Prepared Statement of Ranking Member Chuck Grassley  

Senate Committee on the Judiciary  

Subcommittee on Immigration, Refugees and Border Security  

"The Economic Imperative for Enacting Immigration Reform"  

Tuesday, July 26, 2011    

For years, our country has struggled to find a way forward on immigration reform.  Since the debate reached its peak in 2007, our economy has experienced turmoil comparable to the Great Depression.  Americans are out of work, families are being foreclosed on, and businesses are suffering.  I agree we must do all we can to improve our economic situation.  However, I have concerns with the notion that increasing immigration levels and enacting legalization programs is the answer to the current economic downturn.  

We know it's unlikely that this Administration will push immigration reform in the next year and half.  However, it's my firm belief that we can find agreement on reforms for high skilled workers - and this hearing is a good first step in starting the discussion. 

I've spent a lot of time and effort into rooting out fraud and abuse in our visa programs, specifically the H-1B and L visa programs.  I have always said these programs can and should serve as a benefit to our country, our economy and our U.S. employers.   However, it is clear they are not working as intended, and the programs are having a detrimental effect on American workers.  Thankfully, the H-1B visa program has an annual cap as a stop-gap measure. But frankly, we need to act immediately to enact true reforms.  For this reason, and for many years, Senator Durbin and I have worked on legislation to close the loopholes in the programs.  Our legislation would ensure that American workers are afforded the first chance to obtain the available high paying and high skilled jobs.  We have worked together to make sure visa holders know their rights.  We have worked to increase oversight by the executive branch and have advocated for the Departments of Labor and Homeland Security to implement tighter controls.  The bill we have written would strengthen the wage requirements, ridding the incentives for companies to hire cheap, foreign labor.  Our bill would require companies to attest that they have tried to hire an American before they hire a foreign worker.  

The attention that Senator Durbin, I and others have put on H-1B visas has had an impact.  Our efforts have increased scrutiny and have forced bad actors to find other ways to enter, live and work in the United States under false pretenses.   The increased oversight of the H-1B program, for example, has caused businesses to "think creatively" to get around the program, using both the L and B-1 visa to bypass the requirements and protections under the H-1B visa program.  

On February 23, 2010, an employee of Infosys filed a complaint alleging that his employer was "sending lower level and unskilled foreigners to the United States to work in full-time positions at Infoysys' customer sites in direct violation of immigration laws."  The complaint further states "Infosys was paying these employees in India for full-time work in the United States without withholding federal or state income taxes."  Infosys, one of the top ten H-1B petitioning companies, has worked to "creatively" get around the H-1B program by using the B-1 business visitor visa in order to bring in low-skilled and low-wage workers.  However, B-1 visa holders are not able to receive salary or income from a U.S. based company and thus, Infosys is being accused of visa fraud. That plaintiff, Jay Palmer, has written a statement to be placed into the record.  The courts will decide if the activities of Infosys were illegal.  But I can definitely say that their actions don't comport with the spirit of the law.  

In addition to using the B-1 visa to get around the H-1B, companies are looking at ways to increase their use of the L intercompany transfer visa.  The L visa program has no annual cap.  It does not hold employers to wage requirements.  It provides flexibility and allows businesses to bypass the red tape that comes with other work programs.  On March 29, 2011, I wrote to the Acting Inspector General at the Department of Homeland Security with my concerns on the L intracompany transferee visa program and requested the office investigate the fraud and abuse.  The last review of the program was completed over five and a half years ago with recommendations that have yet to be implemented.  Serious loopholes continue to exist and be exploited to the detriment of the system. 

That brings me to another program that is undermining American workers, and one that gets very little attention from bureaucrats and investigators.  The Optional Practical Training - known as OPT - is a program that was created entirely through regulation.  There's nothing in the Immigration and Nationality Act that allows the executive branch to run the OPT program.   

But, it's high time that we start taking a closer look at the impact this program has on American students and workers.  Originally, OPT was created to give foreign students the ability to further their knowledge before returning to their home country.  However, today it is being used as a bridge to an employment visa or other immigration status.  Students are allowed to work in any field for an extra 12 to 29 months.  There is no limit on how many can apply for OPT, and more importantly, it is the schools and universities that principally administers the program.  There are very few checks and balances when it comes to the schools and employers.  The Department of Homeland Security may not even know where the student is being employed, creating a substantial national security risk.  More scrutiny must be placed on this program.  This past January, Senator Durbin and I wrote to Secretary Napolitano in regards to this, and other immigration issues.  The Secretary in response provided figures which were quite surprising.  U.S. Citizenship and Immigration Services approved 95,259 OPT petitions in fiscal year 2010 alone.  She did not, however, give any reassurances that the Department would add any safeguards nor will they commit in this economy to reduce the amount of time these foreign students are working in the U.S.  I will continue to press the Department for this much needed reform to protect American students and workers.    

Finally, I'd like to address the idea being pushed by many immigration advocates and some members in the House of Representatives.  As part of the solution to America's immigration problem, some policy makers have proposed the idea of giving immigrants a green card upon graduation.  In their opinion, this would prevent the loss of all the resources put into these students if they are forced to return home.  While it is important to keep the best and the brightest, getting a degree from a U.S. institution should not equate to a fast track to citizenship for all.  Should this happen, the demand for enrollment in U.S. universities by international students would only increase and further erode the opportunities for American students.  

