Statement of U.S. Senator Chuck Grassley
Senate Committee on Finance
Executive Session to consider the U.S.-Korea Free Trade Agreement, the U.S.-Panama Trade Promotion Agreement, and the U.S.-Colombia Trade Promotion Agreement
Thursday, July 7, 2011

Let me start by saying I am glad we are here today trying to work out these trade deals.

We all know how important these agreements are.  We can all cite to statistics and data that tell us how much they mean to our economy.  I don't need to recite numbers, because we already know them.  We have heard the same speeches on the benefits of these agreements for four years.  But these deals have been kicked around and delayed over partisan fights.  The American people simply can't afford that anymore.

The Obama administration has finally gotten the message that increasing trade has to be a part of growing our economy.  That is why they are willing to move these deals forward.  But now, as we are on the brink of real action, President Obama has moved the goal-posts once again.  Not only are we told that these deals won't be sent to Congress without a deal on Trade Adjustment Assistance, but we have the unprecedented move of putting TAA into an implementing bill.

There are parts of TAA that I support.  As Ranking Member of this committee, I helped draft some of the reforms Congress passed in 2009.  But the political gamesmanship with these deals by the administration has to stop.  TAA is a spending bill that should be debated and passed on its merits. 

It's a violation of the process to put a program like this in an implementing bill.  But I know that the Chairman has spoken of some flexibility that might be in that, and I've told him that I'd like to help with that process of having a separate and open and fair debate.  I hope we can move forward with that flexibility.  In telling the Chairman that, I'd also like to urge the administration to reconsider its current approach.  Instead, we should come to terms on an agreement for sequencing four separate bills -  including the three separate implementing bills -  And a fourth bill that addresses TAA, trade promotion authority, and the generalized system of preferences.

I was just contacted by an Iowa cattleman who took a trip to Korea less than three weeks ago.  He had a tremendous trip promoting U.S. beef.  But one of his takeaways was that all of Asia is watching how the United States handles these trade deals.  And want to know if the United Sates wants to be in a leadership role for international trade.  They want to know if we are people of action, or just words.  They want to know if we will follow through with these agreements or will we let them languish even longer.  This cattleman came away with the message loud and clear.  Either we get this done, or our trading partners will be looking at other places for the trading terms that they desire.

We don't want to let that happen.  American farmers, businesses, and workers need greater access to these markets.  They need these trade deals.  I appreciate the Chairman scheduling this session today, and scheduling it so we have an adequate amount of time to address these important issues and at a time when more members of the committee are able to be present.  Thank you, Mr. Chairman.

Statement of U.S. Senator Chuck Grassley

Wednesday, July 7, 2011

The June unemployment figure is expected on Friday, and this morning there's a meeting of Finance Committee members about pending international trade agreements with Korea, Panama and Colombia.  Approval of those agreements needs to be part of the economic recovery effort.

These three agreements have been ready for congressional action for more than four years.  Demands made by congressional Democrats were accommodated to get the agreements ready back in 2007.  Even so, the Democratic leadership of Congress has refused to allow a vote.  Since President Obama took office, trade got sidelined even more.  That's a mistake.  Jobs supported by exports pay 15 percent more than the national average.  Manufacturers, farmers, and the service sector need new markets for their products.  It's a matter of retaining and creating jobs.

Getting to a congressional vote has been a frustrating process.  A year and a-half ago, President Obama said he wanted to double exports within the next five years.  Still, he let the three trade agreements languish.  This spring, the United States Trade Representative said the trade agreements were ready, but then the administration changed the terms and insisted that the Trade Adjustment Assistance program be passed with the trade agreements.

The Trade Adjustment Assistance program needs to be voted on separately, rather than used to bog down job-generating trade agreements.  The focus needs to stay on helping to spur manufacturing, services and agriculture-related jobs in the United States.  Today, U.S.-Colombia trade is a one-way street.  None of our ag products have duty-free access to the Colombian market, but more than 99 percent of Colombian ag exports enter the U.S. market duty-free.  With a trade agreement, Korea is expected to absorb five percent of total U.S. pork production.  The insurance and financial services industry in the United States, including Iowa, says Korea represents the largest insurance market yet in a free-trade agreement and presents enormous opportunities for domestic job growth.  Panama has tariffs on U.S. beef and corn that would go to zero under a trade agreement.  These trade agreements need to be implemented without delay.

