Stop the Student Loan Interest Rate Hike Act of 2012

Mr. President, parliamentary inquiry: We are now on the Stop The Student Loan Interest Rate Hike Act of 2012, is that not correct?

Mr. President, I yield myself such time as I may consume.

Mr. President, I can't emphasize strongly enough the importance and the urgency of the legislation before us--the Stop the Student Loan Interest Rate Hike Act of 2012--which the majority leader spoke about. On July 1, unless Congress intervenes, the interest rate on Federal student

loan debt is set to double from 3.4 percent to 6.8 percent. More than 7.4 million American students, including an estimated 255,000 students enrolled in Iowa colleges and universities, will be required to pay an average of $1,000 more per year of school.

The bill before us is straightforward and it is fully paid for. It keeps the interest rate at 3.4 percent, and the cost is offset by closing a tax loophole that benefits certain high-income professional service providers.

I wish to thank Senator Reid for his leadership in advancing this critical legislation. I also thank President Obama for making this legislation an urgent priority and for visiting college campuses across the country to speak out on this urgent problem facing our Nation's students and their families.

In today's global knowledge-based economy, an education beyond high school is no longer an option but a necessity. A worker with a bachelor's degree earns 85 percent more, on average, than a high school graduate. Almost two-thirds of the job vacancies between now and 2018 will require some postsecondary education, and more than half of those jobs will require at least a bachelor's degree.

You can see by this chart, as I said, 63 percent of the jobs will require at least some college education--either some college, an associate's degree or bachelor's degree or more. And that is by 2018. The demand is going to grow even beyond that. These statistics convey a very clear message: Higher education is the key to entry not only to the middle class but to a middle-class life.

Another message is equally clear, and that is America's economic competitiveness and growth depends on a highly educated and highly skilled workforce. That is why the ever-growing mountain of student loan debt is a major concern to me as the chair of the Health, Education, Labor and Pensions Committee, and also a major concern for families all across America who are struggling to get by. It is a shocking fact that total student loan debt has now surpassed total credit card debt for the first time ever, with $867 billion right now in student loans, auto loans at $734 billion, and credit cards at $704 billion. So for the first time ever, American families now owe more on school loans than they do on their car loans or on their credit cards.

Again I want to bring this closer to my own home. It affects Iowans profoundly. Nearly 72 percent of Iowa's college graduates have debt-- the fourth highest percentage in the Nation. And those borrowers have an average of $30,000 in student loan debt, which is the third highest level in the Nation.

Over the past 3 years, President Obama and Congress have taken robust steps to improve college affordability and help our students succeed. From the Recovery Act and its unprecedented support for our education systems, to the student loan reforms that enabled us to help more students through larger Pell grants, and most recently our efforts to make it easier for students to repay their loans--this all happened in the last few years--we have made major strides toward the President's goal--and I hope it would be our shared goal--of reclaiming America's standing by 2020 as the country with the highest proportion of college graduates. Needless to say, it will be much harder to reach this goal if Congress allows interest rates to double on July 1.

As I said, more than 7.4 million American students will be required to pay an average of $1,000 over the lifetime of their loan for each year they borrow. Again, if you look at this chart, it shows what is happening. If the interest rate is paid at 3.4 percent, we are looking at about $883 in interest over the life of the average loan. Double that interest rate and it goes to $1,876. That is at 6.8 percent. So the average savings to the average student would be almost $1,000 a year.

I might add that the 255,404 borrowers in Iowa will save an estimated total of $254 million with this bill in front of us.

With today's tough economy, and given the very high unemployment rate among young Americans, it is absolutely unacceptable to ask middle- class families to shoulder sharply higher student loan interest payments. We must not allow this to happen.

If we look closer at the characteristics of students who will be impacted by this interest rate hike, we see that it affects middle- class families and vulnerable students from disadvantaged backgrounds at the very time when they are under enormous financial strain. If we look at who gets the subsidized loans, from this chart we can see, by family income, dependent students, their family income is less than $60,000 a year.

If we look at the independent student loan borrowers, their income is less than $50,000 a year, and 89 percent of them earn less than $50,000. Of the dependent student loan borrowers, 60 percent are from families who earn less than $60,000. I might also add that 7 out of 10 of those independent students here reported under $30,000 a year in income.

So allowing the interest rate to double would also disproportionately affect minority students who account for 40 percent of these borrowers. So 40 percent of these borrowers are minority students. This bill, again, would prevent the interest rate from doubling on July 1 for those borrowers.

So with the bill before us, we are considering a pragmatic and fiscally responsible solution to this problem that will keep interest rates low for more than 7.4 million students. Again, the bill is fully paid for, and we offset the cost by raising revenues in a way that will provide a solution to a longstanding problem in the Tax Code that has been subject to widespread abuse.

