DES MOINES, IA (06/21/2010)(readMedia)-- State Treasurer Michael L. Fitzgerald announced today that once again Moody's and Standard and Poor's have affirmed that Iowa has the highest credit rating possible. "We met with both companies last week and both affirmed that Iowa is a Triple A state." Fitzgerald noted.

According to Moody's report, "The State of Iowa, while not entirely immune to the current economic downturn, has fared relatively well compared to similarly rated states. Iowa's financial position has strengthened in recent years allowing the state to be better prepared for the sudden economic shift."

"The experts agree that Iowa is in a good financial position." Fitzgerald stated, "They continue to recognize the first-rate fiscal management and strong economy of our state and we can stand out as a model to other states. Only seven other states have AAA ratings across the board."

WASHINGTON -Monday, June 21, 2010

Senators Chuck Grassley and Kit Bond have sent a letter to the Secretary of the Department of Housing and Urban Development, or HUD, reiterating their concerns about possible waste, fraud and abuse in the Department's distribution of stimulus funds to troubled Public Housing Authorities.

"Our oversight is focused on making sure the federal agencies handling the $787 billion in stimulus dollars passed by Congress and signed by the president last year are operating with the highest level of transparency and accountability.  In this case, taxpayers deserve an answer to why the federal agency gave tens of millions in stimulus dollars to housing authorities it found to be 'high risk.'  Is there so much pressure to shovel stimulus dollars out the door that responsible stewardship has been abandoned?" Grassley said.

"When families across the nation are still struggling to pay bills and put food on the table, the Administration owes Americans answers on why they chose to gamble with taxpayer dollars on risky organizations," Bond said.

Grassley initially sent a letter to HUD on March 15, 2010, in which he cited problems with a number of Public Housing Authorities that had been raised by the HUD Office of Inspector General and not adequately addressed in the HUD response.  Today, Grassley and Bond are seeking answers on the accuracy of troubled housing designations and the abuse of stimulus funds.

As ranking member of the Senate appropriations subcommittee that funds our nation's housing programs, Bond has questioned the Administration on their lack of oversight of stimulus funds awarded to troubled PHAs. Bond continues to stress that Congress - and the taxpayer - deserves answers on the benchmarks the Administration is using to hold PHA's accountable for their use of taxpayer dollars. The Senator also has concerns on whether the Administration is putting scarce resources to the best use - including whether they are investing in projects that will address the huge backlog of public housing capital needs. 

In its response, HUD agreed to Grassley's suggestion of posting Public Housing Assessment System scores on the HUD website.  Grassley and Bond also request that HUD post the following information on its website:  location of the Public Housing Authority; fiscal year in which the Public Housing Authority was designated as troubled; categorization of the Public Housing Authority problems (Troubled, Substandard Financial, Substandard Physical, and Substandard Management); the applicable narrative and corrective plan; total number of units involved; level of concern (high, medium, low); stimulus funding risk level; and amount of stimulus funding awarded to Public Housing Authority.

Click here to read Grassley's initial letter.

Click here to read HUD's response to Grassley.

Click here to read Grassley and Bond's June 16 letter to HUD.

Floor Statement of Senator Chuck Grassley Unfinished Time-Sensitive Tax Legislative Business: Expiring Lower Marginal Rates and Family Tax Relief

Delivered June 17, 2010

Last week, I discussed the unfinished tax legislative business.  I used this chart.  The legislation before the Senate deals with only one small, but important, piece of unfinished tax legislative business.  These tax extenders are on their second Senate stop.   As the chart shows, the tax extenders, which are overdue by almost half-a-year, are not alone.  There are three other major areas of unfinished business.

One area is the one I discussed a couple of days ago. It's the Alternative Minimum Tax ("AMT") patch.

Another area is the death tax.  That's the area I talked about yesterday.

The third area is the 2001-2003 tax rate cuts and family tax relief package.  I'm going to discuss that policy today.

As important as the AMT patch and the death tax are, they are dwarfed by the impact of this third package of expiring tax provisions.   I'm referring to the marginal rate cuts and the family tax relief of the bipartisan tax relief that was enacted in 2001 and 2003.

Efforts to make these tax relief packages permanent were rebuffed.  The resistance was the result of a hard and determined Minority, marshaled by the Senate Democratic Leadership.  It was reflected in the budget resolutions offered and filibusters.  Even more inexplicable than the Democratic Leadership's failure to extend popular and bipartisan tax relief enacted in 2001 and 2003, were some of the reasons given.  It was basically said that since Republicans wrote the law, it is our, meaning Republicans', problem.  The left wing of the blog-o-sphere echoed the Democratic Leadership.

