 100 percent.  At least with tax credit bonds, the taxpayer includes the amount of the tax credit in income, and the federal government collects taxes on that income.  The only purchasers of tax credit bonds are those that have tax liabilities.

Otherwise, it makes no sense to buy a tax credit bond.  However, Build America Bonds are technically taxable bonds, but most of the investors do not pay tax on these bonds.  For example, under our tax rules, if a foreign person or a pension fund or a tax-exempt entity buys a Build America Bond, they do not pay tax on the interest they receive.

Thus, the federal government not only cuts a check for 100 percent of the bonds' interest costs, it also loses most of the revenue it would have collected from the tax-credit bonds.

States and local governments can view this federal money as free money, because they don't even have to collect it from their residents.  Therefore, of course state and local governments are big fans of the Build America Bonds program ? they get federal money that they don't have to pay back.  And the large Wall Street investment banks love Build America Bonds ? they're getting richer off of them.

However, we all know there's no such thing as a free lunch.  Federal taxpayers are footing the bill for this big spending program, which only gets bigger every time Congress touches it.  And American taxpayers are the ones I'm looking out for.

And American taxpayers are the ones who, in the words of the senior house staffer, do "not view the Build America Bonds program as an enormous success."

I urge my colleagues to look beyond the fancy, well-funded lobbying campaign for this rich subsidy.  Take a look at who wins.  The winners are the big Wall Street banks.  Maybe a small number of governments will issue bonds they otherwise wouldn't.

The only certainty is that the federal taxpayer is on the hook for the interest costs.  With record budget deficits under this Congress and Administration, we cannot casually look away as new, open-ended subsidies are proposed.

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WASHINGTON- Chuck Grassley today said that the U.S. Department of Agriculture, Office of Rural Development awarded payments totaling $1,644,242.64 to Iowa through the Bioenergy Program for Advanced Biofuels.

"It's great to see the Department of Agriculture working with these Iowa biofuel companies to help lessen our dependence on foreign oil by continuing to develop advanced biofuels here at home," Grassley said.

The Department of Agriculture will distribute the funds as shown below.

· Central Iowa Energy in Newton will receive $114,239.69 to help support and ensure an expanding production of advanced biofuels and to help provide economic incentives for increased production of advanced biofuels through the use of soybean oil and other oils.

· Iowa Renewable Energy in Washington will receive $216,592.82 to help support and ensure an expanding production of advanced biofuels and to help provide economic incentives for increased production of advanced biofuels through the use of soybean oil, other oils and animal fat.

· Maple River Energy in Galva will receive $9,742.32 to help support and ensure an expanding production of advanced biofuels and to help provide economic incentives for increased production of advanced biofuels through the use of soybean oil and other oils.

· Renewable Energy Group in Ralston, Iowa and Houston, Texas will receive $727,132.93 to help support and ensure an expanding production of advanced biofuels and to help provide economic incentives for increased production of advanced biofuels through the use of canola oil, soybean oil, other oils and animal fat.

· Riksch Biofuels in Crawfordsville will receive $10,401.22 to help support and ensure an expanding production of advanced biofuels and to help provide economic incentives for increased production of advanced biofuels through the use of soybean oil, grease oil and animal fat.

· Sioux Biochemical in Sioux Center will receive $13,961.87 to help support and ensure an expanding production of advanced biofuels and to help provide economic incentives for increased production of advanced biofuels through the use of soybean oil and other oils.

· Western Dubuque Biodiesel in Farley will receive $253,695.87 to help support and ensure an expanding production of advanced biofuels and to help provide economic incentives for increased production of advanced biofuels through the use of vegetable oil and technical tallow.

· Western Iowa Energy in Wall Lake will receive $298,475.92 to help support and ensure an expanding production of advanced biofuels and to help provide economic incentives for increased production of advanced biofuels through the use of waste vegetable oil, oils, greases and animal fat.

According to the Department of Agriculture, the Bioenergy Program for Advanced Biofuels provides payments to eligible in rural areas to support and ensure an expanding production of advanced biofuels.  Payments are based on the amount of biofuels a recipient produces from renewable biomass, other than corn kernel starch, such as cellulose, crop residue, animal, food and yard waste material, biogas, vegetable oil and animal fat.

Each year, thousands of local Iowa organizations, colleges and universities, individuals and state agencies apply for competitive grants and loans from the federal government.  The funding is then awarded based on each local organization or individual's ability to meet criteria set by the federal entity.

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Floor Statement of Senator Chuck Grassley

Ranking Member of the Committee on Finance

Monday, March 1, 2010

Today the Senate starts debate on expiring tax and health provisions.  They are known around here as "extenders."  I'd like to make a couple of points on the process before I get into the substance of the substitute.

What I find surprising is that we are taking up a package, that like last week's exercise, absolutely belongs to the Senate Democratic Leadership.  That is to say we are not taking up a bipartisan package that I put together with Finance Committee Chairman Baucus.  To be sure, some of the structure reflects the agreement my friend, the chairman, and I reached.  But this package is almost three times the size of the package we agreed on.  Virtually all of the additional cost is due to proposals that I would not have agreed to in representing the Republican Conference.  I was under the impression that the Senate Democratic Leadership was genuine in its desire to work on a bipartisan basis, but clearly I was mistaken.  Although the Senate Democratic Leadership was highly involved in the development of a bipartisan bill, they arbitrarily decided to replace it with a bill that skews toward their liberal wing.

So, my first comment to my colleagues, the media, and the public is, don't let this package be mislabeled as the Baucus-Grassley package.  It is not the package my friend Chairman Baucus and I negotiated.  Again, the package before the Senate dramatically differs in cost, balance, and intent from the Baucus-Grassley deal, announced on February 11.

