Q&A with Senator Chuck Grassley

Oversight of Government Bailout

Friday, May 7, 2010

Q: How exactly is the claim made that General Motors paid back a multi-billion dollar taxpayer-supported government bailout loan "in full, with interest, ahead of schedule, because more customers are buying vehicles."

A: Here's what's happened and, unfortunately, the reality doesn't match the rhetoric.  As part of the government bailout of the automakers, the taxpayers had loaned GM around $20 billion by May 2009.  After GM declared bankruptcy in June, the Treasury Department loaned GM another $30 billion.  Then, to help GM emerge from bankruptcy, the Treasury Department struck a deal with GM that contained three components -- a $7 billion loan, $2 billion in preferred stock and 61 percent of GM's common stock -- in exchange for the original $50 billion in loans.  The deal translated into the taxpayers paying roughly $41 billion for the GM common stock.  Today, when GM says it paid its loan "in full," it's talking only about the newer $7 billion loan, not the original $50 billion in taxpayer loans.  And, the repayment money came from a $17 billion escrow account that was created with the $41 billion in tax dollars used to buy GM common stock.  The escrow was for expenses, and GM needed permission from the Treasury Department to use the money.  The way that GM repaid the newer $7 billion loan was with the TARP money in that escrow account, not earnings.

The taxpayer bailout of GM still stands at around $40 billion.  Taxpayers won't get back that money unless GM's stock price goes up enough to repay the $40 billion.  Will that happen?  No one knows, but the nonpartisan Congressional Budget Office estimated in March that, in the end, taxpayers will lose around $30 billion on GM.

Another question is why the Treasury Department allowed GM to repay the $7 billion, seven-percent loan out of escrow and gave permission to take the final $6.6 billion out of escrow free and clear, but did not require that a $2.5 billion, nine-percent loan that GM owes to the union health plan be repaid?  You'd think the higher interest rate loan would be paid first.  And, with $6.6 billion left over in the escrow, GM could have paid both loans.  When I asked the Treasury Secretary during a Senate hearing, he didn't have a good answer.

Q: What can be done about it?

A: I hope one lesson that's been learned by the Treasury Department is to tell it like it is.  Overall, the effort to collect the bailout funds is speculative at best.  So far, since coming out of bankruptcy, GM has lost billions.  Beyond that, the way the agreement was set up with the Treasury Department, GM now has access to the remaining $6.6 billion in the escrow account without any strings attached.  GM said publicly that it didn't need the escrow money.  If that's the case, then the extra $6.6 billion should be returned to the taxpayers right now.  The most important lesson from all of this is that it doesn't make sense for the federal government to own private businesses.

Veteran Manager Joseph Klinger to Lead Public Safety Agency

SPRINGFIELD - May 6, 2010. Governor Pat Quinn today announced the appointment of Joseph Klinger, assistant director at the Illinois Emergency Management Agency (IEMA), as interim director of the agency effective immediately.  Klinger replaces outgoing Director Andrew Velasquez III, who was recently appointed as regional administrator for FEMA Region V by President Barack Obama.

"Joseph Klinger is a professional and experienced manager, who will continue to keep this fine agency ready and able to handle any emergencies or problems that may arise anywhere in our state," said Governor Quinn.

Klinger is also Assistant Director at IEMA, a position he's held since 2007, and has worked for the state's nuclear safety program, which is housed within IEMA, for more than 20 years.  As IEMA Assistant Director, Klinger oversaw nearly two dozen programs to ensure public safety from the hazards of ionizing radiation. These include programs to monitor conditions at the six operating nuclear power stations in Illinois, plan for emergency response actions for incidents involving radiation and ensure the safe use of radiation-producing machines, such as x-rays

"IEMA has a critical mission, and I'm honored that Governor Quinn has asked me to lead the agency," Klinger said.

Klinger is also a Marine Corps Vietnam combat veteran and recently retired as a Captain in the U.S. Navy, Reserve Component, after serving 23 years commissioned service, which included a deployment to the Middle East in 2004-2005.

Velasquez has served as IEMA Director since March 2007.  During his tenure, he oversaw several state responses to major disasters, including the 2008 floods, the Northern Illinois University campus shooting and the 2009 derecho in southern Illinois.  As administrator for FEMA Region V in Chicago, Velasquez will direct FEMA activities for Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin.

Illinois Emergency Management Agency is responsible for preparing the state of Illinois for response and recovery from any natural, manmade or technological disasters or acts of terrorism.  During disasters, IEMA coordinates with state and federal agencies on response efforts.  IEMA, through the Illinois Terrorism Task Force, develops and implements the state's homeland security strategy and administers federal preparedness funding.

