Washington, DC - Today, Congressman Bruce Braley (IA-01) released thefollowing statement after the vote on the debt ceiling:

"The simple truth is, today's vote is a symbol of everything that's wrong in Washington: partisan brinksmanship, broken promises, backroom deal making, and kicking the can down the road. Enough is enough. I've been demanding a balanced approach of shared sacrifice from both the President and the Speaker since the beginning of the year. I've listened to my constituents at multiple town halls. Iowans know that when times are tough, families don't just tighten their belts, they also take on extra jobs to increase their income. Today's vote squarely places the burden of deficit reduction on middle class families, while demanding nothing of millionaires, billionaires and corporations making record profits. My constituents don't agree with that, and neither can I."

In recent months, Rep. Braley voted to cut nearly half a trillion dollars from the current budget:

He called for an immediate withdrawal of our troops in Iraq and Afghanistan, which would save over $1 trillion dollars.

He opposed the invasion of Libya, which has cost taxpayers over $700 million dollars in our 5 months of involvement.

He fought for legislation to end waste, fraud and abuse in Medicare, which would save up to $700 billion.

He opposed the Bush tax cuts,which have already cost over $1.8 trillion dollars. And last December he opposed the extension of President Bush's tax cuts to the wealthiest Americans. By not ending tax cuts for the wealthiest, we will spend another $700 billion over the next decade.

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Senator Chuck Grassley issued the comment below regarding his vote against the deal with the White House to increase the federal debt limit.

"I voted against the plan because it delays meaningful spending reductions, fails to address entitlement spending in a way that will save the programs for future generations of retirees, and leaves open the possibility of tax increases.

"In fact, the White House said yesterday it will seek to increase taxes in the second part of the deal.  Tax increases are the wrong answer for a struggling economy, and recent history proves that higher taxes don't go to the bottom line.  Instead, they're a license for Washington to spend even more.  Since World War II, for every dollar in new taxes, the government has spent $1.17.

"The federal debt will continue to climb another $7 trillion under this deal, and the promise of cuts down the road, rather than making those decisions now, is more of the same from Washington.  Congress can always change the promises made in this deal, and the sad reality is that Congress has a record of abandoning fiscal responsibility when it's time for tough decisions.  Putting the decisions off, as this deal does, raises skepticism about whether the commitment to dollar-for-dollar reductions will be met along with this historically high debt-limit increase, especially considering the fact that until Memorial Day, the President wanted to increase the debt limit with no strings attached.

"Remember also that in February, President Obama submitted his budget proposal to Congress that refused to address looming deficits and debt.  His budget would have added another $13 trillion to the national debt over ten years.  Then the President delivered a speech in April that magically found $4 trillion in spending cuts.  So, in just a matter of weeks, President Obama found $4 trillion in spending that no longer needed to be spent.  The American people have to wonder how Washington can be serious about budgets and spending if the President, in a matter of weeks, can find $4 trillion of spending that was of national importance on February 14, but is no longer necessary on April 13.  It's this type of behavior that leads people to be cynical of Washington and the federal government.  It's little wonder that lofty commitments from Washington are most often received in Middle America as just more empty promises and political rhetoric.

"During the last five years, debt-limit increases have averaged $800 billion for six months, so this $2.4 trillion increase is an extraordinary expansion of government debt, just the opposite of what we ought to be doing.  I wish this plan was proportional to the size of the problems we face."

Q.  What are tax expenditures, and why are they in the news?

A.  Tax expenditures are defined in the Congressional Budget Act of 1974 as lost federal income due to provisions in the tax code that exempt or reduce taxes for certain groups, products or activities.  Tax expenditures were intentionally passed by Congress for certain policy goals, such as encouraging employer-provided health insurance or home ownership, so they are also called tax incentives.  Since they help achieve goals set by Congress, they are not loopholes. The debate in Washington over reducing the federal debt has invoked whether certain tax expenditures should be ended.  Stopping these tax expenditures would raise money for the federal Treasury but also would take away tax incentives that are used by tens of millions of middle-income taxpayers.  There's also controversy over whether the amount of revenue raised by ending some of the tax expenditures is overstated and whether the revenue gained would be worth ending policies that support widely desirable behavior, like pension plan contributions.  

Q.  What are the biggest tax expenditures?

A.  An analysis by Senator Orrin Hatch of Utah, who serves as Ranking Member of the Senate Committee on Finance, which is responsible for tax legislation, determined these top 10 largest tax expenditures.  The analysis was based on data from the nonpartisan Joint Committee on Taxation, Congress' official estimator for the cost of tax legislation.

Exclusion for Employer-Provided Health Insurance.
Representing 13 percent of tax expenditures, it's the single largest tax expenditure.  To do away with this would threaten access to health care for families and individuals that have health insurance through their employers.

Home Mortgage Interest Deduction.
Having helped millions of Americans achieve home ownership, this expenditure accounts for nine percent of all tax expenditures.

Preferential Rates for Dividends & Capital Gains.
Take away this tax expenditure which accounts for eight percent of tax expenditures, and the rate on dividends will almost triple in less than 18 months, and the rate on capital gains will go up 59 percent, also in less than 18 months.  This will discourage investment in stocks and bonds.

Exclusion of Medicare Benefits.
Accounting for seven percent of tax expenditures, its elimination would increase taxes seniors' Medicare benefits.

Pre-Tax Treatment of Defined Benefit Pension Plan Contributions.
This is a tax benefit that reduces the cost for those workers who save for retirement.  It represents six percent of tax expenditures.

Earned Income Tax Credit. 
Designed for low-income people, the Earned Income Tax Credit accounts for five percent of all tax expenditures.

Deduction for State and Local Taxes. 
This deduction would hit high-tax states hardest, driving up the marginal rate of taxpayers who take this deduction by as much as 35 percent.  It represents five percent of all tax expenditures.

Pre-Tax Treatment for Contributions to a 401(k).  
At four percent of tax expenditures, this is a significant incentive to families and individuals to save for retirement.

Exclusion of Capital Gains at Death.  
If this one goes, death would be taxed twice.  First, the decedent's estate might get hit with the death tax.  Then the decedent's heirs would be subject to tax again on the gain embedded in any inherited asset, should they decide to sell it.  This accounts for four percent of tax expenditures.

Deductions for Charitable Contributions. 
This is the tax benefit for donations to charities other than education and health care institutions, including donations to religious institutions.  This charitable deduction represents four percent of tax expenditures.

Source: Joint Committee on Taxation, "Estimates Of Federal Tax Expenditures For Fiscal Years 2010-2014," December 21, 2010. http://www.jct.gov/publications  

Q.  Are tax expenditures the same as tax loopholes?

A.  Despite some political arguments to the contrary, tax expenditures are neither spending nor tax loopholes for millionaires, yachts or corporate jets.  Less than one-tenth of one percent of all tax expenditures benefit corporate jet owners.  Tax expenditures are used by many families and individuals.  Consideration of them by Congress should be done in a comprehensive tax reform debate to make sure the tax code is made more efficient and no more burdensome than it is today.

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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