My second preliminary comment goes to the way in which these expiring tax provisions have been described by many on the other side, including those in the Democratic Leadership.  If you rolled the videotape back a week or so ago, you'd hear a lot of disparaging comments about these routine, bipartisan extenders.  From my perspective, those comments were made in an effort to sully the

If you take a look at newspaper accounts of a week or so ago, you'd come away with the impression that the tax extenders are partisan pork for Republicans.  A representative sample comes from one report, which describes the bipartisan bill as "an extension of soon-to-expire tax breaks that are highly beneficial to major corporations, known as tax extenders, as well as other corporate giveaways that had been designed to win GOP support."  The Washington Post included this attribution to the Senate Democratic Leadership in an article last week.  " "We're pretty close," {the majority leader} said Friday during a television appearance in Nevada, adding that he thought "fat cats" would have benefitted too much from the larger Baucus-Grassley bill."

The portrait that was painted by certain members of the majority, echoed without critical examination, in some press reports was inaccurate.  For one thing the tax extenders include provisions such as the deduction for qualified tuition and related expenses and also the deduction for certain expenses of elementary and secondary school teachers.  If you are going to school or if you are a grade school teacher, the Senate Democratic Leadership apparently viewed you as a fat cat.  If your house was destroyed in a recent natural disaster and you still need any of the temporary disaster relief provisions contained in the extenders package, too bad, because helping you would amount to a corporate giveaway in the eyes of some.

The tax extenders have been routinely passed repeatedly because they are bipartisan and very popular.  Democrats have consistently voted in favor of extending these tax provisions.  House Speaker Nancy Pelosi released a very strong statement upon House passage of tax extenders in December of 2009, saying this was "good for businesses, good for homeowners, and good for our communities."  December of 2009 was not very long ago.  In 2006, the then-Democratic Leader released a blistering statement "after Bush Republicans in the Senate blocked passage of critical tax extenders" because "American families and businesses are paying the price because this Do Nothing Republican Congress refuses to extend important tax breaks."

Recent bipartisan votes in the Senate on extending expiring tax provisions have come in the Emergency Economic Stabilization Act of 2008, the Tax Relief and Health Care Act of 2006, which passed the Senate by unanimous consent, and the Working Families Tax Relief Act of 2004, which originally passed the Senate by voice vote although the conference report only received 92 votes in favor and a whopping 3 against.  According to the non-partisan Congressional Research Service, extension of several of these provisions goes back even further, including the Tax Relief Extension Act of 1999, which again passed the Senate by unanimous consent but lost 1 vote on the conference report.

One member on the other side said, "Our side isn't sure that the Republicans are real interested in developing good policy and to move forward together.  Instead, they are more inclined to play rope-a-dope again, my own view is, let's test them."  Another member of this large 59 vote majority exclaimed, "It looks more like a tax bill than a jobs bill to me.  What the Democratic Caucus is going to put on the floor is something that's more focused on job creation than on tax breaks."

Reading those comments I found myself scratching my head.  The only explanation for this behavior is that certain senators decided last week that it serves a deeply partisan goal to slander what have been for several years bipartisan and popular tax provisions benefitting many different people.  The Washington Post article I quoted from earlier includes a statement from a Senate Democratic leadership aide saying that, "No decisions have been made, but anyone expecting us immediately to go back to a bill that includes tax extenders will be sorely disappointed."

You can imagine, that today, a little over a week after these comments, I'm really scratching my head.  We have before us the expiring tax and health provisions that were disparaged just a short time ago.  Have they morphed from corporate tax pork?  Have they suddenly re-acquired their bipartisan character?  Are these time-sensitive items, now expired for more than two months, suddenly jobs-related?

Now, as we begin to debate another, quote, jobs bill, I want to focus on the economy, small businesses, and jobs.

We all agree that our nation is currently facing challenging economic times.  While there have been some signs of improvements such as the recent growth in our gross domestic product, job losses continue to mount and many hardworking Americans are struggling to make ends meet.  According the Bureau of labor Statistics, over 8 million jobs have been lost since our economy officially slipped into a recession in December of 2007.  The unemployment rate is currently at 9.7 percent, which is simply an unacceptable level.

The lack of job creation continues despite aggressive actions taken at the federal level in order to stabilize the economy.  This includes the enactment of TARP and the $800 billion dollar stimulus bill.  However, these bills were all missing a critical ingredient for spurring job creation-substantial tax relief targeted at small business.

In October of 2008, Congress enacted the Troubled Asset Relief Program (TARP), a $700 billion dollar financial bailout bill that we were told had to be enacted immediately  in order to deal with so-called toxic assets to prevent credit from drying up, which would have choked off the lifeblood of the American economy.   What we actually got was direct infusions of cash into the largest Wall Street banks, which was 180 degrees different than what we were told by Treasury.

And later came the bailout of GM and Chrysler using TARP money after the Senate had just voted not to bail GM and Chrysler out.  This inconsistent policy by Treasury created uncertainty in the financial markets and business community.  Moreover, exorbitant bonuses were paid to executives and managers of firms that would have been out of a job if not for Congress, Treasury, and the Federal Reserve intervening.

And how effective was the bailout at improving credit markets?  In October 2009, the Government Accountability Office released a report reviewing TARPs first year performance. The GAO report found credit had improved based on certain market indicators.  However, they were not able to determine how much, if any, was attributed to TARP, as compared to general market forces or other federal actions.

While it is unclear to the extent credit has been freed up as a result of TARP, it is clear who has reaped the benefits of the program.  This past year, many financial firms, including Goldman Sachs, J.P. Morgan Chase and others who received TARP funds posted record or near record profits.