Now, let me just define how this measure is paid for. For many years we have seen avoidance of properly owed Social Security and Medicare taxes by some subchapter S stockholders who can declare that a portion of their income is effectively profit and therefore not subject to Social Security or Medicare taxes. This is not supposed to be a choice that is made at the whim of the taxpayer. It should be based on objective facts. The offset in this legislation does just that. It creates a bright-line test for a small share of subchapter S shareholders--basically, those engaged in professions such as doctors, lawyers, accountants, consultants and lobbyists--whose financial gains they have come from the work they do.

It is narrowly tailored to cover only those subchapter S organizations in which there are three or fewer stockholders, and only for those earning $250,000 on joint filings. With this bright-line test, the Medicare and Social Security trust fund will receive the funds that are properly owed, which are not received today because they are counted not as income but as profits.

My friends on the other side of the aisle have proposed a different offset to pay for keeping the interest rate at 3.4 percent. The bill that passed the House of Representatives and the legislation proposed by Senator Alexander of Tennessee would offset the cost of this bill by eliminating the Prevention and Public Health Fund which was created by the Patient Protection and Affordability Care Act.

In short, rather than put an end to a widespread abuse of the Tax Code, my friends on the other side of the aisle are proposing that we eliminate the sole dedicated source of Federal funding for critical investments in preventing disease and keeping women and children and elderly families healthy. They want to eliminate the Prevention and Public Health Fund.

Many of my Republican colleagues have acknowledged the critical importance of investing in prevention and wellness, which makes the use of this offset that is eliminating it all the more troubling. Preventing disease, expanding access to screenings, encouraging people to stop using tobacco--these used to be bipartisan goals strongly supported by a vast majority of Republicans and Democrats alike. So in the affordable care act we created the prevention fund, with the express goal of ramping up our investments in these prevention and wellness initiatives, again, with Republican support.

Here are quotes from two Republican leaders. Senator Kyl, on July 12, 2010, just a few months after we passed the affordable care act, said:

One of the things we did in the health care legislation was

to provide a lot of different incentives for preventive care,

for screening to try to help people avoid illnesses on the

theory that it would be a lot cheaper if we didn't do a lot

of treatment that was unnecessary.

I couldn't agree more.

The Republican leader, Senator McConnell, said in an op-ed the same year, 2010:

Congress should be able to work together on our practical

ideas that the American people support, such as . . .

encouraging wellness and prevention programs that have proved

to be effective in cutting costs and improving care.

That was less than 2 years ago, right after passage of the health reform law. But now Republicans are making outrageous partisan attacks on the prevention fund. I find this deeply disturbing and disappointing. It is not hard to imagine the message gurus, those who hone messages, telling Republicans: Here is all you have to do. Just smear the prevention fund by calling it a slush fund.

How many times have I heard that: the prevention fund is a slush fund? I have heard it in committee, I have heard it on the floor, I have seen it in print, Republicans calling the prevention fund a slush fund. Well, this is shameful. That term ``slush fund'' is a malicious untruth. Nothing could be further from the truth. The truth is the prevention fund has been a giant step forward for public health in our Nation.

Typically, prevention and public health initiatives are an afterthought. This means important community-based interventions often go unsupported. The prevention fund is making it possible for us to make national investments in evidence-based programs that promote physical activity, improved nutrition, and reduced tobacco use. Well, these are the investments we make.

This prevention fund, which Republicans want to eliminate, invests $226 million to reduce chronic diseases, including diabetes and heart disease. That minimizes the $440 billion a year in health care costs from heart disease alone. It invests $93 million for antitobacco education and support campaigns to minimize the fact that over 6 million kids will die from smoking if the current rates persist. It invests $190 million for childhood immunization programs, again, to minimize the $3 billion a year in unnecessary health care costs right now.

I might just add the lead editorial in today's New York Times said, ``No Longer Just `Adult Onset'.'' That is the head of it. I will not read it all, but I think there are a few pertinent paragraphs in the Times editorial. It starts off by saying:

A study of diabetes in overweight and obese youngsters

bears an ominous warning about future health care trends in

this country. It found that Type 2 diabetes, a new scourge

among young people, progresses faster and is harder to treat

in youngsters than in adults. The toll on their health as

they grow older could be devastating.

This new study was published in the New England Journal of Medicine. Reading further:

Some experts suggest that young patients at risk of

diabetes need to be detected earlier and treated more

aggressively. But the long-term goal should be prevention of

obesity and of diabetes.

Congressional Republicans, meanwhile, are bent on

dismantling health care reforms that could greatly assist in

curbing the obesity epidemic. The Republican-dominated House

last month narrowly passed a bill that would eliminate a

Prevention and Public Health Fund, established under the

reform law, in part to pay for lowering the interest rate on

subsidized student loans for this year.