For more information go to www.iema.illinois.gov.

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ROCK ISLAND, IL (05/07/2010)(readMedia)-- More than 75 Augustana students, including several from the local area, will share their advanced research projects on Saturday, May 8 at Augustana's 14th annual Celebration of Learning. This unique on-campus research symposium gives students an opportunity to show off their academic accomplishments to their families and friends and members of the Augustana community.

Celebration participants can choose to present their research through a poster display or an oral presentation. Many students present the results of their senior inquiry project, a multiple-term research project required for most academic programs. Other students share Honors capstone projects or student-faculty research. Because of the advanced level of research involved, most of the presenters are upperclassmen.

Students from the local area who are participating in Celebration of Learning include :

Daniel Meden, a senior from Davenport, IA who is majoring in biology. Meden will be presenting his project " Which Birds Die from Striking Windows?" in the biology sector of the symposium.

Students from the local area who are participating in Celebration of Learning include :

Sam Alvarado, a senior from Davenport, IA who is majoring in chemistry. Alvarado will be presenting her project " Synthesis of New Phosphine-Functionalized N-heterocyclic carbene Ligands" in the chemistry sector of the symposium.

Students from the local area who are participating in Celebration of Learning include :

Michael Seevers, a senior from Cordova, IL who is majoring in geography. Seevers will be presenting his project " A Study to Determine the Highway Culverts in Upper Rock Island County, Illinois" in the geography sector of the symposium.

Students from the local area who are participating in Celebration of Learning include :

Sara Michaletti, a senior from Rock Island, IL who is majoring in classics. Michaletti will be presenting her project " Latin Pedagogy" in the classics and theatre sector of the symposium.

Students from the local area who are participating in Celebration of Learning include :

Luke Osborne, a senior from Moline, IL who is majoring in classics with a Latin emphasis. Osborne will be presenting his project " Plato's Republic and Symposium and Homer's Iliad and Odyssey" in the classics and theatre sector of the symposium.

Students from the local area who are participating in Celebration of Learning include :

Steven Ash, a senior from Moline, IL who is majoring in physics. Ash will be presenting his project " A Study of Neutron-Rick Nuclei" in the poster sector of the symposium.

Students from the local area who are participating in Celebration of Learning include :

Jacob McDowell, a senior from Rock Island, IL who is majoring in psychology. McDowell will be presenting his project " Morality and Patriotism: Predictors of Responses to Terrorism?" in the poster sector of the symposium.

Students from the local area who are participating in Celebration of Learning include :

James Sales, a junior from Rock Island, IL who is majoring in biology. Sales will be presenting his project " Differences in Health Perceptions of Students" in the poster sector of the symposium.

Students from the local area who are participating in Celebration of Learning include :

Alex Sieg, a senior from Bettendorf, IA who is majoring in biochemistry. Sieg will be presenting his project " The Annotation of N-acetyl-ornithine/N-acetyl-lysine deacetylase, AbpE Family Lipoprotein and 4F-4S Iron Sulfur Binding Domain pProtein from Meiothermus ruber" in the poster sector of the symposium.

Students from the local area who are participating in Celebration of Learning include :

Henry Stauffenberg, a senior from Bettendorf, IA who is majoring in geology. Stauffenberg will be presenting his project " Another Step toward Answering the Dolomite Question" in the poster sector of the symposium.

Students from the local area who are participating in Celebration of Learning include :

Sam Anderson, a junior from Rock Island, IL who is majoring in mathematics and computer science. Anderson will be presenting his project " Tournaments" in the mathematics sector of the symposium.

Anne Earel and Stefanie Bleumle, Augustana reference librarians and the event's co-directors, are glad that the Celebration of Learning provides an outlet for students to show off their accomplishments. "Not every student will be able to go to a conference somewhere off-campus," Earel said. "This provides an on-campus opportunity to be part of a professional scholarship community."

Leah Mortenson, a junior from Manhattan, KS, will present her analysis of the media used in a current environmental advocacy campaign. She believes the Celebration of Learning will give her the chance to show how she has grown, academically and personally, through her project. "Celebration of Learning opens up doors for sharing knowledge about various fields of study with peers who may have different perspectives and experiences than you," she said.

The event will begin with a keynote address by Caroline Skaggs Sallee '02. She double majored in economics and history at Augustana. Ms. Sallee is currently the director of Anderson Economic Group's Chicago Office, where she manages economic and public policy projects. Her address is entitled, "The Augustana Difference: How a Liberal Arts Education Prepared Me for the Real World."