While Wall Street executives have clearly benefited from TARP, small businesses and their employees have not been so fortunate.  Small businesses continue to struggle to obtain credit in order to expand their operations, purchase inventory, or even to make payroll.

The so-called stimulus bill enacted almost solely by an overwhelming Democratic majority in Congress last February has not spurred job creation. The massive $800 billion spending bill was hastily rushed to the floor with little time to deliberate its merits.

Lawrence Summers, the Director of President Obama's National Economic Council, said the test for stimulus is whether it is timely, targeted, and temporary.  This stimulus bill hit the tri-fecta; it failed on all three.

Through a report issued in January of 2009 by the current chair of President Obama's Council of Economic Advisors, Christina Romer, the administration predicted that the stimulus would save or create 3.7 million jobs.

We were told by the Obama Administration that if the bill was not passed quickly we would experience unemployment of nine percent.  However, we were also told by the Obama Administration that if the stimulus bill passed, unemployment would not go over 8 percent.

Well, Mr. President, the bill was passed but what did we get for the $800 billion in debt, before interest, that was laid at the feet of our children and grandchildren?  The unemployment rate jumped from 7.7 percent in January -- right before the stimulus was enacted -- to a high of 10.1 percent in October.  While unemployment recently dipped slightly to 9.7 percent, this was not due to job creation, but because millions of individuals have literally given up looking for work.  The Obama Administration also stated that quote "more than 90 percent of the jobs created are likely to be in the private sector."  In all, 3.3 million jobs have been lost since the stimulus bill was enacted, and 3.2 million of those jobs were private sector jobs.  In summary, the Obama Administration was terribly inaccurate regarding its stimulus jobs projection.

At the time the stimulus bill was passed, I raised concerns that the bill was not targeted enough at small businesses and job creation.  However, my point of view lost out and less than one-half of one percent of the bill included tax relief for small businesses.  The money in the stimulus bill to give tax credits to people who buy electric plug-in golf carts, or to pay for rattlesnake husbandry in Oregon, among numerous other ill-advised provisions, would have been better allocated to small business tax relief.   Since the stimulus, small businesses have been bearing the brunt of job losses in our economy.  However, the words of those on the other side regarding the importance of small business to job creation does not match their actions when looking at the paltry amount of small business tax relief that they have provided.  Again, in the jobs bill or stimulus bill or whatever you want to call it that passed the Senate last week, there was only one provision directed solely to small business tax relief.  That was a provision that I support, increased expensing of equipment purchased by small businesses, but it is a very small provision and it only gave small businesses what they've already been getting for the last couple years.

That provision was only $35 million out of a $62 billion bill?the $15 billion that everyone talks about plus the $47 billion for the highway trust fund that is typically not mentioned.  Last year, I introduced S. 1381, the Small Business Tax Relief Act of 2009.  My bill would double the amount of equipment that a small business could expense, and it would make those higher levels permanent, instead of just for one year as the Reid bill did.  In my negotiations on a "jobs bill", I sought to include provisions from my small business tax relief bill, but there was no agreement to put small business tax relief provisions from my bill in the bipartisan compromise we reached.  Instead, we were asked to defer those provisions.

According to ADP National Employment data, from February of 2009 through January of 2010 small businesses with fewer than 500 employees saw employment decline by 2.67 million, while large businesses with 500 or more employees saw employment decline by 694,000.

While I am sure many of us disagree about the effectiveness of the financial bailout and stimulus spending in getting our economy back on track, I know we all agree that there has been a lack of job creation and too many people continue to be unemployed.

Because the stimulus bill has so clearly failed what it was supposed to do, which is to create jobs, the Administration and Congressional Democratic Leadership are running away from the word stimulus faster than the triple-crown winning horse, Secratariat. Everything proposed now is called a jobs bill, even if it includes proposals that were always labeled stimulus in the past.  Only 6 percent of Americans believe the stimulus bill created jobs.  That is less than the 7 percent of Americans who believe that Elvis is still alive.

Last week the Senate passed a bill that included a provision designed to increase hiring. This includes a payroll tax holiday for business that hire unemployed workers and a tax credit for the retention of newly hired individuals in 2010.

The payroll tax holiday part of this proposal is likely to spark some modest hiring at businesses at the margins, among those that have seen some improvements in their business, but are on the fence about whether to hire somebody now or wait until later.  However, many businesses continue to struggle and won't hire new employees just because it is the stated policy goal of Congress.  Before a business can hire a new employee, they need to know that that the new employee will generate additional revenue that exceeds the cost of the employee.

The latest survey of Small Business Economic Trends by the National Federation of Independent Businesses (NFIB) shows that many small businesses may not be in a place that they could afford to hire new employees, even with the payroll tax holiday.

I have here a chart from NFIB with selected components from their Small Business Optimism Index.  While many components of this index improved slightly from December, it is clear that small businesses continue to struggle.

  • A net negative 1 percent of owners plan to create new jobs in the next three months;

  • A net positive of only 1 percent of businesses owners expect the economy to improve. Only 4% of  business owners said it was a good time to expand

  • A net negative 42 percent of owners reported higher earnings

This last component is especially important for businesses when it comes to hiring new employees.  If earnings are declining there is little a payroll holiday will do to spark hiring since the businesses needs to know that the revenue generated from the additional employee will exceed the cost, not just today but in the future as well.

According to the NFIB survey, when businesses are asked what the single most important problem facing their business is, the answer is lack of sales.  But, this is closely followed by taxes and then government regulations and red tape.

I am glad that my colleagues on the other side have recognized that true job creation comes through the private sector and have thus sought hiring incentives through payroll tax relief.