Some of those reflections in the blog-o-sphere even alleged that the sunset was a Republican conspiracy.

I came across a 2007 posting on the Daily Kos blog. The poster reviewed the provisions of the Tax Increase Prevention and Reconciliation Act of 2005, which was enacted in May 2006.  That legislation contained two basic pieces.  One was an extension of lower rates for capital gains and dividends.  Another was an extension of the Alternative Minimum Tax ("AMT") patch.   The poster's analysis concluded that that the bill was a "poison pill" designed to sabotage the economy to increase the prospects of Republican candidates in 2012.  The argument seems to be that having popular and bipartisan tax relief from 2001 and 2003 all sunset at the end of 2010 would cause such an economic mess that the Democrats, assumed by the poster to be in power at the time, will take the blame and suffer at the polls.

In a posting titled "The Monster Republican Tax Hike," the poster stated that "Republican Congresses chose not to make their tax cuts...permanent."  The argument seems to be that Republicans put sunset clauses in the bill solely to improve long term budget projections and that responsibility for the expiration of tax relief rests completely with Republicans.  The implication is that by lowering taxes, Republicans are responsible for a tax increase that would occur when the Democratic majorities control both houses of Congress.

The commentaries I just referred to are available to everyone in the April 12, 2007, edition of the Congressional Record.  I've heard that some Members on the other side, as well as key staff, have made similar assertions.

As one who was involved in the writing of these tax relief plans, I can tell the Senate, without reservation, that these assertions are untrue.  To begin with, it is completely ridiculous to suggest that President Bush and Republicans in general did not intend or desire the permanence of tax relief.  President Bush and Republicans in general have favored tax relief permanence.

You need look no further than the budgets I've referred to.  The Administration and Republican Congress budgeted for an extension of the bipartisan tax relief provisions.  That action affected the bottom lines of those budgets.  We heard, over and over and over and over again, the criticisms of those budgets.  We heard it from the Democratic Leadership, liberal think tanks, and some sympathetic East Coast media.

As a matter of fact, after three and one-half years of Congressional control, we still hear the Democratic Leadership's criticisms every day.  Just recently, the Speaker of the House was asked when the Democratic Leadership would cease laying the blame for all fiscal problems on Republican budgets for the years 2001-2006.  MSNBC's Chuck Todd recently interviewed the highest-ranking Democrat in the House.  Mr. Todd asked if there was a statue of limitations on placing responsibility on President Bush. "At what point do you think the public says, 'You know what, yes, we were unhappy with the Bush administration ... [but] stop blaming the Bush administration.' When does that run out?"  Mr. Todd asked.  "Well, it runs out when the problems go away," the Speaker replied.

The blame game is no substitute for doing the job you've been hired on to do.  People elect folks to public office to govern.  Governing isn't just about enjoying the benefits of public office.  Part of governing is also about making choices.  Some of those choices are tough.  And those of us in public life need to be accountable for those choices.  The Democratic Leadership can't have it both ways.  They can't continue the bipartisan tax relief and not be responsible for deficit impact those policies carry.  No family can make decisions about its budget and evade the consequences by blaming their next-door neighbors.  No business can make decisions about its budget and evade the consequences by blaming a competing business.

The fiscal consequences are an important part of that decision.  The statutory pay-go regime was enacted as part of the last debt limit increase.  It covers only part of the revenue loss of making permanent the bipartisan tax relief plans of 2001 and 2003.  For instance, the alternative minimum tax ("AMT") patch is extended for two years only.  Death tax policy is extended at 2009 levels only through 2011.  Even with those limitations, the Joint Committee on Taxation states complying with the pay-go rule means a revenue loss of over $1.5 trillion over 10 years.  I ask unanimous consent to insert in the record a copy of a Joint Committee on Taxation estimate of the tax relief covered by statutory pay-go.

The expiring tax relief I'm talking about today includes the marginal rate cuts and family tax relief.  Under statutory pay-go, the amount permitted in this area is about $1.4 trillion.  It covers about 80% of extending all of the marginal rate cuts and family tax relief from the 2001 and 2003 bipartisan plans.

That number makes sense because the bipartisan tax relief plans cut taxes for virtually every American family that pays income tax.  How significant and widespread is this tax relief?  This chart, drawn from Congressional Budget Office ("CBO") data, may shed some light.

The line measures the effective tax rate paid by the top 5% of taxpayers.

This group roughly represents those taxpaying families with incomes over $250,000.  Under the Democratic Leadership's budget, this line will go back up to where it was in 2000.  That is also where the President's budget and the statutory pay-go regime would take the rates.