The fund is already providing grants to state and local

governments to help pay for programs to fight obesity and

prevent chronic diseases, including diabetes, in the

community, the workplace and among minority groups that have

high rates of obesity and diabetes. Killing off this program

would be hugely costly to Americans' health and future health

care costs. There is no explanation for this move, except for

the usual anti-health care reform demagoguery.

I ask unanimous consent to have printed in the Record a copy of the full editorial.

I don't know that I can make it any more clear than the New York Times editorial, and there is not the time to mention all of the ways this fund is already making Americans healthier. But I want to mention several representative investments that are happening, again, right now.

I mentioned those right here, the $226 million for diabetes and heart disease, the $93 million for antitobacco education, the $190 million, again, for childhood immunization programs.

I might just go back to that first on the heart disease because heart disease disproportionately affects women. Most people don't know that. I think most people would say the No. 1 cause of death in women today might be breast cancer. Not so. The No. 1 cause of death for women in this country is heart disease. Some 42 million women in America are currently living with some form of heart disease, and the World Health Organization estimates that a staggering 80 percent of heart disease, diabetes, and stroke could be prevented just from changes in smoking, nutrition, and physical activity alone. That is what this prevention fund is doing right now.

Moreover, this investment by the prevention fund isn't only saving lives, but it is saving money. Right now, heart disease costs our Nation about $440 billion a year. We can reduce those costs.

I might also mention smoking. Cigarette smoking also kills an estimated 173,000 women every year. If current smoking rates persist, more than 6 million kids will die from smoking.

The new national antitobacco ad campaign called Tips From a Former Smoker is being supported by this prevention fund. I think many of us probably have seen these ads. They are extremely powerful and effective ads, and they are going to save lives. In fact, this ad campaign is expected to inspire a half million quit attempts and help at least 50,000 Americans quit smoking forever.

I might just add that within 2 days of these ads first appearing, the number of phone calls to quit-smoking lines tripled from people who wanted help in quitting smoking.

I mentioned the immunization programs for kids. These investments from the prevention fund aren't just at the national level, they are also in our communities. This fund is helping States and cities and towns to implement evidence-based programs that meet their particular local needs.

For example, in Illinois, the State has made improvements to its sidewalks and has marked crossings to increase levels of student physical activity. Because of these improvements, the number of students who are walking to school has doubled. That is a good thing. So not only is this good for their health; it is expected to save the school system about $67,000 yearly on bus costs.

In Mobile, AL, Mobile County officials enacted a comprehensive smoke- free policy expected to protect 13,000 residents and visitors from being exposed to secondhand smoke.

All across America, the prevention fund is investing in proven, locally developed programs that promote health and wellness. These evidence-based programs not only improve health but, as I said, will help us save money in health care costs.

According to a new study by the Centers for Disease Control and Prevention, programs such as the National Diabetes Prevention Program could prevent or delay nearly 885,000 cases of type 2 diabetes, saving our health care system about $5.7 billion over the next 25 years. The National Diabetes Prevention Program is a public-private partnership of health care organizations working together to prevent the type 2 diabetes the New York Times editorial was talking about. Given that in 2007 diabetes alone accounted for $116 billion in direct medical costs, it is critical we continue these investments.

Again, here is how this investment is returned, the return on investment for public health care spending. For every $1 spent on childhood immunizations, we save $16.50--proven; tobacco control programs, for every $1 we save $5; for chronic disease prevention, for every $1 we save $5.60; for workplace wellness programs, $3.27. If we want to look at it just in terms of dollars and not just in terms of lives, we are saving money also.

The prevention fund's investments in cancer prevention also provide an opportunity to save lives and money. In 2007, the direct and indirect costs of cancer, which account for nearly one out of every four deaths in the United States, totaled about $123 billion. Earlier this year, researchers found nearly half of U.S. cancer deaths could be prevented--again, through the kinds of programs the prevention fund is funding today. Preventable U.S. cancer deaths, about 50 percent; preventable deaths from heart disease, diabetes, and stroke, about 80 percent. This is what the prevention fund is going after. For the life of me, I have never understood those who want to get rid of the prevention fund, yet are willing to pump untold billions, trillions of dollars into patching, fixing, mending surgery and health care costs down the line. Perhaps my friends on the other side of the aisle never learned the old axiom of Ben Franklin about an ounce of prevention is worth about a pound of cure. Here, an ounce of prevention is worth about 10 pounds of cure or more.

The list goes on. Recently, the Trust for America's Health released a study showing that a 5-percent reduction in the obesity rate could yield more than $600 billion in savings on health care costs over a 20- year period of time--a 5-percent reduction. Studies such as this one confirm what common sense tells us, that prevention is the best medicine for our bodies and for our budgets. That is why nearly 800 organizations have spoken out against these misguided efforts to slash or eliminate the prevention fund. These organizations, such as the Young Invincibles, the U.S. Student Association, the American Diabetes Association, the Campaign for Tobacco-Free Kids, have all said: No, don't cut, don't eliminate the prevention fund.