However, this minor tax relief is a drop in the bucket considering the challenges small businesses are facing due to the economy and proposed increased taxes and red tape included in the President's budget -- whether we are speaking about "cap and trade" that will drastically increase their energy costs, health care reform that would mandate small businesses to offer health benefits that will increase the cost of labor, or the call for tax increases on so-called wealthy taxpayers earning over $200,000 that will largely fall on the backs of small business.

If our intention is to increase long-term employment, the last thing we should be doing in this time of economic uncertainty is increase taxes or place additional burdens on those who are  responsible for creating 70 percent of the jobs in our economy --  namely small businesses.

Providing small businesses a payroll tax holiday while intending to impose increased taxes, regulations and mandates amounts to throwing them a few peanuts while taking away their supper.

In recent months, I have spoken at length about the impact of the tax increases set to kick in 10 months from today.  I've examined the impact of these tax increases on small businesses.  Let's take a close look at this impact.

The President and my colleagues on the other side of the aisle have proposed increasing the top two marginal tax rates from 33 and 35 percent to 36 and 39.6 percent, respectively; increasing the tax rates on capital gains and dividends to 20 percent; fully reinstating the personal exemption phase-out, known as PEP, for those making over $200,000; and fully reinstating the limitation on itemized deductions, which is known as Pease, for those making over $200,000.  With PEP and Pease fully reinstated, individuals in the top two rates could see their marginal tax rate increased over 15 percent or more.

My colleagues on the other side of the aisle respond that these proposals will only hit "wealthy" individuals and only a small percentage of small businesses fall into this category.  What my colleagues fail to understand is that the small businesses that fit into this group are not static, but consist of different businesses over time that go in and out of the top two tax brackets depending on the market.  Data from the Joint Committee on Taxation, which is the nonpartisan official Congressional scorekeeper on tax issues, shows that 44 percent of the flow-through business income will be hit with the increase in the top two tax rates proposed by the President and Democratic Congressional Leadership.  This hits small businesses particularly hard, since most small businesses are organized as flow-through entities.  It will increase taxes on single small business owners that make more than $200,000 per year, even if they plow all of their income back into their small business to keep paying their workers or hire additional workers.

Increasing taxes on this group punishes their success. It limits their ability reinvest in their company. It prevents them from putting away funds for tough economic times to keep their business afloat.

Government is currently creating a climate of uncertainty where the private sector does not know what we will do next, what taxes will be raised, or what regulatory barriers will be put in their way.

We can start to put some certainty back into the business world by declaring we will not increase taxes on businesses one dime by making the 2001 and 2003 bipartisan tax measures permanent.  But let me be clear, businesses do not want to be certain that the government is going to raise their taxes and make them go through more red tape.  They want to be certain that's not going to happen.  Until then, many will simply sit on the sidelines and not hire more workers.

Moreover, we can directly provide targeted relief to small businesses.  Last June, I proposed legislation to do just that.  I introduced the Small Business Tax Relief Act of 2009 to lower taxes on job-creating small businesses.

Since the Democratic leadership barred any amendments last week, I'm hopeful we'll debate and vote on an amendment offered by Senator Thune.  Many provisions in my bill are contained in the Thune amendment, which I support.

My bill contains a number of provisions that will leave more money in the hands of small businesses so that they can hire more workers, continue to pay the salaries of their current employees, and make additional investments in their business.   This includes allowing flow-through small businesses such as partnerships, S corporations, LLCs, and sole proprietorships to deduct 20 percent of their income, effectively reducing their taxes by 20 percent.  My bill also includes relief for small business owners from the unfair alternative minimum tax.  It takes the general business credits, such as the employer-provided child care credit, out of the alternative minimum tax.  This allows a mom and pop retail store that provides child care for their employees to get the same tax relief that a Fortune 500 company gets when it provides child care for its employees.  My bill would also allow more of the nearly two-million small C corporations to benefit from the lower tax rates for the smallest C corporations.  There are so many small C corporations because they were formed as C corporations before other entities such as LLCs become more widely used.  Among other provisions, my bill would also lower the potential tax burden on small C corporations that convert into S corporations.

The NFIB has written a letter supporting my small business tax relief bill, stating, quote, "To get the small business economy moving again, small businesses need the tools and incentives to expand and grow their business.  S. 1381 provides the kinds of tools and incentives that small businesses need."

I'd now like to talk about an opportunity for true bipartisanship that was killed by the Democratic leadership.  The same day that Chairman Baucus and I released a bipartisan bill that contained significant compromises, behind closed doors Democratic leaders cherry-picked just 4 provisions out of the larger bill that Chairman Baucus and I agreed to.  Those provisions had been agreed to in a meeting of senior members of the other side only while Chairman Baucus and I were negotiating.  I was extremely disappointed to see the Democratic leadership blow up the bipartisan deal that Chairman Baucus and I reached.  To pour a little salt into the wound, the Democratic leadership then prohibited any senator on either side of the aisle from even offering an amendment to improve the bill that he hijacked.

One of the four provisions the Democratic leadership cherry-picked is Build America Bonds.  If it had been just me drafting a bill, I wouldn't have included this provision.  However, in the sake of bipartisanship and compromise in the context of a much larger bill, I reluctantly agreed that putting this provision in the bill would not cause the overall bill to lose my support.  Build America Bonds is a very rich spending program disguised as a tax cut.  Bloomberg reported that large Wall Street investment banks have been charging 37 percent higher underwriting fees on Build America Bonds deals than on other deals.  Therefore, American taxpayers appear to be funding huge underwriting fees for large Wall Street investment banks as part of the Build America Bonds program.