America should continue to be the land of opportunity for those who wish to seek it.  We have a rich history of multiculturalism which has helped us become the strong, proud country we are today.  Our excellent system of higher education boasts many of the best scholars and researchers in their fields.  This system is one of our best resources and should be made available to all American students.  For more and more students, this resource is often not available to them.  As the amount of international students continues to rise, access to this precious resource for American students is lost.  Attaching a green card to each international student's diploma would only accelerate this process and crowd more and more American students out of a chance to achieve their dreams.      

I will continue to push for more reforms in our immigration system to ensure Americans are the number one priority and are not displaced.  I thank the Chairman and Ranking Member for their courtesies in scheduling this hearing and I look forward to the testimony from our panels of witnesses.    

 

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New Laws Will Boost Emerging Technologies and Create Illinois Jobs in Technology-Based Fields

CHICAGO - July 25, 2011. Governor Pat Quinn today signed legislation to support the development of the technology industry in Illinois and create jobs. Senate Bill 107 strengthens Illinois' position to attract technology-based businesses by boosting the state's investment in them. The new law was one of the Governor's priorities during the spring legislative session, and it represents a major component of his aggressive agenda to support emerging technologies in Illinois, creating the jobs of today and tomorrow.

"Creating jobs throughout Illinois is one of my top priorities, and targeted investments in the technology industry will create jobs today while strengthening our role in the global economy of tomorrow," Governor Quinn said. "This important new law allows us to invest in the companies that invest in Illinois, creating high-paying jobs for our skilled workforce." 

Senate Bill 107, sponsored by Sen. Dan Kotowski (D-Park Ridge) and Rep. Daniel Biss (D-Evanston), allows the state to build upon the success of its Technology Development Account (TDA I). The TDA I allowed the state to invest up to 1 percent of its investment portfolio in venture capital firms that invest in technology-based businesses - those providing computer, IT, laboratory or experimental services and products - that are interested in locating or expanding in Illinois.

The new law allows the state to invest up to 2 percent of its portfolio in venture capital firms. This allows to state to invest an estimated $150 million into venture capital funds, generating an estimated $300 million of venture capital investment into Illinois companies. Companies may use the funding for activities such as research and development, marketing new products and workforce expansion.

"The highest priority in Illinois is putting people back to work," Sen. Kotowski said. "Senate Bill 107 will help create a healthy business climate that ensures economic vitality and spurs job growth. Encouraging the development of innovative Illinois?based businesses will truly benefit our state. I have been pushing for this legislation for the last three years because I believe these businesses can lead to a stronger Illinois economy."

"I am proud to be the Chief House Sponsor of Senate Bill 107," Rep. Biss said. "It is not often that we have the opportunity to pass legislation which simultaneously earns money for the taxpayers and creates good high wage jobs. But this legislation does just that by creating an excellent investment opportunity for the state, while filling a critical venture capital gap that will allow Illinois entrepreneurs to start successful high-tech businesses."

According to the Illinois Venture Capital Association, the state's investments into Illinois venture capital firms under the original TDA I, starting in 2002, allowed those firms to invest $115 million in 37 Illinois companies. That in turn attracted more than $450 million in additional private investment. Companies that received TDA I investments created approximately 1,200 direct jobs and around 2,700 indirect jobs in Illinois.

Governor Quinn today also signed legislation that builds upon his commitment to supporting Illinois' technology-focused entrepreneurs. House Bill 1876, sponsored by House Minority Leader Tom Cross (R-Oswego) and Sen. Linda Holmes (D-Aurora) creates the Higher Education Technology Entrepreneur Center Act. The law enables the board of trustees at the state's public universities and community colleges to start a technology entrepreneur center. The centers must provide students with the resources to allow them to develop innovative concepts into goods or services they can market. The new law builds on a successful program that was established at the University of Illinois at Urbana-Champaign.

"It is so important to encourage entrepreneurs and innovation in our state," Rep. Cross said. "We have to constantly be working on legislation that will help our residents explore, cultivate and invent ideas that will grow new businesses and jobs in Illinois."

Both new laws go into effect immediately.

Today's bill signing ceremony took place at Chicago TechWeek 2011, a week-long conference and trade show that celebrates the technology, web and interactive communities. The event gathers 2,000 entrepreneurs, business leaders and innovators from across the nation to connect with the latest web and mobile technologies.

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Getting the U.S. economy back on track can be achieved by unleashing America's "vibrant entrepreneurialism," according to the President.  Taking him at his word, I agree the United States' free enterprise system has been "the greatest force for prosperity the world has ever known."

Yet, for the last two years, joblessness and deficits have climbed under the flawed theory that taking money away from the private sector grows jobs and creates wealth.  In 2009, the White House threw taxpayers under the bus with a failed effort to spend tax dollars and boost the U.S. economy.  The government stimulus package added hundreds of billions to the taxpayer's tab for what the President called shovel-ready projects that would save and create jobs and keep the unemployment rate below eight percent.  Yet, today, nine-percent unemployment persists.  And, an irresponsible pattern of reckless spending and excess has put the full faith and credit of the United States on the line.

Washington cannot borrow-and-spend our way to prosperity.  It creates a chilling effect on the free enterprise system.  Like a magician pulling a rabbit from a hat, it makes an illusion.  The trouble is, the other hand is reaching for your wallet because government doesn't create wealth.  It only consumes wealth.  In the real world, we can't out-innovate, out-educate and out-build the rest of the world if we are drowning in debt.  When the federal government borrows money, it siphons money out of the economy, crowding out affordable capital for start-ups and increasing the future burden on taxpayers.