Floor Statement of U.S. Senator Chuck Grassley

Tuesday, July 5, 2011

Continued Review of Audits of the Defense Department Inspector General

Click here for the video. Prepared remarks are below.

Mr. President, I come to the floor today to set the record straight on a report I issued on June 6th.

This report evaluated audits produced by the Department of Defense (DOD) Office of the Inspector General in fiscal year 2010.

I call it a Report Card because that is exactly what it is.

Each of the 113 unclassified reports published in fiscal year 2010 was reviewed, evaluated and graded in five categories. After each report was graded individually, all the scores for each report in each category were added up and averaged to create a composite score for all 113 reports.

Although 15 top quality audits were highlighted in the Report Card, the overall score awarded was a D minus. That's low, I know. Maybe the score should be a little higher. I don't know for sure.

Clearly, none reflected any of the reforms that Inspector General Heddell put in place in December 2010 - as all were published well in advance of that date.

My oversight staff read these reports as educated consumers. We expect these audits to provide leverage in the monumental day-to-day DOD oversight task. We want them to provide assurance that the Defense Department is spending the taxpayers' money wisely.

Some did that but most did not.

This Senator from Iowa is sure of one thing: The audits, which are the subject of my Report Card, are not somehow exempt from oversight and public scrutiny. They, too, need to be put under the public microscope - especially when they cost almost a million dollars apiece to produce.

So that's exactly what we did with the Report Card - put them in the public spotlight. And I will keep them there until I see sustained improvement.

As the report states and as I explained on in my speech on June 6th, this grading system was subjective and imperfect.  However, as subjective and inexact as it may be, I believe it provided a reasonable or rough measure of audit quality.

Following my speech, Defense Department Inspector General Heddell pounced on my report. He expressed strong opposition to the low score. He complained that it did not adequately reflect $4.2 billion in "achieved monetary benefits" identified in fiscal year 2010 audits.

To address IG Heddell's concerns, my staff asked the Audit Office to prepare an information paper that links the $4.2 billion in savings to the audit where those savings were reported. That information was provided to me on June 20th. I call it a "cross-walk." It takes me to the exact page in each report where the savings were discussed.

This document lists $4.4 billion in "identified potential monetary benefits" and "collections" of $4.2 billion.

After reviewing the "cross-walk," I have concluded that IG Heddell had a legitimate gripe about the Report Card. He is right. It should have included a section that addressed potential savings. So I will address those issues now, focusing on four reports that contained almost all of the $4.2 billion in savings listed in the "collections" column.

In grading these reports, we did not give sufficient credit for potential savings and efficiencies. They were a casualty of the grading system - for one simple reason. If the exact dollar amounts of alleged fraud and waste were not verified using primary source accounting records, they did not pop up on my oversight radar screen.

My staff is attempting to work with the Audit Office to develop a mutually agreed upon set of standards for grading audits. The purpose of these discussions would be to create a grading process that would accurately capture the true quality of all reports, including policy reviews that uncover real savings and efficiencies.

From the beginning, I have been very critical of the Audit Office for producing far too many policy reviews and far too few hard-core contract and payment audits.

For the most part, the policy audits have no measurable monetary impact whatsoever. However, I have learned recently that at least a few are important for other reasons. I am told that some of these reports are of real value in the work of the Armed Services Committee.

Contract and payment audits are also very important. They go right to the heart of the IG's core mission: To root out and deter fraud, waste and theft. If done right, they too can produce big pay offs. Those audits earned top scores in the Report Card.

Mr. President, I am not saying that the Audit Office should do nothing but contract and payment audits. What I am saying is this: The current mix of audits creates a huge imbalance in favor of policy reviews. A better balance needs to be established.