The Democratic leadership has said the Build America Bonds program is about creating jobs, but I want to know whether it's about lining the pockets of Wall Street executives.  Last week, I asked Goldman Sachs CEO a number of questions about these much larger underwriting fees subsidized by American taxpayers.  I expect to have that discussion shortly.

Turning back to the bill being debated this week, the Thune amendment, which incorporates many of the provisions from my small business tax relief bill, provides substantial small business tax relief and should be adopted.

In this bill, I hope that we can all work together toward improving our economy -- not through more government -- but by letting the engine of job creation-small business-keep more of their own money in the form of substantial small business tax relief.

-30-

Wednesday, March 10, 2010

Senator Chuck Grassley today made the following comment about the House "jobs" legislation's expansion of the Build America Bonds provision.  The Senate could take up the House bill this week.  Grassley also released two responses from Goldman Sachs to his inquiries about the fees Goldman Sachs has received from Build America Bonds.

"Build America Bonds were created in the stimulus last year as a temporary program. A recently-passed House bill included an expansion.  The Senate then passed a further expansion and sent the bill back to the House.  The House took the Senate's bill and made it richer.  Now a temporary program is becoming bigger, and Wall Street is seeking to make it permanent.  Wall Street is profiting and cheering the expansion.

"Build America Bonds result in higher underwriting fees for the Wall Street banks that underwrite the bonds than for traditional tax-exempt bonds. According to Bloomberg News, Build America Bonds provide 37 percent higher underwriting fees to the large Wall Street banks when compared with traditional tax-exempt bonds.  According to an article in today's Wall Street Journal, Wall Street banks have made more than $1 billion in underwriting fees on Build America Bonds deals in less than a year.  The taxpayers pay for those lucrative fees to Wall Street.

"Build America Bonds are portrayed as an easy way to help school kids and green energy.  What's left out is that this is a spending program disguised as a tax cut, getting bigger each year, and Wall Street takes a healthy share.  In an era of bailouts and disgust with government spending, House members should have to answer for giving yet more taxpayer dollars to Wall Street and foreign investors.  Senators should understand the vote they're about to take."

Background on Build America Bonds:

The 2009 stimulus bill created the Build America Bonds program on a temporary basis, and provides a check from the Treasury Department to the state or local government that issues the bonds equal to 35 percent of the interest costs on the bonds.  The President has proposed in his fiscal year 2011 budget to make the Build America Bonds program permanent but at a reduced 28 percent subsidy level.  The House passed a "jobs" bill that would expand the Build America Bonds program created in the 2009 stimulus bill to two tax-credit bonds ? Qualified School Construction Bonds and Qualified Zone Academy Bonds.  The Senate then expanded the House bill to cover two additional tax-credit bonds ? Qualified Energy Conservation Bonds and Clean Renewable Energy Bonds, and set the federal subsidy for interest costs at 45 percent (65 percent for small issuers, defined as those issuing less than $30 million in bonds per year).  Just last week, the House increased the subsidies from the Senate bill to 100 percent for Qualified School Construction Bonds and Qualified Zone Academy Bonds, and 70 percent for Qualified Energy Conservation Bonds and Clean Renewable Energy Bonds.  The increase in the subsidy percentages made by the House increased the cost of the Build America Bonds provision by more than $2 billion.  The subsidy has gone from big, bigger, to biggest.  Under the House bill, the outlays, which are scored as spending by the Congressional Budget Office, from these bonds will be $13.2 billion through 2020, which will be paid for by federal taxpayers.

Build America Bonds have been popular with industry and states because they are uncapped and provide higher subsidies to local governments and foreign investors than traditional tax-exempt bonds. The Congressional Budget Office originally underestimated the popularity and had to issue a revised cost estimate of an additional $26 billion.  The bonds in the Senate and House "jobs" bills are capped, but the subsidy for the interest expense on school projects in the House bill could cost the federal government more than 100 percent of the financing cost in some cases.  This is because unlike with tax credit bonds, where the federal government collects revenue from taxpayers that have to include the tax credits in income, revenue is not collected from investors such as foreigners, pension funds, or other tax-exempt entities that make up the majority of the holders of Build America Bonds.

Attached are Goldman Sach's responses to Senator Grassley's inquiry on Build America Bonds.  Following is his initial inquiry.

For Immediate Release

Wednesday, February 24, 2010

Grassley Asks Goldman Sachs About Underwriting Fees for Build America Bonds

WASHINGTON - Sen. Chuck Grassley, ranking member of the Committee on Finance, today asked Goldman Sachs whether it would collect double-digit underwriting fees for participating in a newly expanded Build America Bonds program, as included in the "jobs" bill promoted by the Senate Democratic leaders and passed by the Senate today.

Grassley's inquiry came after Goldman Sachs published a newspaper ad in support of the Build America Bonds program, identifying itself as "one of the principal underwriters."  Earlier, an analyst was quoted in the media saying that the generous amount of federal money available in the program gives states and cities leeway to spend generously on underwriting fees.

"I'm interested in finding out whether the big Wall Street investment banks being so involved in, and profiting from, the Build America Bonds program siphons off a lot of taxpayer dollars that are meant to help cities and states," Grassley said.

The text of Grassley's letter today follows.   

February 24, 2010

Mr. Lloyd C. Blankfein

Chairman and Chief Executive Officer

The Goldman Sachs Group, Inc.