That's why it's so important to cut back on government spending, keep Washington living within its means and let the American people create, earn and enjoy their prosperity.  Just after the new year began, and with a lot of fanfare, the President ordered a top-to-bottom regulatory review.  He ordered every federal agency to examine the red tape that chokes job growth and stifles risk-takers.  Just imagine if red tape were keeping the next American success story from launching a business, finding a cure or inventing the next-generation biofuel.  Revenue-hungry policymakers need to appreciate that burdensome regulations shrink the economic pie, stunt job creation and harm U.S. competitiveness.  Clearing the way for individuals and businesses to succeed and thrive will expand the economic pie and help Uncle Sam pay down the debt and pay the nation's bills.

The President's executive order sure sounded like a refreshing change.  But six months later, scant progress seems to have been made to remove outdated regulations that make our economy less competitive.  In fact, right after the President's order, officials at the Environmental Protection Agency were quoted in news stories stating that they were confident that none of the current or pending rules would need to be modified. 

The attitude of the EPA makes it difficult to believe in the administration's ability to strike the proper balance between protecting public health and safety and protecting small business owners, farmers and entrepreneurs from burdensome regulations and paperwork.  For years I've been fighting the EPA's proposed rule that would apply absurd federal regulations on the amount of field dust kicked up by a farmer's combine during the busy harvest season.  The cost and inconvenience to a farmer to comply with such a ridiculous regulatory burden - not to mention the potential for a neighbor's lawsuit, should "coarse particulate matter" blow across the property line - is inconceivable.  What's next?  Malpractice insurance for farmers to protect against the risk of dust floating through the countryside during harvest?

Iowans can be sure I will continue to try and knock some common sense into the EPA.  It is possible.  After an outcry, the EPA in April exempted dairy farmers from complying with a federal rule aimed at preventing oil from spilling into U.S. waterways.  Sounds puzzling because it was a real head-scratcher.  The EPA rule originally included milk containers under the "Oil Spill Prevention, Control and Countermeasure Rule."

Simplifying restrictive regulations would help refuel the U.S. economy without adding to the national debt.  Thousands of rules infiltrate every nook and cranny of American life and commerce.  Injecting common sense into the regulatory process can help wipe out job-killing rules that are preventing the U.S. economy from finding the on ramp.

During the economic downturn, the Obama administration has issued hundreds of new rules that add even more uncertainty to job creators in the private sector with thousands more still in the pipeline to implement overhauls of the U.S. health care and financial systems.

Let's hope the President makes good on his call for a regulatory system that strikes a better balance between protecting the public good and promoting America's prosperity.

Friday, July 22, 2011

Mr. President, on August 2nd, our nation will be unable to borrow money to meet our current obligations.  We've known for a while that this time was coming.  Our annual deficits have been near $1.5 trillion for the past two years, and will be that large this year.  With deficits of that size, no one should be surprised that we've hit the debt ceiling. 

Which raises the question:  What has the President offered to confront this looming crisis?  What has the Senate Democratic Majority done to address our deficit crisis?  Well, the answer is simple.  Not much.  Last year, President Obama virtually ignored his own deficit-reduction commission.  This year, he offered a budget for 2012 that would increase spending, increase taxes and add trillions to our debt.  His budget was so ill-conceived and out of touch that it was defeated here in the Senate by a vote of 97-0.  Not a single Senator voted for President Obama's budget.  Every member of the President's party said no to his budget.

For most of this year, President Obama said we should raise the debt ceiling without taking any measures to address our long-term deficits and debt.  It was the position of this administration that Congress should simply rubber stamp another debt ceiling hike with no plan in place to reduce our deficits.  That plan was voted on in the House and was soundly rejected.  All Republicans and nearly half of the Democrats in the House voted against increasing the debt ceiling without deficit reduction.

The President then gave a budget speech in April.  I presume he recognized the inadequacy of his budget proposal.   He outlined a budget framework that would reduce budget deficits by $4 trillion over 12 years. But he still hasn't presented an actual budget to go with it.  The Director of the Congressional Budget Office, Mr. Elmendorf, was asked if he could estimate the budget impact of this new framework.  The CBO director state clearly, "We don't estimate speeches.  We need much more specificity than was provided in that speech for us to do our analysis."

We've heard a lot from the White House about the need to come up with a plan, but the White House itself has never offered a single debt-ceiling proposal for a vote.  And the Senate Democratic Leadership has also seriously shirked its responsibility.  They haven't put forward a budget for more than 800 days.  Every family in America that works hard and sacrifices to pay their bills ought to be ashamed at the failure of the U.S. Senate to offer a budget.

In sharp contrast, members of the House fulfilled their responsibility and passed a budget earlier this year.  The Democrats have done nothing with it but demagogue it.  While they can't find time to compile their own budget, they've sure found time to make speeches about the House budget.  While members on the other side come to the floor to oppose and demagogue the Cut, Cap and Balance plan, they've offered no plan of their own.  While there is now a framework from the so-called gang of six, their plan also lacks any specificity.

Perhaps that's the political strategy the other side has chosen.  Voters and the American people can't be upset with a position you've taken if you haven't taken any.  This strategy may be politically expedient, but it will drive our economy and our country off a cliff.  The strategy of placing a higher priority on the next election rather than the economic and fiscal situation facing our county is how we got in this mess. 