Despite misguided efforts to cut or eliminate the Prevention and Public Health Fund, most Americans understand what is at stake. Prior to the prevention fund, for every $1 spent on health care, 75 cents went to treating people with chronic illnesses and only about 4 cents went to prevention: 75 cents taking care of people later on with chronic diseases that are preventable, only 4 cents out of every $1 went to prevention. This underinvestment has had devastating consequences. Nearly half of American adults have at least one chronic condition. Yes, you heard me right. Nearly half of American adults have at least one chronic condition, and two-thirds of the increase in health care spending between 1987 and 2000 was due to the increased prevalence of chronic diseases. So two-thirds of our budget, of the increase in spending, is on chronic diseases. Yet since we can reduce those chronic diseases through prevention, one would think we would want to increase that 4 cents a little bit--4 cents on the $1 we are spending right now. This prevention fund gives us an unprecedented opportunity to bend the cost curve.

How many times have I heard about bending the cost curve in medicine? The best way to do it is to prevent chronic diseases. The transformation of America into a true wellness society, a society that focuses on preventing diseases, saving lives and thereby money is the most cost-effective way to proceed. As we can see, to slander the prevention fund as a so-called slush fund is a shameful mischaracterization. This fund is saving lives and saving money. Eliminating this fund--as proposed by my friend from Tennessee--would be bad public policy, a serious case of misplaced priorities. The very idea that Republicans would slash prevention in public health care so a small group of high-income taxpayers can continue to abuse the Tax Code I find simply unacceptable.

Before I close my remarks, I would like to address an egregious mischaracterization that I have heard from the other side of the aisle. Some Republicans claim Democrats, in our historic reform of the student loan program, took money that had been going to students and used it to pay for the health care bill. I have heard that a lot of times. Again, that is simply not so. The reforms passed by Democrats in Congress--I might add over vehement Republican opposition--did not take a single dime from students. Instead, the

bill eliminated wasteful, taxpayer-funded subsidies to banks by converting all new Federal student loans to a more stable, reliable, cost-efficient direct loan program and redirected that money to students, to deficit reduction, and some important health care reforms.

The money did not come from students. The money came from the subsidization we have been giving to banks. Specifically, thanks to the huge savings generated by eliminating wasteful subsidies to banks, what we were able to do with that--we provided increases in the maximum Pell grant award to keep up with inflation. We provided funding for minority-serving colleges and universities. We made a major investment in community colleges, creating a community college and career training grant program. We were able to make loan repayment more manageable by capping a new borrower's loan payment at 10 percent of their net income and, for some, forgiving any remaining debt after 20 years of payment.

That was all done by stopping these wasteful subsidies to banks and putting it into the direct loan program. Again, we provided more than $10 billion in deficit reduction at the same time we were able to expand the Community Health Center Program to ensure access to lifesaving medications and to expand vital consumer protections to millions of Americans with private health insurance--protections we put in such as banning lifetime limits, requiring dependent coverage, prohibiting cancellation of coverage due to an illness. In other words, thanks to the education reform bill, students benefited, the middle class benefited, taxpayers benefited, and health care consumers benefited. For my friends on the Republican side, had they had their way and had those reforms been defeated, only the banks would have benefited.

Indeed, I kind of detect a pattern. When we Democrats were fighting to end this subsidy to banks so we could dramatically increase college grants and loans for middle-class and disadvantaged students, my friends on the other side of the aisle stood with the banks and did everything they could to kill the reforms. Likewise, today Democrats are fighting to prevent a 100-percent student loan rate hike. We want to fully pay for it by correcting a provision in the Tax Code that allows a small group of wealthy Americans to avoid paying some Social Security and Medicare taxes. Republicans are going to the mat to prevent those wealthy taxpayers from having to pay their fair share. Instead, how do they want to pay for keeping the interest rate down? By gutting the prevention fund, killing it, eliminating it--the very fund that is investing in initiatives to fight cancer and heart disease and to protect the health of our children, our women, and our elderly.

What they are proposing is bad public policy. It is bad priorities. We need to be putting the middle class first. We need to be putting students struggling to pay for college first. We need to be putting public health care and prevention first--put all those out there. To make these things possible, we should ask a small group of wealthy Americans to put their country first and stop abusing this provision, this loophole in the Tax Code. I urge my colleagues to support the Stop The Student Loan Interest Rate Hike Act and to support the offset currently in the bill.

Five years ago, the original law that reduced the student loan interest rate to 3.4 percent passed with overwhelming bipartisan support and was signed by a Republican President. I hope we can find common ground to pass this new legislation with that same kind of broad and bipartisan support.

I yield the floor.

Mr. President, how much time is remaining on our side?

Mr. President, am I correct the time for debate under this bill will expire at 4 p.m.?