85 Broad Street

New York, NY 10004

Dear Mr. Blankfein:

I was interested to see your company's full-page advertisement in support of Build America Bonds in yesterday's edition of the Politico newspaper that stated that Goldman Sachs is "one of the principal underwriters..." of Build America Bonds.  The "jobs bill" that passed the Senate today contained an expansion and an increase in the subsidy levels of the Build America Bonds program.  This increased subsidy allows non-taxpaying entities to receive a check from the American taxpayers equal to either 65 percent or 45 percent (depending on the amount of bonds issued) of these non-taxpaying entities' interest costs on Build America Bonds.  The American Recovery and Reinvestment Act of 2009, more commonly known as the stimulus bill, allowed non-taxpaying entities to receive a check from the American taxpayers equal to 35 percent of these non-taxpaying entities' interest costs.  The President has proposed in his most recent budget for non-taxpaying entities to receive a check from the American taxpayers equal to 28 percent of these non-taxpaying entities' interest costs.

A November 27, 2009, Bloomberg article by Jeremy R. Cooke stated that:

"States and municipalities paid an average 37 percent more to investment banks for underwriting Build America Bonds than for handling tax-exempt sales since offerings of the subsidized taxable debt began in April....  'The large subsidy gives them leeway to charge more because the issuer probably cares less about the underwriting fee,'" said Matt Fabian, managing director and senior analyst at Concord, Massachusetts-based independent research firm Municipal Market Advisors.  'They shouldn't care because federal taxpayers will cover the difference.  As a federal taxpayer, I'm highly concerned.'"

I, too, am concerned that American taxpayers are subsidizing larger underwriting fees for Wall Street investment banks, including Goldman Sachs, as a result of the Build America Bonds program.  I have raised concerns about the increased subsidy levels in the Build America Bonds program that passed the Senate today.

As "one of the principal underwriters" of the Build America Bonds program, please answer the following questions:

1. How much in total underwriting fees has Goldman Sachs collected to date on Build America Bonds' issuances?

2. How has Goldman Sachs determined its underwriting fees on Build America Bonds' issuances?

3. Are these underwriting fees larger than the underwriting fees that Goldman Sachs has charged on tax-exempt bond issuances?  If so, how much larger are these underwriting fees?

4. Has Goldman Sachs received any money, in addition to the underwriting fees, in connection with the Build America Bonds program?

5. Does Goldman Sachs expect to receive additional underwriting fees if the Build American Bonds expansion and subsidy increase that passed the Senate today is enacted into law?

Thank you in advance for your prompt response to these questions.

Sincerely,

Charles E. Grassley

Ranking Member

Senator Chuck Grassley issued the comment below about a newly released report of the Government Accountability Office regarding the criminal division of the Food and Drug Administration.  Grassley requested the review, in 2009, in response to allegations about lax standards and poor accountability in the criminal division.  The senator has conducted extensive oversight of the FDA's performance and he has worked to hold federal officials accountable for mismanagement.

The report is linked below and also posted with this memo at http://finance.senate.gov and http://grassley.senate.gov.  Also linked below and posted with the report is a letter from the FDA Commissioner to Grassley regarding agency plans to respond to the shortcomings identified by the GAO.

Senator Grassley's comment:

"This report has made a difference already by securing a much needed commitment from the Commissioner to make the FDA's investigative unit live up to its significant responsibilities.  There's no excuse for the fact that this division's failures have gone unchecked for years, and having the FDA leadership focused on fixing what's broken is the first, very important step needed."

GAO Report

FDA Commissioner's letter to Grassley

During today's conference call with Iowa reporters, Senator Chuck Grassley answered questions about the following issues:                       

International Trade, Medicaid Reimbursements to Doctors, Bipartisanship in Health Care, Reconciliation, Senator Bunning, Unemployment Benefits, Pay as You Go Rules, and Post Office Reduced Mail Delivery

Click here to listen to the audio of the conference call or go to http://grassley.senate.gov. Click on News Center and select News Conference Calls.

The transcription of the conference call is below or click here.

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

TELECONFERENCE

MARCH 3, 2010

SPEAKER:  SEN. CHARLES E. GRASSLEY, R-IOWA

GRASSLEY: I went to the Senate floor offering an amendment to make sure that Medicare providers in this (inaudible) bill are fully offset and paid for.  It also would extend physician payment update til the end of the year to bring some uncertainty to doctors -- or to bring certainty to doctors.

All of these provisions are very important to the wellbeing of Medicare beneficiaries.

It's also very important that they be taken care of in a way that's fiscally responsible.  Senator Baucus and I tried to update these provisions before they expired at the end of February, but of course our efforts were rebuffed by the Senate majority leader, Senator Reid.

Senator Baucus and I had a bipartisan bill that was paid for.  Senator Reid pushed it aside and now put a second bill on the floor that's both partisan and fiscally irresponsible.  The Reid bill this week is almost three times the size of the bill Senator Baucus and I put together in February and, again, our bill was fiscally responsible.  My amendment needs to be passed so that the cost of the Medicare provisions isn't added to the federal debt.

In the Finance Committee this morning, I questioned U.S. Trade Representative Ron Kirk about the trade policy agenda released by the president Monday.  One of my main concerns is the lack of anything specific in that agenda regarding the Panama, Colombia and Korea free trade agreements.  It's been nearly three years since all of them have been modified according to a compromise between congressional Democrats and the then-Bush administration.

The Obama trade agenda says only that the administration will continue to engage, without any timetable for moving ahead.  Continued delay is hurting U.S. credibility around the world, both economically and geopolitically.

These trade agreements are good policies.  And while the United States sits on the sidelines, the world is moving on without us.  South Korea now has a trade agreement with European Union and Colombia has done the same.  When the United States becomes less globally competitive, there are bottom-line consequences for Iowa agriculture, manufacturing and service industries, and employers across the country.

International trade is an opportunity for job creation through new markets and it doesn't make any sense to neglect it when job creation is so very much needed.  In fact, trade is one of the very best ways of moving us out of this recession we're in.