Based on the lack of proposals put forth by the other side, one could assume that they're perfectly content borrowing 40 cents for every dollar we spend.  Are they pleased with deficits of $1.5 trillion annually?  They must be, because they haven't offered a plan to reduce these deficits.

On top of that, they have argued for tax increases.  They must believe we have a revenue problem.  According to their arguments, the American people are not handing over enough of their money to satisfy the needs of Washington to spend.  The reason the economy isn't growing and jobs aren't being created is because Washington isn't spending enough money.  Remember, just two years ago they passed the $800 billion so-called stimulus as a means to keep unemployment below 8 percent.  So, we borrowed the money and spent it on government programs. 

And where is the U.S. economy today?  Unemployment is at 9.2 percent.  More than 14 million Americans are out of work.  And now the national debt is more than $14.3 trillion.  This experiment proved that government spending does not stimulate private sector job growth.  Government doesn't create wealth.  Government consumes wealth.  The only jobs created by the government are government jobs. They don't add value to the economy; they are a cost to the economy.

The fact is, we're in this hole today because of our spending problem.  Historically, spending has averaged about 20 percent of our gross domestic product.  Today, and in recent years, spending has been near 25 percent of gross domestic product.  This level of spending cannot be sustained, particularly when revenue has historically been around 18 percent of gross domestic product.

For my colleagues who think we can reduce deficits by increasing taxes, you need to understand that it doesn't work.  Professor Vedder of Ohio University has studied tax increases and spending for more than two decades.  In the late 1980s, he co-authored, with Lowell Galloway also of Ohio University, a research paper for the congressional Joint Economic Committee that found that every new dollar of new taxes led to more than one dollar of new spending by Congress.  Professor Vedder has now updated his study.  Specifically, he found that "Over the entire post World War II era through 2009, each dollar of new tax revenue was associated with $1.17 in new spending."

History proves tax increases result in spending increases.  We know that increasing taxes is not going to reduce the deficit.  Instead of going to the bottom line, tax increases are a license for Washington to spend even more.

History also shows that tax increases don't increase revenues.  Everybody thinks that if you raise the marginal tax rates, you will bring in more revenue. But the taxpayers, workers, and investors of this country are smarter than we are.  Regardless of the rate, over the past 40 years, revenue has averaged about 18 percent of gross domestic product.  Higher tax rates just provide incentives for taxpayers to invest and earn money in ways that reduce their tax liability. 

You cannot tax your way out of this problem.  We have a spending problem, not a revenue problem.  That's why I'm supporting the only plan that has been put forth to address our deficit and debt problem.  The Cut, Cap and Balance plan passed the House with bipartisan support from 234 members.  This plan is the only plan offered to cut spending in the near term.  We need to halt and reverse the trend of the last two years when government spending increased by 22 percent, not even counting the failed stimulus program.  It will also impose budget caps to get our spending down to a manageable level compared to our gross domestic product.  Finally, it would impose a balanced budget amendment to our Constitution.  It only makes sense to impose a requirement that we live within in our means.  Washington proves again and again that it needs this kind of discipline.

I'd say to my colleagues, if you don't support this plan, then offer your own plan.  You know the debt limit must be increased. But you also know we must take action to reduce the future levels of deficits and begin to bring our debt down.  Where is your plan to do that?  Where is your budget resolution?  How will you meet these responsibilities of elected office? 

The trajectory of our debt is alarming.  It will soon undermine our economy and our economic growth.  If we do nothing, our children and grandchildren will have fewer economic opportunities than we have had.  This is a moral issue.  Without a plan to put our fiscal situation on a better path, the next generations will have a lower quality of life than the one we've experienced.  We can't let that happen. 

We must take action to correct our course.  I urge my colleagues to support the Cut, Cap and Balance plan.

Appointments Continue Implementation of Workers' Compensation Reform Law

CHICAGO - July 20, 2011. Governor Pat Quinn today announced 12 appointments to the Workers' Compensation Advisory Board. Today's action continues implementation of the historic workers' compensation reforms signed into law by the Governor last month. The Advisory Board will make recommendations on the appointment of arbitrators, among other duties. 

Effective immediately, Governor Quinn named Mitchell W. Abbett, Richard Aleksy, Aaron Anderson, Michael Carrigan, John Carpenter, Mark Denzler, Phillip Gruber, David Halffield, William Lowry, Mark Prince, Sean T. Stott and David Vite to serve as members of the Workers' Compensation Advisory Board.

"Each of these appointees brings the knowledge and experience to support us in reforming Illinois' workers' compensation system," said Governor Quinn. "Our efforts to overhaul and modernize workers' compensation are critical to improving our state's business climate. I want to thank these individuals for their commitment to our businesses and our workers, and I look forward to the board's recommendations."

In June, Governor Quinn signed House Bill 1698, a comprehensive overhaul of Illinois' workers' compensation system. The reforms are expected to save Illinois businesses between $500 and $750 million dollars, while continuing protections for injured workers. The reform package also includes a major overhaul of Illinois' troubled Workers' Compensation Commission. 

In addition to making arbitrator recommendations, the Workers' Compensation Advisory Board also assists the Illinois Workers' Compensation Commission (IWCC) in formulating policies, setting priorities and developing administrative goals. The chairman of the IWCC serves as the ex officio chairman of the Advisory Board.

The Advisory Board consists of 12 members appointed by the Governor with the advice and consent of the Senate. Members are unpaid, but may have expenses reimbursed. Six board members represent employees, and six represent employers; the structure is designed to balance the concerns of businesses, while ensuring critical protections for workers.