That said, Mr. President, I have an admission to make to my colleagues. I finally found a policy audit that I like.

This report is entitled Recapitalization and Acquisition of Light Tactical Wheeled Vehicles, number 2010-039, dated January 29, 2020. It identified potential savings of $3.84 billion. That's 90% of the savings uncovered in FY 2010 audits.

Now, in my Report Card, I gave this audit a low grade. This audit failed to connect the dots on the money trail and verify dollar amounts using primary source contract and payment records. Plus it took 16 months to complete.  When you add the four to six months of planning that often precedes the audit start date, you are probably looking at two years to complete this audit. That's far too long.

But this report had other important qualities that were overlooked. It uncovered gross violations of applicable procurement regulations, including use of a sole-source contracting arrangement. It also determined that the proposed vehicle might duplicate the capabilities of existing vehicles.

In the midst of this audit, for reasons that remain unclear, the project manager decided to stop the program "and put the $3.84 billion in funding to better use in FY 2010-2013." This language suggests that all the money was reallocated within Army accounts for other purposes. Clearly, the audit may have helped to stop $3.84 billion in potential waste. That's excellent, but this does not constitute savings in the classical sense -- as all the money was shifted to other Army projects. Waste could  happen there, too.

Using a modified grading system to reflect the good qualities of this audit, it would have earned a higher score were it not for an excessively long completion time. In this particular case, however, the impact of the audit was apparently felt while the audit was still in progress. So the timeliness rule may not apply here and probably should be set aside.

There are three other audits containing savings and efficiencies that I wish to discuss today.

The next one is entitled Implementation of the Predator/Sky Warrior Acquisition Decision Memorandum, number 2010-082, dated September 10, 2010.

The purpose of this audit was to determine whether the Air Force and the Army had complied with DOD directives and law to combine the Predator and Sky Warrior drone programs. The Defense Department estimated that $400 million could be saved by merging these two programs.

While the audit was in progress, DOD pulled the rug out from under the auditors. A new directive was issued, stating that the two programs did not have to be combined. To counter this move, the auditors recommended administrative action against those who failed to comply with the original directive. The DOD non-concurred and tossed the auditors a bone. DOD wiggled out of harm's way by offering to do a meaningless "lessons learned" exercise.  In the end, the auditors caved in, agreeing that the DOD plan was "responsive" and backed off.

Despite what appears to be an unsuccessful outcome, the Office of the Inspector General still claims that this audit produced $60 million in savings.  The audit itself indicates that the $60 million was, in fact, "reprogrammed to meet higher priority operations." That means it was reallocated to other DOD accounts - and not saved.

Since this audit was all about an opportunity to save $400 million - and DOD balked, maybe these so-called savings might be better characterized as lost savings.

In my Report Card, this audit earned low scores - mainly because it failed to verify actual costs of the two drone contracts, using primary source accounting records. And it failed to assess the validity of DOD's estimated savings of $400 million.

I am not convinced this audit deserves a higher score - especially since it took 22.5 months to complete, and the recommendations - though initially tough -- were watered down at the end.

The next report claimed $242 million in potential savings.

This one is entitled "Deferred Maintenance and Carryover on the Army Abrams Tank," number 2010-043, dated March 2, 2010.

This report concluded that contrary to Army claims, depot maintenance on M-1 tanks was not deferred in fiscal year 2008. All planned overhauls were, in fact, completed, but a large sum of money was left-over. The Army requested and received a formal, written waiver to "carryover" $346 million in un-needed and un-used fiscal year 2008 M-1 maintenance funds for use in 2009 and beyond. The reason given was inadequate capacity at the Lima, Ohio tank plant. Without the waiver, this money would have been cancelled and lost. The report concluded that Army documents contained "inaccurate and misleading" information and may have caused a violation of the Anti-Deficiency Act. It recommended that the waiver be recinded and $275 million in FY 2008 money be cancelled, reprogrammed or reduced.