Joe Morton?

Tom Beaumont?

QUESTION: Senator, do you take President Obama's comments yesterday or in the letter about Medicaid being underfunded in the Senate bill as an authentic attempt to win your support?

GRASSLEY: Well, the answer is definitively yes.  I think it's a sincere effort.

That in and of itself doesn't win my support because, you know, he's adding these things to a 2,700-page bill that we have taken the position of 70 percent of Americans that we ought to start over.

But this is a very important issue that isn't only important because I brought it up with the president and he recognizes it, but it's also an issue I brought up when the health care reform bill was before the Senate Finance Committee, and I did it in a way that was paid for.

There's no question that Medicaid won't be able to provide adequate access to these 15 million people that the bill adds to it and -- and pushing both of them into Medicaid.  It's -- as I think I stated it this way to the president, it's kind of a false promise.  I think I may have even used the words it's kind of intellectually dishonest.  But a false promise to the very low-income people in our country.

And something that Speaker Pelosi said to me after the meeting, as we were walking out.  So I hate to report the exact -- well, I don't have the exact language in my mind, but I can give you the gist of it.

I hate to say a one-on-one conversation, but it adds emphasis to what the president said, and I think that it may be because of Pelosi that maybe the president has taken this step.

And that is that she agreed with me it is a problem and we need to do something about it.  And that's, kind of, the gist of what she said to me, because, you know, you're, kind of, surprised when the speaker of the House, who's almost my opposite politically, agrees with me on something.

I take notice that she's agreeing with me, but you're almost stunned, so I don't remember exactly how she put it, but that's the gist of it.

QUESTION: Considering have for a long time been an advocate of a bipartisan bill, how are you going to respond to -- to this, you know, invitation, if you will, to consider an area that was pretty -- a priority for you?

GRASSLEY: Well, I think I've just given you that response that -- that...

QUESTION: I mean, are you going to -- are you going to, you know, White House, you know, in some way on this?

GRASSLEY: I'm always available to talk to the White House, but I'm not anxious to let people -- are very much opposed to this 2,700-page bill to give any indication to them or to even Iowans who object to the 2,700-page bill that I'm compromising on the 2,700-page bill.

QUESTION: Thank you.

GRASSLEY: Ed Tibbetts?

QUESTION: Senator, I'm just wondering if you would -- people talk about reconciliation.  And I think there's some confusion about -- out there about why it's been used and how it's been used.  The other side will say that -- that reconciliation has been used a number of times, many times when the Republicans were in the leadership, including on the Children's Health Insurance Program and on -- and on Medicare Advantage -- on insurance policies.

GRASSLEY: Sure.

QUESTION: And I guess I'm just wondering if -- if you might speak to why -- given that, why you think that this is an inappropriate use of that technique.

GRASSLEY: Yeah, I'd be glad to.

And I think I -- if you go back -- if you can get to the congressional record for what I said today -- is a partial answer to this -- and it was at the end of my speech, which was prepared text for my amendment that I just talk about on Medicare.

But I did give off-the-cuff comments in rebuttal to something that the previous speaker had said in morning business about the health care bill and finding faults with Republicans on this very subject that you're asking me about.

But before I answer your question, if Tom Beaumont's still on, I just thought of one other thing that I ought to say about some consideration about the president going this direction -- because I suggested it on Medicaid -- more funding for Medicaid.  I think that it's legitimate that we know how he's going to pay for it.

Now to your question.  The main difference that I said on the floor a few hours ago -- in answer to your question but also answering your question -- is it that I didn't disagree with anything Senator Durbin was saying about Republican use of filibuster, because he was accurate as far as I know, without going back and checking everything he said.

But right now what's so different is we are restructuring one-sixth of the economy.  And there's no -- there's no reconciliation bill that you can name that restructures the economy, including a $1.1 trillion cut in taxes in 2001, which would have been $1.3 trillion of approximately $10 trillion or $11 trillion economy.  And that was spread out over 10 years; not a complete restructuring of our economy.  So that's the difference, to use reconciliation.

And then just think of the history that you heard me talk about 12 years in negotiating on health care or being involved with health care.  When Senator Baucus and I started out a year ago, we were going to get 75, 80 votes because we were restructuring one part of the economy, and it ought to be done in a consensus basis.

Then -- then another difference for reconciliation in this instance is they want to have the Senate pass a bill to reconcile a policy that isn't even law yet.  And reconciliation is always used to reconcile or to change existing policy; in other words, law of the land.

And what they want to reconcile is some changes in the Senate bill that is now residing in the House.  And that's never been done before.

And then I believe the other thing is -- my answer to -- to the people that say, "Well, you ought to be able to pass it by a majority vote," well, the House of Representatives always does things by a majority vote.  If they want to pass a health care reform bill, just pass the bill that the Senate passed, and it'll be given to the president and then for sure the president's going to sign it.

So they don't have to use reconciliation if they want to get a health care reform bill.  Just go pass the bill that we sent over there.

QUESTION: If I might follow up, with respect to the issue of the size of a piece of legislation, whether reconciliation is appropriate, my understanding is that when welfare was overhauled back in the mid-'90s that reconciliation was used as well.  And while that may not be a sixth of the economy, it did, indeed, affect millions of people. I guess, where do you draw the line, where reconciliation -- where a proposal is too big to -- to use reconciliation on?

GRASSLEY: Well, first of all, welfare reform was passed in a bipartisan way.  And it was vetoed twice by President Clinton.  But finally the message got through that the public wanted it, and so the president eventually signed it, after a third time.

So I think that in that particular case, where we were using something that at the grassroots of America was demanded, and in this particular case, of this 2,700-page bill, the public's saying, "Start over."