Profiles of the new Advisory Board members are attached.

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Mitchell Abbett has over 20 years of experience in workers' compensation, human resources, and in developing successful policies concerning health and safety in the workforce.  Mr. Abbett is currently the human resources and safety manager at Holten Meat Inc. Previously he worked as safety and training manager at The P.D. George Company, director of safety and insurance for the city of Granite City, a claims adjuster for Crawford Company and a personnel safety coordinator at Lanter Courier Corporation.

Richard Aleksy is a partner at Corti, Aleksy & Castaneda, P.C. Mr. Alesky has served as president and director of the Workers' Compensation Lawyers Association, and has been published extensively on workers' compensation law.

Aaron Anderson has been an employee-class representative for the Illinois Workers' Compensation Commission Advisory Board since 2009. He is currently the director and representative for the Painters District Council No. 30 in Aurora. Mr. Anderson has health and safety certifications from a number of organizations including the International Union of Painters and Allied Trades, U.S. Environmental Agency, the American Red Cross and OSHA.

Michael Carrigan is the president of the Illinois AFL-CIO. Mr. Carrigan brings 30 years of experience with labor organizations, and first-hand knowledge of injured workers' experiences within the workers' compensation system. He has served on the Illinois Workers' Compensation Commission Advisory Board since 2005.

John Carpenter is the senior vice president of public policy for the Chicagoland Chamber of Commerce. Mr. Carpenter's extensive business background includes work as vice president of corporate affairs for American Airlines, served on the boards of Fort Worth Chamber of Commerce, the Dallas Convention and Visitors Bureau, the Midwest Board of Directors of the National Conference of Community & Justice, and the Board of Directors of the World Affairs Councils of America.

Mark Denzler is currently the vice president and chief operating officer at the Illinois Manufacturers' Association.  Mr. Denzler has also served the association's Illinois government affairs specialist, director of government affairs, and a legislative analyst.

David Halffield is the vice president of Sears Holdings Management Corporation and specializes in overseeing risk management and workers compensation claims. Mr. Halffield has also had past experience as the assistant director of casualty claims services at the Midwest Region of Aon Risk Services, a claims insurance manager at Chicago Bridge and Iron, and as a claims adjuster and supervisor at Liberty Mutual Insurance Company.

Phillip Gruber is the general vice president for the International Association of Machinists and Aerospace Workers Union. Mr. Gruber has been a member of the International Association of Machinists and Aerospace Workers Union Local Lodge 688 since 1972, and has served on the Workers' Compensation Advisory Board since 2007. 

William Lowry is a managing shareholder at Nyhan, Bambrick, Kinzie and Lowry, PC. He is a member of the Workers' Compensation Lawyers Association, and has concentrations in trial and appellate workers' compensation and employer liability practice. He is the author of several articles on workers' compensation law, and he lectures throughout Illinois.

Mark Prince has been part of the Prince Law Firm in Marion, Illinois since 2004, representing clients that have been harmed on the job due to negligence or intentional misconduct. He has been awarded the William J. Harte award for his amicus curiae briefs, and he has lectured at multiple legal education seminars on the rights of injured people.

Sean Stott has 15 years of experience analyzing the Workers' Compensation Act as the director of governmental affairs for the Laborers' International Union of North America. He has also had prior experience with unions and workers compensation through his position as the legislative director for the Illinois AFL-CIO.

David Vite is currently the president and CEO of the Illinois Retail Merchants Association and has served for two years on the Board of Directors and Executive Committee of the National Retail Federation. He has served on the Employment Security Advisory Board since 1983, where he is the longest serving member.

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Washington, DC - Today, Congressman Bruce Braley (IA-01) released the following statement regarding the 'Gang of Six' deficit reduction plan:

"As details emerge, I'm very pleased to see that thoughtful, bipartisan discussions have resulted in a compromise that could address our nation's deficit and keep the very real risk of default at bay. While many politicians in Washington have done their best to claim that default is not a real possibility - others have sat down, rolled up their sleeves and worked together to ensure our nation does not default on our obligations. This proposal will provide immediate deficit reduction, finally fix a broken payment system for Iowa's doctors, and abolish the Alternative Minimum Tax, which unfairly penalizes middle class families.  

I look forward to analyzing this proposal and moving the country away from default, and back on track towards economic recovery."

Office of Congressman Bruce Braley (IA-01)
1727 Longworth House Office Building
Washington, DC 20515
(P) 202.225.2911
(F) 202.225.6666

Leucadia Project Will Boost Regional Economy;

Provide Long-Term Price Certainty to Consumers

CHICAGO - July 13, 2011. Governor Pat Quinn today signed legislation that will help create Illinois' first coal gasification plant and substantially reduce carbon emissions, while creating 1,500 jobs and saving consumers more than $100 million over the next several years. The new law follows principles the Governor outlined in the spring legislative session requiring all energy projects to protect consumers, create jobs and safeguard our environment.

"Projects that create jobs and protect consumers strengthen our continued economic recovery," said Governor Quinn. "This project protects Illinois consumers, while continuing our position as a leader in clean energy technology by utilizing home grown resources to create the jobs of today and tomorrow."

The Chicago Clean Energy project is a $3 billion coal gasification project that will be located on a brownfield site within the Chicago-Calumet Industrial Corridor at 115th Street and Burley Avenue, formerly the LTV Steel plant, on Chicago's southeast side.