Republicans believe this significant tax increase will be a mistake.  We hope that we will be able to debate this policy in the House and Senate in committee and on the floor.  That was, after all, the process we followed when the bipartisan tax relief plans were passed in 2001, 2003, and 2005.  We will point out that about half the heavy tax increases will fall on small business owners.  The top marginal rate on small business owners will rise by almost 17%.  Democrats and Republicans agree small businesses are the key job creators of the future.  President Obama correctly pointed out that small businesses create 70% of new jobs.  The rest will also hit investment hard.  The top capital gains rate will rise by 33%.  The top dividend rate could rise by almost 275%.  All of this is set to occur not at some far distant future point.  It occurs in a little over half a year from now.   We all hope the economy is on a path to recovery, but does this heavy tax increase on small business owners and investment ever make sense?   Even the most liberal member on the other side might wonder whether it makes sense now.  Do we really think the private sector will grow if we hit small business and investors this hard 6 months from now?

You can see that the bipartisan tax relief brought the effective rate down with respect to the bottom 95% of taxpayers.  That's the red line.  Here it is.

Some of my colleagues on the other side of the aisle may be thinking to themselves, sure this is true for income taxes, but what about other federal taxes like Social Security, which make up a large percentage of taxes paid by middle and low-income individuals?  Well, this chart is not just a depiction of federal income taxes, but includes all federal taxes.  This includes Social Security, other payroll taxes, and excise taxes frequently referred to by my colleagues on the other side of the aisle as regressive taxes.

Even including all federal taxes, over the last 30 years, the top five percent have paid a lot higher effective tax rate than the bottom 95%.   It's been that way no matter which party has controlled the White House, Congress, or both.  It shows something you would never know if you listen to the rhetoric of some on the other side, the punditry on the left, and some in the media.  Here's what it shows: a progressive income tax system is deeply embedded in our culture.  The bipartisan tax relief plans of 2001 and 2003 made the system more progressive.  Those plans brought the rates down for the bottom 95% of taxpayers.

The 2001-2003 tax relief plans dropped the effective tax rates for taxpaying families under $250,000 to their lowest levels in a generation.   This is the current law level of taxation.  In a little over half a year, these rates will pop back up for all these taxpayers.

I have a couple of charts that illustrate how significant the tax hits will be.  Middle income families will run right into these tax walls.  For a family of four with income of $50,000, that's a tax wall of $2,300.  For a single mom with two kids earning $30,000, that tax wall means $1,100.

The President, as powerful as he is, cannot unilaterally hike or cut taxes.  He needs a bill from Congress to do that.

On our side, we want all the tax relief made permanent.  We want the opportunity to debate and amend a bill that deals with this basic level of taxation.  As has been made clear for the last three and one-half years, Republicans do not control this Congress.  We cannot decide the fate of the marginal rate cuts and family tax relief.   This is unfinished business.  It's unfinished tax legislative business that affects virtually every American taxpayer.

It will have fiscal consequences.  They are pretty significant fiscal consequences.  But, if the Democratic Leadership wants to keep these levels of taxation low, then they have to deal with the fiscal consequences.  Alternatively, the Democratic Leadership can raise taxes and claim the revenue.  Not changing the law, by failing to act, is the same as raising rates on virtually every American taxpayer.  But they will have to explain to taxpayers why they raised taxes by almost 10% on average.

In the 2006 election, almost 4 years ago, the American People provided the Democratic Leadership with control of the Congress.   In the 2008 election, over 18 months ago, the American People provided the Democratic Leadership with the largest majorities in more than a generation.

They also provided the Democratic Leadership with a President of their party.

The Democratic Leadership spent the period of 2001-2006 thwarting efforts to make the bipartisan tax relief of 2001 and 2003 permanent.  Upon assuming control, they have spent three and one-half years with no legislation to make permanent or even extend the marginal rate cuts and family tax relief packages.   My friends in the Democratic Leadership need to step up to the plate.  We've had budgets and statutory pay-go.  We've debated and voted on the breadth and composition of the marginal rate cuts and family tax relief in those contexts.  No legislative action.  No House committee and floor action.  No Senate committee and floor action.

The Democratic Leadership needs to step up to the plate.  Blaming Former President George W. Bush and Republican Congresses of many sessions ago is no substitute for running this time-sensitive tax legislative business through the process.  Put forward proposals.  Debate them.  Allow for amendments.  Allow votes on amendments.  Do the People's Business.  It's time to check these boxes.