I thank the Chair. Mr. President, after listening to the previous three speakers, it is hard to know where to begin to correct the record with all the misstatements. Maybe I will kind of work backward. My good friend, the Senator from Wyoming, gave a whole list of different things about where this money was spent. He mentioned something about California and fast food construction. I did not get it all. But I am informed there was absolutely no money from the Prevention and Public Health Fund that went for that program.

If the Senator from Wyoming has any evidence to the contrary, I would be more than delighted to look at it. Then there was the one about the dogs and cats in Nashville, TN. I thought the newspaper article that was in the Hill newspaper put that one to rest, but I guess it did not. It just goes on and on.

That money actually was funded by private grant money. I guess PetSmart, from what I am told, put that money in for pet spaying and neutering in Nashville, TN. Again, that money did not come from the Prevention and Public Health Fund. If the Senator from Wyoming has evidence to the contrary, I would like to look into that. Then the Senator from Wyoming mentioned the New York Department of Health using $3 million to lobby in New York for a soda tax initiative. First of all, I will tell my good friend, the Senator from Wyoming, there is an absolute prohibition on Federal moneys being used for lobbying. So if anyone has any evidence of Federal funds being used to lobby, please let us know. We would like to take them to task for that and sic the Justice Department on them.

That did not happen. It was not CDC funding. This was funding by the New York State Department of Health. Again, none of the CDC money we used in the prevention fund was used for that. Those were just three of--I do not how many examples my friend the Senator from Wyoming had, but those are just three of them there that absolutely had nothing to do with the Prevention and Public Health Fund, but somehow this has gotten out in the popular press.

The city of Nashville received a $7.5 million grant to provide free pet spaying and neutering. You put that out there and the radio talk shows pick up on that and all that kind of stuff. Then they bat this around and it gets everyone upset. My God, we are using tax money now to neuter dog and cats in Nashville, TN. Who would not be opposed to that? It is not true. That is all. It is simply not true. As I say, if anyone has any evidence to the contrary, please let me know and we will get the Justice Department after them.

Again, I say to my friends on this side of the aisle that talk about seriousness of whether--how we are going to pay for this. I heard it said by the previous three speakers we all agree the interest rate should not go up. OK. We have before us, as I understand, two choices right now. The Republican choice is the one passed by the House of Representatives a couple weeks ago, which would eliminate the Prevention and Public Health Fund and put that money in to keep the interest rate down at 3.4 percent rather than letting it go up to 6.8 percent.

So they would eliminate the Prevention and Public Health Fund, about which I spoke at length a little while ago. Our bill would close a loophole in the Tax Code that allows certain subchapter S corporations to avoid paying their FICA taxes, their Social Security and Medicare taxes, because of the way they are arranged.

I am going to get into that in a minute and try to explain exactly how that is set up. We are not going after small businesses at all. We are simply providing more of a bright line on what are legitimate dividends from a corporation, which does not have to pay FICA taxes, and what are wages and salaries that they do have to pay FICA taxes on.

Right now, in certain subchapter S corporations, it is kind of cloudy. It is kind of cloudy. As someone on the other side said, we have seen this big increase in subchapter S corporations. Well, of course. People who have had partnerships before or sole proprietorships all of a sudden are rushing to establish subchapter S corporations, with very few stockholders, to get away from paying their legitimate taxes on Social Security and Medicare.

Our bill would close that loophole. We have these two choices in front of us. Which do we want? If those are the only two, do we want to eliminate the Prevention and Public Health Fund or do we want to put a bright line on subchapter S corporations and say if they cross that line they have to pay their Social Security and Medicare taxes? Maybe we can have that vote. Maybe we have to actually have that vote here.

I would like to see if my Republican friends want to eliminate the Prevention and Public Health Fund. Earlier this year, from our committee I passed out to every Member of the Senate how much money went to the individual States and what it was used for in the Prevention and Public Health Fund because I wanted to be transparent and above board. So I pointed out, for example--these are not private things; these are public. I pointed out to my friend from Tennessee that $4,669,362 was made available to Tennessee in this Prevention and Wellness Fund for fiscal year 2011. I listed all the things it went to: community programs to promote healthy living, detection and prevention of infectious diseases, clinical preventive services, strengthening of public health infrastructure, tobacco prevention programs, some to East Tennessee State University for the training and preparing of a public health workforce, Vanderbilt University Medical Center for clinical preventive services.

I get right down to the dollar, where it all went. I am not trying to hide anything. I say to my friend from Tennessee, ask these people where did this money go. We know where it went. Does my friend propose that we cut out all this money that went to the State of Tennessee?

Here is Arizona: $7,758,944 went to Arizona in 2011. I gave this to my friend from Arizona listing exactly where it went and what it went for in prevention and wellness. Does my friend say this ought to be eliminated? Wyoming got $1,785,534. Every bit of it is listed here, exactly where it went.