The project will utilize, for the first time in Illinois, an advanced clean coal process known as gasification. The chemical process allows production of substitute natural gas from Illinois coal and petroleum coke without burning the coal or petroleum coke. Carbon dioxide and other harmful emissions are captured as part of the process and then eventually sequestered underground. Experts view the process as a lynchpin to development of new coal facilities with sharply reduced greenhouse gas emissions.

Chicago Clean Energy expects to generate more than $10 billion in economic output for Illinois and create tens of thousands of jobs, including approximately 1,100 construction jobs, 200 permanent jobs and 165 additional mining jobs. The plant will use at least one million tons of Illinois coal per year.

"We are grateful to Governor Quinn for his foresight in seizing an opportunity to make Illinois a leader in clean energy technology, and in securing clean energy jobs for the state," said Tom Mara, executive vice president of Leucadia National Corporation, the company behind the Chicago Clean Energy project. "We are committed to working closely with local leaders and community members to make this project a tangible benefit to Chicago and the entire state of Illinois."

The final legislation was revised from a previous measure considered earlier this year to include input from the Governor, the Environmental Law and Policy Center, the Citizens Utility Board, local organizations near the project site and other stakeholders. The bill now proportionally allocates the natural gas produced at the facility to Illinois' gas utilities. It also includes a number of consumer protections, including a rate cap, a robust reserve account that fairly aligns the interests of the developer with those of the consumer, and a revised system to share savings and potential revenues with consumers. 

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Q.  What is the debt ceiling and when will the federal government reach it? 

A.  The debt ceiling is the amount of debt the federal government can legally borrow from the public and government trust funds.  The ceiling is set by law and is currently $14.294 trillion.  On May 16, 2011, the Treasury Secretary said that the government will reach the current debt ceiling by August 2, 2011.

Q.  Will Social Security recipients receive their checks if the debt ceiling is not increased by August 2?

A.  After August 2, Social Security benefits are next scheduled to be paid on August 3.  The U.S. Treasury has the authority and assets to pay Social Security benefits if the debt ceiling is not increased before August 2.  The government continued to pay Social Security benefits when the debt limit was reached in 1985 and again in 1996.

Q. How will benefits be paid if the government can't borrow more money?

A.  The U.S. Treasury has two ways to make Social Security payments if the debt ceiling is not raised by August 2.  The first is with general tax revenues.  Regardless of U.S. borrowing authority, tax revenues continue to flow into the U.S. Treasury.  In August, the Treasury is likely to receive revenues around $172 billion and have bills due around $306 billion.  The President has the discretion to determine how the money is spent.  Whether or not Social Security would be one of his top priorities, there are special safeguards for Social Security payments.  The federal government is required to invest the payroll taxes going into the Social Security Trust Fund in special obligation bonds. These special obligation bonds are debts held by the government instead of the public.  By law, these bonds can be exchanged for public debt in order to secure infusions of cash, if needed, to continue paying Social Security benefits.  As a result, Social Security Trust Fund assets of $2.6 trillion ensure that Social Security benefits can be paid until the debt limit is increased or the federal debt is otherwise reduced. 

July 15, 2011

WASHINGTON - Sen. Chuck Grassley of Iowa today gave a statement on the Senate floor explaining that tax increases historically have not reduced budget deficits, only fueled more federal spending.

Video of his speech and the speech text follow here.

Prepared Remarks of U.S. Senator Chuck Grassley

Senate Floor Debate on S. 1323, the Millionaires Tax Resolution

Tuesday, July 12, 2011

As the President and Congressional leaders continue to debate how best to reduce the deficit, it seems that my friends on the other side of the aisle continue to demand tax increases as part of any deal. For sure, any discussion on reducing the deficit should include a discussion on tax reform.

However, what is being discussed currently is tax increases on targeted groups supposedly because they can afford it. This is not tax reform.

Professor Vedder of Ohio University has studied tax increases and spending for more than two decades.

In the late 1980s, he co-authored, with Lowell Galloway also of Ohio University, a research paper for the congressional Joint Economic Committee that found that every new dollar of new taxes led to more than one dollar of new spending by Congress.  Working with Stephen Moore of the Wall Street Journal, Professor Vedder updated that research last year and came to the same result. 

Specifically, they found, and I quote, that "Over the entire post World War II era through 2009, each dollar of new tax revenue was associated with $1.17 in new spending."

So history proves tax increases result in spending increases and so we know that increasing taxes is not going to reduce the deficit.

History also shows that tax increases don't increase revenues. This chart here shows that revenue as a percentage of gross domestic product hovered around 20 percent as far back as the post-World War II years.  This chart also shows the highest statutory tax rates for those same years.

During the last years of World War II we had a 94-percent top rate. From 1950 through 1963, the rate hovered around 90 percent.

Then, President Kennedy reduced it to about 70 percent.

It stayed around 70 percent until President Reagan brought it down to 50 percent. As a part of tax reform in 1986, it went down to approximately 30 percent.

Then, the first President Bush reneged on his promise to not raise taxes and the marginal rate went back up to almost 40 percent.  It stayed there until the tax relief enacted under the second President Bush.

During all of these tax increases and decreases, the amount of revenue as a percentage of gross domestic product stayed the same.

So, everybody thinks that if you raise the marginal tax rates, you will bring in more revenue. But the taxpayers, workers, and investors of this country are smarter than we are. We've had a 93-percent marginal tax rate -- then 70 percent, 50 percent, 30 percent, 40 percent and now a 35-percent marginal tax rate. But, regardless of the rate, we get the same amount of revenue.  Higher tax rates just provide incentives for taxpayers to invest and earn money in ways that result in the least amount of taxes paid.