The Army appeared to agree with the recommendation to disclose the $275 million carryover to Congress, but non-concurred with other recommendations.

This report does not point to any real savings.

This report probably deserves higher scores except for timeliness and strength of recommendations.

It was untimely, taking 22 months to complete.

In addition, there were unresolved issues about the waiver document. Did the official, who signed the waiver, know that document may have allegedly contained false and misleading information? Was he questioned about its truthfulness? If so, the report should have recommended that he be held accountable.

The last of four reports uncovered $2.2 million in purported savings, but this one appears to be  more about helping the Army spend - not save - money.

It is entitled "Controls Over Unliquidated Obligations for Department of the Army Contracts," number 2010-073, dated July 19, 2010.

This report deserves high scores for hitting most of the dots on the money trail, including verification of exact dollar amounts using primary source accounting records. Such nitty gritty accounting work is highly commendable.

Unfortunately, the objective of this audit appears to be questionable. The report finds that sloppy Army accounting work "could increase the risk that funds are unavailable for other needs because funds available for de-obligation are not identified in a timely manner." Now what does that really mean?

It means that the money in question is no longer needed and is at risk of being "lost" because it is about to expire.

Having un-needed money lying around in the Pentagon is almost always a recipe for more waste. In the Pentagon, there is no such thing as un-needed money. Every dollar has a mission.

This report is all about managing money to make sure that every cent is spent before it expires. Avoiding the loss of appropriations is the primary responsibility of the Army Comptroller or Chief Financial Officer - not the IG.

In this scenario, the IG's primary focus should be to ensure that "lost" appropriations are not used illegally - or that un-needed monies are not wasted by being shifted to another questionable project.  Money that is not needed should be reported to Congress and returned to the Treasury.

Although this audit deserves high scores in several categories, its long completion time - 16 months - and questionable focus lowers its overall score.

To summarize, Mr. President, there are two main problems with these four reports on savings and collections: 1) None was timely; and 2) Reported savings are unverified and elusive.

First, these four reports took an average of 19 months to complete. Two took a total of 45 months or almost four years to finish. And that does not include the four to six months it takes - I am told -- to get each audit rolling. As I have said on other occasions, the power of top quality audit work is greatly weakened by stale information.

Second, these four audits supposedly produced $4.2 billion in collected savings. But all of that money appears to have been shifted to other DOD accounts and spent. To the best of my knowledge, not one cent was really saved or re-deposited in the taxpayer's bank account.

Only in the government could you spend all the money and still claim savings.

What we are really talking about here are lost savings that grew out of waste that was thankfully discovered and avoided. And waste that is avoided surely has monetary benefits.

In closing Mr. President, I would like to share a simple observation with my colleagues.

For some reason, auditors in the Office of the Inspector General show a great reluctance to use the word waste in their reports. That word rarely - if ever - appears in their audits. At the same time, auditors seem overly eager to tout savings and efficiencies. Now, why would that be? Could it be that their superiors in the Pentagon take a dim view of the word waste?

Savings may be nothing more that the flip-side of waste. Auditors detect and verify potential waste and then convert it to potential savings by proposing remedies to eliminate the waste. Maybe the auditors need to start calling it what it is - call it waste, and then talk about savings.

I yield the floor.

Illinois Conservation Corps Provides Valuable Work and Life Experience to Young People Throughout Illinois

CHICAGO - July 5, 2011. As part of his jobs agenda, Governor Pat Quinn today promoted a summer internship and jobs initiative for more than 2,500 teens and young adults throughout Illinois. The Illinois Conservation Corps will provide opportunities at more than 100 not-for-profit conservation, recreation and education-focused employers, including state parks, park districts and nature centers.

"It is never too early for our young people to get started on a career path and to teach them responsibility and leadership skills," said Governor Quinn. "Green jobs are the jobs of the future, and these internships will prepare our youth to compete in the economy of tomorrow."