If we accept the Republicans' proposal, we do away with all of that, all prevention and public health. It has been said on the other side that even our President wanted to do away with or take money out of it. I point out that the President did propose earlier this year as a pay- for for the extension of the unemployment insurance program and for other things to keep tax rates from going up that we take $5 billion out of this program over the life. But I think the President made it very clear that was it.

In fact, we have a Statement of Administration Policy on this bill which states unequivocally that the President will veto this bill if there are any cuts in the Prevention and Public Health Fund. While I was personally opposed to the $5 billion that the President proposed taking out--and was taken out of the fund--I can say that, well, that ought to be the last penny taken out of the Prevention and Public Health Fund. Now we see that the President agrees, no more. We took $5 billion out and that is the end of it.

People keep calling it a slush fund. I have here where every dollar went in all of the States, what it went for. It did not go to neutering dogs in Nashville, TN, regardless of how many times we may read it or hear it on Rush Limbaugh or Joe Scarborough or anyplace else. It is not true. I challenge anybody, if they have that evidence, let's see it.

Again, I just think what the Republicans have offered as an offset is not serious. I cannot believe they want to do away with the Prevention and Public Health Fund. On the other hand, is our proposal serious? Do we want to really close this loophole for professional corporations under subchapter S? Yes, we do. I think that is serious. There has been a lot of abuse of people using the cover of subchapter S to avoid paying their taxes. A number of cases have come before us that I have seen where people have used subchapter S as a means of not paying their fair share of taxes.

One of the examples that just came through was former Senator John Edwards of North Carolina, a former Member of this body, a former Presidential candidate and Vice Presidential candidate. I will not get into his personal life; that is something else. But former Senator John Edwards of North Carolina claimed, over a multiyear period, that $26 million in revenue from his subchapter S corporation was unearned. He claimed he didn't really work for a large share of his income from winning court cases. By making this argument, he avoided nearly $750,000 in payroll taxes.

That is not fair. That is an inappropriate gimmick. It is a gimmick when we allow a professional to give his or her spouse and children 95 percent of the stock in their subchapter S corporation and then declare it their profit and not their work as an accountant or as a lawyer that is responsible for the income. That is a gimmick. That is why people are rushing to form these subchapter S corporations.

We have a recent case where the taxpayer was an S corporation, an accounting practice owned by a CPA and his wife. The CPA served as the corporation's president, treasurer, director, and only full-time accountant but received no salary. Imagine that. He received no salary. Instead, the CPA ``donated'' his services to the corporation and withdrew earnings from the entity in the form of dividend distribution. During the years under audit, the CPA worked for the corporation approximately 36 hours per week. In addition to testifying that his work was crucial to the continued success of the corporation's business, the CPA also indicated that dividends were drawn in lieu of salary to reduce employment taxes. Imagine that. The corporation asserted that the CPA was not an employee, and even if he was an employee dividend distributions cannot be taxed as wages.

Well, he was caught in an audit. But, we know audits are few and far between. So the court found the shareholder to be an employee who performed significant services. His wages encompassed all remuneration for services, and it constituted all wages for tax purposes. That is what is happening. That is what is happening out there.

What does our bill do? Right now, if you are in a subchapter S corporation, you, the person, get to say whether what you are making is income or dividends. I heard mentioned something about Warren Buffett. I don't know his whole deal, but it seems to me that most of his income is from dividends and capital gains. We are not talking about that. We are talking about--this would be--if we took the subchapter S situation and applied it to C corporations, which Mr. Buffett would be in, then Mr. Buffett would face a board with independent people making a decision on officers' salary.

Now with subchapter S corporations with only one, two or three stockholders, they are making their own decisions on their personal taxes, whether they are dividends or salary. What do you think people decide?

Again, an accountant tells a subchapter S corporation it can do 40 percent and it would not get audited, they do 40 percent and don't get audited, and they don't have to pay Social Security or Medicare taxes on what is really gain.

What do we do in this bill? We say: Look, if you are a professional subchapter S corporation and you have three or fewer shareholders, then we draw a bright line. If your income is over $250,000 a year for a joint filer, and if in fact there was earned income, then it would be subject to FICA taxes. That is the bright line that we are drawing. In fact, what it will do is give subchapter S corporations a better idea of whether profits are earning money or dividends.

Quite frankly, not only are we helping to raise money for the Medicare

and Social Security trust funds, we are actually making it better for people out there who may not know where they fall. Is it dividends or is it earned income? Our bill only covers a very narrow share of S corporations. It deals only with certain professional corporations. It doesn't touch manufacturing or retail activities. It doesn't touch real estate activities. It covers the area where the abuse is most prevalent right now.

I want to speak for a minute on what Senator Alexander was talking about earlier about the money that came from students and whether it was given back to students. He said that instead of 6.8 percent, it would have been 5.3 percent. We voted on that and it failed. So we did speak on that.