Last week, I discussed the unfinished tax legislative business.  I used this chart.  The legislation before the Senate deals with only one small, but important, piece of unfinished tax legislative business.  These tax extenders are on their second Senate stop.  As the chart shows, the tax extenders, which are overdue by almost half-a-year, are not alone.  There are three other major areas of unfinished business.

One area is the death tax.  Another area is the 2001-2003 tax rate cuts and family tax relief package. The third area is the one I'm going to discuss today. It's the Alternative Minimum Tax ("AMT") patch.

Over the past few years, I'm sure many have noticed that the AMT is frequently a subject of my speeches.  Some of you may be wondering how long I intend to keep talking about it.  The simple answer is that I intend to keep talking about the AMT until this Congress actually takes action on reforming the AMT.

Instead of taking action, Congress this session has done absolutely nothing and the problem continues to get worse for at least 26 million American families who will be caught by the AMT, and are now being caught.

When I speak of those now being caught, I am referring to those families who make estimated tax payments and who will be making their second payment today.

Last year, in 2009, a bit over 4 million families were hit by the AMT.  I think this was 4 million too many, but it is considerably better than the more than 26 million who will be hit this year, in 2010.

The reason we are experiencing this large increase this year is that, over the last 9 years, Congress has passed legislation that temporarily increased the amount of income exempt from the AMT.

These temporary exemption increases have prevented millions of middle class American families from falling prey to the AMT, until now.  While I have always fought for these temporary exemptions, I believe that the AMT ought to be permanently repealed.  One reason I have previously given for permanent repeal is that it may be difficult for Congress to revisit the AMT on a temporary basis every year, and the current situation is proving me right.

Congress has yet to undertake any meaningful action on the AMT.  The budget resolution, passed over a year ago, provided revenue room for a short-term extension of the AMT patch.  That was a lot less than President Obama's budget, which made the patch permanent.

About 18 months ago, much to the criticisms of some on the other side, I made the 2009 AMT patch an issue in the economic stimulus legislation.  The reason I did it is that 24 million middle class families would've, on average, paid $2,400 more in income tax for 2009, if the patch had been abandoned.  My 2009 AMT patch amendment was adopted in the stimulus legislation by the Finance Committee.  That was 18 months ago.

Despite assurances that AMT relief is an important issue, nothing has actually been put forward as a serious legislative solution for this year.  No House committee markup or floor action.  No Senate committee markup or floor action.  This year is about half done.  A theoretical discussion is not a substitute for real action, as anyone making a quarterly payment today will attest to.

I'm hopeful that I can get folks on Capitol Hill thinking about the AMT and realize that it is a problem right now.  Everyone seems to agree that something needs to be done quickly, but the discussion doesn't go any further from there.  The second quarterly payment is due. Today, taxpayers across the country are under a legal requirement to pay their estimated tax.  They will use the form depicted in this chart.   I bet I will be here when the third payment comes due, saying largely the same thing.

Congress doesn't seem to be under any pressure to actually take action.  Many on the other side insist that, unlike new spending proposals or extensions of existing spending programs, AMT reform should happen only if it is revenue neutral.  That means any revenues not collected through reform or repeal of the AMT must be offset by new taxes from somewhere else.  Notice I said "not collected" and not "lost."

This distinction is important for the simple reason that the revenues that we do not collect as a result of AMT relief are not lost.  The AMT collects revenues it was never supposed to collect in the first place.  Originally conceived as a mechanism to ensure that high income taxpayers were not able to completely eliminate their tax liability, the AMT has failed.  In 2004 IRS Commissioner Everson told the Finance Committee that the same percentage of taxpayers continues to pay no federal income tax.

The AMT was originally created with just 155 taxpayers in mind.  Today, at least 26 million middle class families are in the AMT's cross hairs.  That's quite a change from 155 rich people.

Finally, if we offset revenues not collected as the result of AMT repeal or reform, total federal revenues, over the long-term, are projected to push through the 30-year historical average and then keep going.  The AMT is a completely failed policy that is projected to bring in future revenues that it was never designed to collect.

President Obama met those of us who favor repeal part way by staking out a position on AMT reform during the 2008 campaign.  His position provided for a permanent AMT patch.  His budgets have maintained that position.

While permanent repeal without offsetting is the best option, we absolutely must do something to protect taxpayers immediately, even if it involves a temporary solution such as an increase in the exemption amount.  Of course, if we do that we are going to be in the same fix next year and I will be making the same points again.

Today, Tuesday, June 15, 2010, taxpayers making quarterly payments are going to once again discover that the AMT is neither the subject of an academic seminar nor a future problem we can put off dealing with.  The AMT is a real problem right now, and if this Congress is really serious about tax fairness it needs to stand up and take action.