The Illinois Conservation Corps will enable approximately 2,500 young workers to earn $8.50 an hour at more than 100 locations, including park districts, libraries and forest preserves. The effort is being managed by the Illinois Department of Natural Resources (IDNR).

"This is a great opportunity for our youth to gain valuable life and work experience, while furthering Governor Quinn's priority of leaving no child inside by enhancing local recreational and conservation programs," said IDNR Director Marc Miller.

Through one component of the program, local units of government, and nonprofit entities will receive grants to employ 16 to 19-year-olds in youth-focused educational, recreational and conservation programs.

A second aspect of the program enables IDNR to employ 18 to 25-year-olds as Seasonal Conservation Workers in state parks and other IDNR properties.

For more information about the Illinois Conservation Corps, please visit Jobs.Illinois.gov.

###

WASHINGTON, D.C. - Senator Tom Harkin (D-IA) announced today that $121,013,583 from the U.S. Department of Education will be available in funding to the state of Iowa for special education in the 2011-2012 school year. The financial support helps meet the cost of special education and related services for children in Iowa and across the United States with learning and physical disabilities. The funding was made available by the Fiscal Year 2011 Full-Year Continuing Appropriations Act and will help support over six million students across the United States.

"I am pleased to announce this funding for students with disabilities across Iowa," said Harkin. "It is imperative that we fund efforts that allow students to meet their full potential. This allocation will help ensure students will have access to the instruction and support they need to be successful."

Harkin chairs the Senate Appropriations subcommittee that funds education and the Senate Health, Education, Labor and Pensions Committee.

Advisory for Iowa Reporters and Editors

Friday, July 1, 2011

During his weekly video address, Senator Chuck Grassley discusses the status of the deficit-reduction talks and the importance of not leaving a legacy of debt to the next generation.

Click here for audio.

The text of the address is available below.

Grassley Weekly Video Address:

Deficit-Reduction Talks

The President is finally involved in the deficit-reduction talks, where $2.4 trillion in savings over 10 years is needed in order to offset about that level of an increase in the federal debt ceiling.  August 2 is the operational deadline, at this point.

The President's posture is very combative, and the pressure that's coming from the White House and Senate Democrats to raise taxes to increase revenues ignores two very important facts, separate from the harm it would do to the economy where job creation is still so weak.

First, Americans sent a clear message in the last election that they want government spending reined in.  They know it's morally wrong to make the next generation pay the bills for the way we live today, and that the problem isn't that people are taxed too little but that Washington spends too much.  In just the last two years, government spending increased by 22 percent.

Second, if history is a guide, then an increase in taxes is really a license for Congress to spend more money.  Professor Vedder of Ohio University has found that since World War II, for every dollar in tax increases, Washington has spent $1.17.

Serious spending reforms are needed for the sake of America's fiscal well-being.

One of those reforms is a balanced budget amendment to the Constitution.  The federal deficit is 15 times bigger today than it was in 1997, the last time there was a vote in Congress on a balanced budget amendment.  It's time to bring it up again.  I'm a cosponsor of legislation and have formally asked Senate leaders to hold hearings on a balanced budget amendment.  Forty-six of 50 states have a balanced budget requirement, and there should be one at the federal level.

In the meantime, the debt-ceiling debate provides a major opportunity to help bring fiscal accountability and responsibility to Washington.  And it emphasizes the need for pro-growth policies out of Washington - including less debt, but also regulatory relief, more exports, lower and simpler taxes and greater certainty about taxes, lower health care costs and an increased domestic energy supply.

-30-

Sen. Chuck Grassley of Iowa last month asked a White House official to account for the contradiction between a White House blog post and statements from the Secretary of the Treasury and other officials about the relationship of the Small Business Lending Fund, or SBLF, to the Troubled Asset Relief Program, or TARP.  Today, the Treasury Department responded.  The text of the Treasury Department's response is here.  The details of Grassley's original inquiry are available here.  Grassley made the following comment on today's response.