Again, what I point out is that most of this money--most of the money that we had in that $61 billion, most of that indeed went for students. I think I had it here--of that $61 billion, $36 billion went to Pell grants, helping raise Pell grants; $750 million went to bolster college access for students through the College Access Challenge Grant Program; $2.55 billion went to Historically Black Colleges and Universities and minority-serving institutions; $2 billion went to community colleges; about $10 billion was used for deficit reduction; $9.2 billion, as I said, went to certain health care activities.

Guess what one of those was that was paid for. Requiring dependent coverage--saying that a young person can stay on his or her parents' health care policy until age 26. Does that help students? Of course it helps students. How many young people who go off to college, and they are in college and maybe drop out a little while to make some money and then go back to college and maybe even graduate, but they don't have a full-time job--they can stay on their parents' policy until they are age 26.

I cannot tell you how many people I have heard from in my State of Iowa who have said what a godsend this is to them and their kids who are students. I make no apologies for the fact that some of this money out of that $61 billion that went to subsidize banks went to help students stay on their parents' health care policy.

When they say some of the money came from students, it didn't. The $61 billion all came from cutting the subsidy to banks. The great bulk of it, all but about--well, $10 million went to pay the deficit down, and $9.2 billion went to things such as banning lifetime limits, requiring dependent coverage, expanding community health centers, that type of thing. So none of it actually came from students themselves. It all came from closing the loophole where banks were making on that money.

The next thing that was said I wanted to correct was that the Medicaid expansion in the affordable care act--100 percent of that expansion is paid for in the Federal side, not the stateside. Senator Alexander talked about this and was saying we are expanding Medicaid, which is a burden on the States. That would be true, but for the fact that 100 percent of this expansion is paid for by the Federal Government. I think that phases down to 90 percent in the future, but it never comes below 90 percent.

If the Senator would like to debate whether Medicaid should be all Federal, or Federal and State, we can do that and maybe even find some common ground on that, but that is not the case before us. I didn't think the debate on this bill to keep student interest rates low would now morph into a debate on health care. But if you want to have a debate on health care, I will be more than happy to do so, and whether or not we should use money from the Prevention and Public Health Fund to pay for it.

So, again, I would say no money--no money--comes out of the Medicare trust fund to pay for this bill--none--and certainly none comes out of the Social Security trust fund. The money that is raised goes to the Social Security trust fund and the Medicare trust fund. None of it is actually diverted from the trust funds.

Under the budget rules we are operating under, money raised can be used as an offset even though that money is raised for Medicare. I want to make it crystal clear that the money we are raising from closing this loophole on subchapter S corporations, none of it--none of it-- actually comes out of the trust funds for student loans or to keep the interest rate low. It does go to the Medicare and Social Security trust funds.

Under the Republican proposal, we would not get any more money into Medicare or Social Security. They would just do away with the Prevention and Public Health Fund and take that money and use it to offset keeping the interest rates low, but not one nickel of that would go to Medicare or Social Security. Our bill would help those trust funds.

So our bill really has three benefits: First, it closes a tax loophole, provides for more definitive application of what is subchapter S income or dividends for a narrow class of companies-- earned income or unearned income; second, it provides money to the Social Security trust fund and Medicare trust fund, which is needed; and third, it allows the student interest rate loans, Federal subsidized loans, to stay at 3.4 percent for the next year.

Sometime in the next year, obviously, we are going to have to figure out a long-term fix for this or what we want to do on these subsidized loans in the future and how we are going to pay for this down the road. In the meantime, as everyone has said on both sides, we both agree it ought to stay at 3.4 percent for the next year.

So I guess the debate does revolve around how we pay for it. Again, from my viewpoint--not my viewpoint; the House already voted last week to kill the Prevention and Public Health Fund, and that is what the Republicans are proposing here.

Again, to refer back to where I started earlier this afternoon, I think the lead editorial in the New York Times today was quite clear in talking about the findings found in the New England Journal of Medicine about what is happening with type 2 diabetes and how devastating that is going to be in the future. They said the long-term goal should be the prevention of obesity and diabetes. The editorial said:

Congressional Republicans, meanwhile, are bent on

dismantling health care reforms that could greatly assist in

curbing the obesity epidemic. The Republican-dominated House

last month narrowly passed a bill that would eliminate a

Prevention and Public Health Fund, established under the

reform law in part to pay for lowering the interest rate on

subsidized student loans for a year.

The editorial noted that there is no explanation for this move except for the usual anti-health care reform demagoguery and noted that the fund is already providing grants to state and local governments to help pay for programs to fight obesity and prevent chronic diseases, including diabetes, in the community, the workplace, and among minority groups.

So I guess that is really the argument--how do we pay for it? It comes as no surprise, I am sure, when I say that I think closing this loophole is much better than doing away with the Prevention and Public Health Fund.

With that, Mr. President, I yield the floor.