WHO Radio?

Tim Rohwer?

QUESTION: Yes, Senator. Did you vote -- I understand the Senate last night voted to extend unemployment benefits.  And -- and what's your thoughts on the action of Senator Jim Bunning yesterday, trying to apparently block those unemployment?  I mean, I guess he had some controversy, even in -- with fellow Republicans.

GRASSLEY: Well, those questions are, kind of, tied together, but I'll answer them separately.

First of all, I did vote for it.  And the reason I voted for it, and still support Senator Bunning, is because Senator Bunning offered an amendment to pay for it.  The Democrats said he could get a vote on his amendment.  Then, quite frankly, they lied to him and raised a point of order so it took 60 votes to override it.  Every Republican voted to override it, but we didn't get the 60 votes to override it, so we never really got a vote on his amendment.

But by voting for overriding the point of order, every Republican, including this Republican, was voting to pay for it, because that was what the -- what the point of order was against.

And so then I felt justified in voting for it, even though that amendment of Bunning's lost.

Now, my comment on Bunning is, Bunning was doing two or three things, and all of them appropriate.

Number one, he was -- wanted to -- he wanted to pay for it.  That's the right thing to do.

His motive for wanting to pay for it wasn't just because he believed that it shouldn't add to the deficit, but he was raising the point with the majority party that they want pay-as-you-go, or PAYGO for short, in other words offsets to pay for it, and in this case they didn't want to do it.  And from his standpoint, it was intellectually dishonest.

So he -- he was only making the point that it ought to be paid for.  He had a pay-for.  The Democrats held it up for two days or over the weekend because they didn't want to pay for it.  They thought of it as an emergency and consequently, then, not -- didn't need a pay-for.  And he disagreed, so they held it up.

And the other thing to remember is the Democrats don't -- aren't intellectually honest when they say that he was holding it up or Republicans were holding it up, because the Baucus-Grassley bill had an extension of unemployment compensation in it.  We negotiated that during the last week of January and the first two weeks of -- of February.  We had a bipartisan agreement.  We thought we had Reid's consent.

And Reid decided to go partisan, which was the bill that we passed last week, and he took out the unemployment compensation.  But if we'd gone with that bipartisan bill, we would have had a bill to the president by February 15th, and -- and they would be collecting their unemployment compensation.  There wouldn't've been a lack of it.

So I don't know how -- I -- I've been asked by the media people on Capitol Hill.  They just swarm you with questions about Bunning holding something up.  Well, why all the attention on one Republican?  Why not the attention on the Democrats, that Reid took it out of the bipartisan bill?  And -- and they didn't let -- for three days, they didn't let Bunning have a vote on his amendment.  What are they -- what are they scared of?

And so, you know, I've got to ask people in the fourth estate, the media of our country, how come you're letting him get away with it?

Mike Glover?

Christinia Crippes?

QUESTION: Nothing today, thank you.

GRASSLEY: Courtney Blanchard?

QUESTION: Senator, it's Courtney.

GRASSLEY: Courtney, go ahead.

QUESTION: Yes, I just wanted to, kind of, jump in on that last question and maybe ask you to repeat a little bit about you did end up voting for the bill.  I'm sorry.  I just didn't get on.

GRASSLEY:  OK.

I voted for the bill because I don't want people's unemployment compensation to lapse.  It's a safety net for unemployed people like the farm program is for farmers, to help people when they're hit with something beyond their own control.

The other thing was that it was very important to me in backing Bunning -- and every other Republican backed Bunning -- that it be paid for.  So we offered an amendment to pay for it; in fact, raise more money than what it took to pay for it.  And I voted -- in a sense voting for that amendment, although we didn't get an up-or-down vote on the amendment because the issue was a point of order, and we voted to override the point of order, but we didn't win.

So since trying to pay for it, didn't get it paid for, couldn't get it paid for, I still didn't think unemployment -- unemployed people ought to be denied their unemployment check.

QUESTION: Thanks.

GRASSLEY:  Kathie Obradovich?

OK, I've gone through the entire list.  Anybody else want to pop in?

QUESTION: Senator, Tim Rohwer again. I was doing a story.  I understand that the post office wants to, among other things, cut back mail delivery from, like, six days to five days to save money, and it has to go through Congress.  That's going to come up some time this year.  Would you support those cost-saving measures like reduction of mail service?

GRASSLEY: Well, let me -- let me tell you something.

I ought to be able to tell you yes or no, because that issue has been on the agenda I'll bet once or twice a year for the last five or six years.  But it's never gotten out of committee.  I don't know whether it's even got to the Congress because we wouldn't be acting on it unless the post office would ask us to.  Now it seems like they're asking us to.

So I have not studied it, but let me give you some points that might tell you how I'm going to approach it without giving you an answer.

First of all, there's a lot of fat to be cut in the post office budget.  Executive pay and relocation expenses that I have been investigating in my oversight capacity has -- has -- in my oversight capacity I've had the Government Accountability Office or my own -- post office inspectors general or my own staff investigating a lot of these things and I've been on television, like, 20 minutes on some of these things as an example.  And I'm talking about things I've been looking into over the past two years.

So I want to make sure that all the fat is out of the budget in the first place before I make a decision to cut services to our country.  But now, what I would take into consideration if I figured that the fat's out and you still had to do something, would Saturday delivery be one of the things to do?  I want to know the impact on the economy.

Now, for the average householder it might not make much difference, but there are a lot of businesses that depend upon the Postal Service to do their business and I want to know what that impact is and I don't have any way of knowing that at this point.

So I can't answer your question definitively.

OK, anybody else want to jump in?  OK.  Thank you all very much.

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