"With this response, the White House apparently didn't want to answer questions about the Small Business Lending Fund and is hiding behind the Treasury Department.  I wrote a letter to the White House deputy communications director asking questions regarding the statements she wrote about the Small Business Lending Fund.  Since she's a public servant whose salary is paid by the American people, making statements on a taxpayer-funded website that presents official White House positions, I expect direct answers.   It's misleading, at the very least, for the White House to have insisted that the Small Business Lending Fund and TARP have no relationship, even as the Treasury Department acknowledges that at least some banks will use the Small Business Lending Fund to repay their TARP loans."

Statement by U.S. Senator Chuck Grassley
Ranking Member of the Committee on the Judiciary
Wednesday, June 29, 2011

Balanced Budget Amendment to the Constitution
Tax Increases Not the Answer for Deficit Reduction

The federal budget deficit is 15 times bigger today than it was in 1997, the last time there was a vote in Congress over a balanced budget amendment to the Constitution.  It's time to bring it up again.

Voters sent a clear message in the last election that they want government spending reined in.  They know it's morally wrong to make the next generation pay the bills for the way we live today, and that the problem isn't that people are taxed too little but that Washington spends too much.  In fact, history tells us that an increase in taxes will only fuel more government spending.  Since World War II, Washington has spent $1.17 for every dollar in tax increases, so tax increases have proven to be a license for Congress to spend more money.

State-level requirements for balanced budgets work and serve an important purpose.  A balanced budget amendment to the U.S. Constitution is the kind of serious spending reform needed for the sake of America's fiscal well-being.

June 28 Teleconference, Report Release Will Detail How Cuts Could Cost Iowa Thousands of Jobs, More than a Billion Dollars in Lost Business Activity

Washington, D.C.–The Medicaid cuts in the House Republican budget, if implemented today, would have a devastating impact on the struggling economy of Iowa, putting thousands of jobs and more than a billion dollars in state business activity at risk.

On Tuesday, June 28, Senator Tom Harkin (D-IA) and Families USA, the national organization for health care consumers, will release a report titled "Jobs at Risk" that will detail how Medicaid cuts would damage Iowa's economy.

As the report makes clear, there is also a human toll of such cuts, affecting the health and well-being of low-income and middle-class families, children, seniors, and people with disabilities. This report, however, will look specifically at the economic effect of Medicaid cuts, spotlighting the potential impact of a 5 percent, 15 percent and 33 percent Medicaid cut on Iowa's economy.

Those percentages were chosen for the report, because the budget proposal adopted by the U.S. House of Representatives, sponsored by Rep. Paul Ryan (R-WI), calls for cuts in federal funding to current state Medicaid programs of 5 percent in 2013, 15 percent in 2014, and 33 percent in 2021.

A teleconference for Iowa media will be held on Tuesday, June 28, 2011, to discuss the new Families USA report.

WHAT:  
Teleconference and Release of Families USA Report "Jobs at Risk"

WHEN:  
Noon EDT, 11 a.m. CDT
Tuesday, June 28, 2011

HOW:   
Dial in toll-free: 877-780-3379
Confirmation code: 7301551

WHO:   
U.S. Sen. Tom Harkin (D-IA), Chairman, Health, Education, Labor and Pensions Committee
Ron Pollack, Executive Director, Families USA

America's prosperity hinges on our consumer-driven economy.  The economic recovery is slowed in part by tepid consumer confidence that adds to the reluctance by businesses to increase payroll, upgrade equipment and expand operations.  Decision-makers in the private sector are taking a wait-and-see approach due to uncertainty over the federal debt, tax, spending and regulatory policy.  The economic recovery could continue to languish if the federal government fails to rein in spending.

Even so, America's strength and resilience still rests largely within the indefatigable optimism that drives innovators, entrepreneurs, workers and immigrants to scale the ladder of prosperity.

Americans cherish freedoms of speech, press and religion.  U.S. capitalism encourages people from all walks of life to create wealth and achieve the rewards offered by free enterprise.  Bargain hunters would agree the two essential elements of a good buy are the same for a robust economy:  consumer choice and competition in the marketplace.