For more information on the Celebration of Learning, please visit www.augustana.edu/celebration.

About Augustana: Founded in 1860 and situated on a 115-acre campus near the Mississippi River, Augustana College is a private, liberal arts institution affiliated with the Evangelical Lutheran Church in America (ELCA). The college enrolls nearly 2,500 students from diverse geographic, social, ethnic and religious backgrounds and offers more than 70 majors and related areas of study. Augustana employs 287 faculty and has a student-faculty ratio of 11:1. Augustana continues to do what it has always done: challenge and prepare students for lives of leadership and service in our complex, ever-changing world.

WASHINGTON -- Sen. Chuck Grassley of Iowa just received the Small Business Council of America's Special Congressional Appreciation Award, which has been given only a handful of times over the last 26 years.  Grassley received the award for his "outstanding leadership and efforts on behalf of small businesses in the country," according to the organization.

"I'm grateful to receive this award," Grassley said.  "It's a no-brainer to work to strengthen small businesses.  They create 70 percent of jobs.  Their innovation and services are felt every day. Economic recovery and success depend on the ability of small businesses to preserve and create employment opportunities."

As ranking member or chairman of the Committee on Finance over the last 10 years, Grassley has been in a position to oversee tax and health care policy with an eye toward small business growth and preservation. The Small Business Council of America describes itself as a national nonprofit organization that represents more than 20,000 small businesses in the retail, manufacturing, and service industries on federal tax, health care, and employee benefit matters.

The group said it singled out Grassley for special recognition for his dedication to small businesses, his understanding of the health care and estate tax challenges facing such businesses, and especially his efforts to correct the disproportionate penalties placed on small businesses under a tax shelter crackdown meant to capture large corporations.

For months last year, through the end of the congressional session, Grassley protested the IRS' placement of liens on small businesses that unknowingly invested in prohibited tax shelters. Some of these businesses were assessed tax penalties as high as $300,000 per year but received a tax benefit for as little as $15,000 from the transaction.  Grassley, joined by colleagues, fought to persuade the IRS to provide temporary relief to small businesses facing these penalties until Congress could enact bipartisan, bicameral legislation to fix the penalty structure. Last December, Grassley announced he would hold up all Treasury nominees until the IRS agreed to suspend its enforcement actions.  The IRS agreed to suspend collection enforcement action, and legislation making a permanent fix is advancing through Congress.

Grassley acted out of concern that the Treasury Department gave favorable tax treatment to government bailout participants, including Citigroup, while placing liens on small businesses contrary to congressional intent.

Similarly, the $800 billion stimulus bill was enacted hurriedly in February 2009 with less than one-half of one percent of the bill as tax relief for small businesses.  Grassley protested the lack of consideration for small business.  Last year, he introduced S. 1381, the Small Business Tax Relief Act of 2009.  "This legislation 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," Grassley said.

Several provisions in Grassley's bill are under consideration for inclusion in a small business tax relief bill under development in the Senate.  The National Federation of Independent Business strongly supports the Grassley bill, writing, "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." 

In addition to his legislative efforts, Grassley has worked and continues to work to educate Congress and the public about the impact of various policy proposals on small businesses.  For example, the President and Democrats in Congress 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.

Proponents say those increases would hit only "wealthy" individuals and only a small percentage of small businesses.  Grassley has explained in numerous speeches on the Senate floor and elsewhere that according to the Joint Committee on Taxation, 47 percent of all flow-through business income would be subject to the tax rate hikes.  This hits small businesses especially hard, because most small businesses are flow-through entities, which are S corporations, partnerships, limited liability companies and sole proprietorships. Grassley frequently uses data from the Joint Committee on Taxation and the Congressional Budget Office, the nonpartisan, official scorekeepers, to underpin his analysis. 

Similarly, during the health care reform debate, Grassley highlighted the cost of various proposals on small businesses, both in terms of their ability to provide health care to their employees and the regulatory burden imposed on them by the new health care regime.

"Just this week, the Treasury Department said hiring by small and mid-size businesses remains stagnant even though large firms have seen an uptick in employment over the last six months," Grassley said.  "If we don't look out for small businesses, we'll be shooting ourselves in the foot and letting down the scores of people who work hard and deserve secure employment."

The Small Business Council of America said it gave the award to Grassley this year "in appreciation and recognition of ongoing, outspoken, and effective legislative efforts on behalf of Small Business in connection with federal tax matters as well as sustained and consistent support of America's private enterprise system."