In other words, taxpayers have decided they are going to give us politicians in Washington just so much of their money to spend.

And, it works out to be about 18 percent of gross domestic product.

We ought to have some principles of taxation that we abide by. I abide by the principle that 18 percent of the gross domestic product of this country is good enough for the government to collect and spend. That leaves 82 percent in the pockets of the taxpayers for them to decide how to spend.

This benchmark of 18 percent of gross domestic product is good and it has been consistent throughout recent history. It is a principle we should keep in mind while we debate tax code changes.

There is another principle we should keep in mind.  That is the purpose of the tax laws. Those who support resolutions like the one we are currently debating assume that a key objective of the federal government, through the federal income tax laws, should be to ensure that income is distributed equally throughout the country.  In other words, these folks believe that the federal government is the best judge of how income should be spent.  

Resolutions, like the one we are considering today, assume that the 535 members of Congress know how to best spend the resources of this country.  

It assumes that government creates wealth and should therefore spread it around like they do in Europe.  

In fact, government doesn't create wealth - it consumes it. Only workers and investors and people who invent and people who create, create wealth.  

Yet, as history shows, there is evidence that tax increases lead to more spending and that revenues as a percentage of gross domestic product pretty much stay the same - even when the marginal tax rate is high.  


It would be one thing for me to vote for a tax increase if it went to the bottom line.  

It is another thing to vote for a tax increase that just allows more spending and raises the deficit instead of getting the deficit down.  

The Resolution before us now in the Senate requires us to concede "that any agreement to reduce the deficit should require that those earning more than a $1,000,000 or more per year make a meaningful contribution to the deficit reduction effort." The Resolution does not state that such a "meaningful contribution" would be accomplished through tax increases. But how else would these folks make such a contribution?  

Let me make clear that I do not support this resolution and will vote No on its adoption.  However, I believe it is high time we've had a debate about this issue.   

It is clear that those who support this resolution believe that those earning more than $1,000,000 or more per year are not paying their fair share.  Note, however, that just last year, they believed that a single person who earned $200,000, or a married couple that earned $250,000, wasn't paying their fair share.  

In evaluating whether people are paying their fair share, experts frequently look at whether a proposal retains or improves the progressivity of our tax system.  

Critics of lower tax rates continue to attempt to use distribution tables to show that tax relief proposals disproportionately benefit upper income taxpayers.  We keep hearing that the rich are getting richer while the poor are getting poorer.  This is not an intellectually honest statement as it implies that those who were poor stay poor and those who are rich stay rich.  

In 2007, the Department of Treasury published a report titled "Income Mobility in the U.S. from 1996 to 2005."  The key findings of this study include, and I quote:  

  •  ·          There was considerable income mobility of individuals in the U.S. economy during the 1996 through 2005 period as over half of taxpayers moved to a different income quintile over this period.  
  •  ·          Roughly half of taxpayers who began in the bottom income quintile in 1996 moved up to a higher income group by 2005.  
  •  ·          Among those with the very highest incomes in 1996 - the top 1/100 of 1 percent - only 25 percent remained in this group in 2005. Moreover, the median real income of these taxpayers declined over this period.  
  •  ·          The degree of mobility among income groups is unchanged from the prior decade (1987 through 1996).  
  •  ·          Economic growth resulted in rising incomes for most taxpayers over the period from 1996 to 2005. Median incomes of all taxpayers increased by 24 percent after adjusting for inflation. The real incomes of two-thirds of all taxpayers increased over this period. In addition, the median incomes of those initially in the lower income groups increased more than the median incomes of those initially in the higher income groups.  

Therefore, whoever is saying that once rich, Americans stay rich, and once poor, they stay poor, is purely mistaken. Internal Revenue Service data supports this analysis.  A study of the 400 tax returns with highest income reported over 14 years - from 1992 through 2006 - shows that in any given year, on average, about 40 percent of the returns that were filed were not in the top 400 in any of the other 14 years  

The so-called "shared sacrifice" resolution before us now does not acknowledge these trends.   

It presupposes that anyone making over a $1,000,000 should be contributing more to reduce a deficit that they likely did not create.  The resolution assumes that the folks in this income category have always made more than a $1,000,000, that they haven't paid their dues on their way up the ladder of success and, as a result, should pay a penalty for their current success.  The resolution also assumes that these folks will continue earning what they are earning now.  

As I just noted, however, the Treasury report and IRS tax return data contradict this position. I welcome this data on this important matter for one simple reason: it sheds light on what America really is all about -- vast opportunities and economic mobility.  

Built by people from all over the world, our country truly provides unique opportunities for everyone.  

These opportunities include better education, health care services, and financial security. But most importantly, our country provides people with the freedom to obtain the necessary skills to climb the economic ladder and live better lives.  

We are a free nation. We are a mobile nation. We are a nation of hard-working, innovative, skilled and resilient people who like to take risks when necessary in order to succeed.  

We have an obligation as lawmakers to incorporate these fundamental principles into our tax system.  

During this deficit reduction debate, we have also heard much about "closing loopholes."  Let me just say that if there are, in fact, loopholes to be closed, I would support closing them.   

During my tenure as Chairman and then Ranking Member of the Finance Committee, I worked with colleagues from both sides of the aisle to cut off tax cheats at the pass. 