In the U.S. Senate, I use my legislative and oversight authority to work to strengthen the rights of property owners, taxpayers, consumers, pensioners, patients, and investors.

Consumers armed with accurate, timely information are able to make better decisions and minimize buyer's remorse.  Whether buying big-ticket items such as a car or home or looking for the best surgeon to perform a life-saving transplant, the most informed consumer is likelier to end up a satisfied customer at the end of the day.

I work to foster accountability and transparency in the public and private sectors.  This includes  efforts to advance reforms to the nation's pension laws aimed at preventing bad actors from promising more than they could deliver (remember the Enron scandal); strengthen consumer-friendly comparison tools for family members searching for a quality nursing home; and, let the sun shine in on the financial relationships between medical device makers, pharmaceutical companies, medical professionals and non-profits.

The federal government's system of checks and balances is meant to prevent overreach by the executive, legislative and judicial branches.  That's why I am a strong supporter of sunshine and whistleblower protection laws.  Representing Iowans in Washington, I also have worked to keep close tabs on taxpayer dollars.  Taxpayers deserve to get the most bang for their buck when their hard-earned money is used to build roads, advance medical research, strengthen national security, pay for the military and fund recovery efforts caused by natural disasters.

Transparency also can improve America's health care delivery system. Policymakers have long debated ways to improve quality and rein in the so-called spending curve of U.S. medicine.  On the Senate Finance Committee, I also channel efforts to improve effective medicine and patient safety by promoting better transparency between patients, health care providers, pharmaceutical companies and medical device manufacturers.

I have pressed the National Institutes of Health (NIH) to fully exercise its authority to achieve public disclosure between industry and the doctors who conduct $31.2 billion annually in federally sponsored medical research.  In response to what I exposed about the dramatic disparity between what a number of influential NIH-funded research physicians reported and what they received from pharmaceutical companies, the NIH drafted new guidelines for grant recipients to manage conflicts of interest.  A proposal has been waiting to be processed at the White House Office of Management and Budget since March.  The administration needs to move on this.  The NIH is in a pivotal position to help establish greater accountability in this area through disclosure.  Good stewardship of the tax dollars that back medical research requires it.

In addition, keeping consumers or medical providers in the dark about those with financial ties to medical device makers, as an example, does not help build trust or improve patient outcomes.

A patient having spinal surgery places trust in the doctor's experience and expertise.  The surgeon relies on the current medical literature regarding safety, complications and adverse affects of a medical device or drug when making an informed decision about risks and benefits for the patient.  Troubling reports indicate that severe side effects may have been unreported or under-reported by clinical investigators with financial ties to a bone-growth product they had reviewed.

A patient who is considering surgery has a right to know if his or her physician has a financial relationship with the medical device the doctor is suggesting.  Likewise, a physician using the product deserves to know if the medical professionals who researched and prepared the literature on it have financial ties or consulting arrangements with that company. Public disclosure documenting such financial ties will promote accountability within the industry and allow the public to draw its own conclusions.   Legislation that I co-authored, the Physician Payment Sunshine Act, was enacted into law last year.  It will compel pharmaceutical, biotechnology, medical device and medical supply companies to disclose payments to physicians to the public, starting March 31, 2013, for all payments in calendar year 2012.   That will increase payment transparency.

Transparency and accountability throughout the public and private sectors are standards of good governance that I will continue to champion.  Transparency fosters goodwill in the marketplace and buoys consumer confidence.  Just as American consumers have a right to know where their meat and vegetables are grown, they also have a right to know if their doctor has financial ties to a pharmaceutical company or medical device manufacturer, and their doctors have a right to know about the financial ties of leaders in their profession.

For generations, American consumers have rewarded big thinkers and innovators to out-think and out-innovate the competition. Protecting the public's right to know is as all-American as apple pie and fireworks on the Fourth of July.