The American Jobs Creation Act signed into law in October 2004 included a sweeping package to end tax avoidance abuses such as corporations claiming tax deductions for taxpayer-funded infrastructure such as subways, sewers, and bridge leases, corporate and individual expatriation to escape taxes, and Enron-generated tax evasion schemes.     

One of the tax avoidance provisions that the Jobs bill shut down was so-called corporate inversions.  Average workers in America can't pull up stakes and move to Bermuda or set up a fancy tax shelter to avoid paying taxes. Companies that do this make suckers out of workers and companies that stay in the United States and pay their fair share of taxes.  

We also closed loopholes used by individual taxpayers.  The Jobs bill contained a provision that restricted the deduction for donations of used vehicles to actual sales price.  

Prior to that fix, individuals could claim inflated fair market values.  

Then, in the Pension Protection Act, which was signed into law in August 2006, I championed reforms to deductions for gifts of fractional interests in art as well as donations to charities that were controlled by donors.  In both cases, individuals were taking huge deductions for donations without providing equivalent benefits to the charities to which they donated.   

In addition to ensuring that income and deductions are properly reported, I also supported giving the Internal Revenue Service more tools to go after tax cheats.   

The Jobs bill contained provisions that required taxpayers to disclose to the IRS their participation in tax shelters and increased penalties for participating in such tax shelters as well as not disclosing such participation to the IRS.  

I also authored the updates to the tax whistleblower provisions that were included in the Tax Relief and Health Care Act, which was signed into law in December 2006.  There was a whistleblower statute before 2006. But, because of the low dollar thresholds, it encouraged neighbors to blow the whistle on their neighbors.   

The 2006 changes I championed increased the awards for those blowing the whistle on the big fish - individuals and businesses engaged in large-dollar tax cheating through complex financial transactions. The first pay-out under this new provision was made in April of this year and recovered $20 million for the taxpayers that otherwise would have been lost to fraud.  

These are just a few examples of my support for provisions to stop abuses of the tax code to make sure everyone pays their fair share.  If and when we get around to considering comprehensive tax reform, I would look forward to shutting down any other abuses that might still exist.  But first we need to be clear on what a loophole is.  

Itemized deductions may be tax expenditures but they are not loopholes.  Similarly, deductions and tax credits that enable a corporation to zero out its tax liability are not loopholes.  The question of whether deductions and credits should be limited is a question that should be answered in the context of comprehensive tax reform.  Eliminating deductions and credits for certain taxpayers should be subject to extensive review and debate.  And taxpayers shouldn't be targeted for tax increases for political sport, as the Resolution before us does.   

Let me finish by restating my three key points.  First, tax increases don't reduce deficits and they don't increase revenue as a percentage of gross domestic product.  Second, we ought to have some principles of taxation that we abide by.  Limiting revenues to the historical average of 18 percent of gross domestic product should be one while ensuring income equality should not be one.  And last, but not least, it is right to consider tax reform when discussing deficit reduction.  However, the proposals put forth so far, including the current resolution, are political proposals -- not reform proposals.  Tax reform requires Presidential leadership and we have not seen that yet.  

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New Law Simplifies and Streamlines Environmental Permit

Process to Help Illinois' Employers Create More Jobs

CHICAGO - July 12, 2011. As part of his aggressive business agenda, Governor Pat Quinn today signed legislation that will make it easier to open and expand a business in Illinois. House Bill 1297 will help employers create more jobs by streamlining the environmental permitting process in Illinois, establish a plan for long-term funding, and make the Illinois Environmental Protection Agency (IEPA) more efficient.

"Simplifying and speeding up the review process for environmental permits will help Illinois companies begin hiring, investing and producing more quickly," said Governor Quinn. "This law is a great example of my administration's commitment to reducing the burden on Illinois' businesses - both large and small - so they can grow and create more jobs."

Like the recent worker's compensation reform law, HB 1297 was pushed by Governor Quinn to strengthen Illinois' business climate. Sponsored by former Rep. Dan Reitz (D-Steeleville) and Sen. James F. Clayborne, Jr. (D-East St. Louis), House Bill 1297requires the Illinois Environmental Protection Agency (IEPA) to speed up and streamline the permitting process.

Under the new law, IEPA will begin to use more efficient techniques such as online permitting, processing and tracking to make the permitting process easier to navigate for businesses. The new law also allows for expedited permitting, general permitting and permitting by rule for certain classes of facilities. 

"These changes will improve the agency's operations and make it more efficient, while ensuring that environmental standards are never compromised," said IEPA Interim Director Lisa Bonnett.

"For too long, Illinois' environmental regulatory process has hindered economic development and made it more difficult for businesses to compete," said Greg Baise, president and CEO of the Illinois Manufacturers' Association. "We applaud Governor Quinn's support of this new law that modernizes and streamlines the process, allowing businesses to save time and money. It balances environmental and economic interests."

In addition to making the permitting process easier for businesses, the new law also creates an online portal to assist with the permitting process. As a result, companies can begin production and other projects more quickly. The new law also allows the IEPA to create a new, logical funding source based on revenue from products used to lower emissions. By establishing a Registration of Smaller Sources (ROSS) program for smaller entities, a significant number of low-polluting small businesses will be able to register with the agency instead of obtaining a more extensive air permit. This will reduce the burden on small businesses by lowering the fee for emissions, eliminating the need to hire permit consultants and speeding up the approval process.

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