Friday, June 24, 2011

Tax Predictability Sought to Encourage Expansion of Clean Energy Alternative, Sustain and Create Jobs

WASHINGTON, D.C. - U.S. Senators Chuck Grassley of Iowa and Maria Cantwell of Washington today introduced legislation to simplify and extend the tax incentive for domestic biodiesel production.  Their bipartisan bill would provide predictability to investors and producers so the United States can continue moving forward to displace imported fossil fuels with low carbon, renewable biodiesel.

In putting forward the Biodiesel Tax Incentive Reform and Extension Act of 2011, S.1277, Grassley and Cantwell said that the lack of certainty about the tax policy inhibits access to capital and could undermine the progress that the U.S. biodiesel industry has made to build the production capacity and infrastructure needed to displace imported petroleum diesel fuel with domestically produced, renewable, low-carbon biodiesel.

"Today's high gas and diesel prices are slowing our economic recovery and burdening families," said Cantwell. "For economic reasons, national security reasons, and environmental reasons, we must continue to invest in America's clean energy economy. Biodiesel is America's first advanced biofuel, it can be made from a variety of feedstocks, and is less polluting than today's petroleum-based diesel fuel.  This bipartisan bill is smart federal policy because it is helping launch a nascent, domestically-based industry, reforms an existing credit to make sure it supports American biodiesel producers, and provides the industry the certainty it needs to continue to grow."

"America is trying to kick its addiction to foreign oil, and biodiesel is part of the cure," said Grassley.  "The more we can encourage domestic production and meet demand, the better off we'll be economically, environmentally, and geopolitically.  This legislation simplifies the tax credit for producers.  It also gives investors predictability so they'll be more likely to put their money into biodiesel production.  And it's directly tied to jobs."  

The biodiesel tax incentive was first enacted in 2004.  Since then, it has helped encourage the production and use of biodiesel.  Production in the United States has increased from 25 million gallons in 2004 to 690 million gallons in 2009, before Congress allowed the tax credit to lapse at the end of 2009, which resulted in job loss throughout 2010.  The credit was restored retroactively in December 2010 through December 2011.

A study by Cardno ENTRIX, an international consulting firm that specializes in environment and natural resources economics, estimates that this year, domestic biodiesel production is expected to support more than 31,000 jobs and replace 800 million gallons of imported diesel fuel.  The same study estimates that with the appropriate federal framework, by 2015 biodiesel production will replace 1.9 billion gallons of imported diesel fuel, support more than 74,000 jobs, and generate $4 billion in income and approximately $7.3 billion in gross domestic product.  The study also found that if Congress does not enact the Cantwell-Grassley Biodiesel Tax Incentive Reform and Extension Act of 2011 and the biodiesel tax credit is allowed to expire at the end of 2011, consumers would be forced to spend an additional $6.6 billion for diesel fuel between 2012 and 2015.

Specifically, the Cantwell-Grassley measure would:

  • eliminate potential abuses and simplify administration of the incentive for both taxpayers and the Internal Revenue Service.  The bill changes the incentive from a blender credit to a production tax credit so that incentives are given for building the domestic production industry.   The change would focus the benefits of the credit on the production capacity of these cleaner, greener fuels rather than on the activity of just blending them with petroleum diesel. By focusing on the production of the 100 percent bio-based fuel, this bill will shut down, once and for all, any remaining opportunity for the abuse known as "splash and dash," in which oil companies add a few drops of biodiesel to their petroleum diesel just to qualify for the tax credit. 
  • provide the $1 per gallon tax credit for the production of biodiesel, renewable diesel and aviation jet fuel that complies with fuel standards and Clean Air Act requirements that define qualified fuels under current law.
  • increase the credit from $1 to $1.10 for the first 15 million gallons of biodiesel produced for small producers, those with an annual production capacity of less than 60 million gallons
  • simplify the definition of "biodiesel" to encourage production from any biomass-based feedstock or recycled oils and fats.
  • simplify the coordination between the income tax credit and the excise tax liability to tighten compliance and reduce administrative burdens on taxpayers.
  • extend this tax credit for five years, giving needed financial predictability so that more facilities can be brought online in the United States.

-30-

Pages