Mr. President, I say to my good friend from Wyoming--and he is my good friend, and we do a lot of good work together--I wish we could have this bill in our committee. I think we could work it out. But the fact is, to raise the money, it has to come from the Finance Committee, and we don't have jurisdiction over that. If we had jurisdiction over that, we could probably work it out. We have a good way of working things out in our committee. But we don't have jurisdiction over finance on this darned thing. If we did, we could probably figure it out.

Well, I think that is where this came from. I don't know.

I would also say to my friend from Wyoming, because I was listening to him, I think it is fair, if we are going to have a vote on ours, that we ought to have a vote on yours. I think that if we are going to have a vote, we ought to have a vote on ours, which is the subchapter S corporation, and see how that falls, and have a vote on whether we want to end the Prevention and Public Health Fund and use that money. I would like to have that vote. I would love to have that vote. I would love to see how my friends on the other side of the aisle want to vote on whether they want to kill the Prevention and Public Health Fund.

I would also say that on this subchapter S corporation issue, the IRS right now audits about one-half of 1 percent of the returns from subchapter S corporations. So they have to think, what are the odds they are ever going to catch me, and if they do, they pay a fine and that is it. The IRS doesn't have the personnel to do everyone.

What we are doing, I wish to say again, just to make it very clear, that because of the sort of fog that surrounds subchapter S corporations right now, the IRS simply can't audit them all. They don't have the personnel to do that, and some claim that there is a lot of questions about whether something is income or dividends. But let me repeat again what our bill does.

We create a bright-line test that affects only a narrow class of subchapter S corporations. It affects only professional subchapter S corporations, those engaged in professions such as doctors, lawyers, accountants, consultants, lobbyists, where the gain is due to the professional work. This provision does not include subchapter S gains from unrelated retail, wholesale or manufacturing activities.

The provision only covers subchapter S corporations where there are three or fewer stockholders. It only covers those earning more than $250,000 a year as a joint filer, and it only covers gains when 75% or more are attributable to 3 or fewer stockholders.

So if a subchapter S company has income that is partially from professional activities, such as lobbying, and partially from other activities, such as real estate investments, the investment income does not fall under the rule.

The Joint Committee on Taxation and the Treasury Inspector General for

Tax Administration have both issued reports that show that underreporting of earned income subject to FICA taxes is a significant issue. Using IRS data, the Government Accountability Office in 2009 calculated that in 2003 and 2004 tax years the net shareholder compensation underreporting amounted to nearly $23 billion. Since then, the number of subchapter S organizations has been increasing rapidly, and I would suggest that is a main reason why.

Lastly, I just wish to point out for the record, to my friend from Wyoming, that the House bill did not go through the committee either. They brought it directly to the floor. It did not go through the Education Committee. It only went through the Rules Committee and then to the floor. So they did the same thing. They didn't go through their committee either. Again, I am hopeful we can work this out. But if we can't, I say to my friend, I hope we do have an up-or-down vote on both provisions.

There was one other thing I wished to mention before I leave the floor this afternoon and leave this debate on the student interest rate bill; that is, I heard time and time again from the other side about the fact that the President took $5 billion out of this and the fact that I said earlier: Yes, and that was the limit and that was all and he didn't want any more taken out of it. Someone said, but he has $4.5 billion in his budget to take out.

What happened, the President did put $4.5 billion in his budget to take out of the Prevention and Public Health Fund--which I hope comes as no surprise to anyone. Then, when the House and Senate earlier this year were engaged in negotiations on extending the unemployment compensation and also the payroll tax deduction, when we were engaged in that, they put that on the table. The President stuck with his $4.5 billion, the Congress added another $500 million, and they come up with a $5 million cut to the Prevention and Public Health Fund. The President said: That was in our budget. If you want to use it for that, use it for that but no more.

As I said, we have a statement of administration policy that says that if the elimination or any cuts to the Prevention and Public Health Fund are in here, he will veto the bill. I just wanted to make clear that the $5 billion and the $4.5 billion are one and the same. They are not $9.5 billion that he wanted to take out of the Prevention and Public Health Fund. I wanted to make that clear.

I see my friend from Florida is here, and I yield the floor.

Mr. President, there is no reason we should be having this debate today. Freezing student loan interest rates for 1 year during tough economic times is something I believe we all agree on, so it should be relatively simple to accomplish. The President supports it, Governor Romney supports it, and a bipartisan majority in both the House and the Senate supports it. Given this kind of agreement, I see no reason why both sides could not have a good-faith discussion on where to find the $6 billion in savings in a government with a budget that spends nearly $2 trillion annually. Actually, we spend more than $2 trillion annually.

I would mention, this bill has not been to committee. I hope the American people have noticed that bills that go to committee and then come to the floor are usually successful. I hope they also notice that bills that do not go to committee and come to the floor are usually not successful; they are usually a political statement. That is what we have here again today.

This is how it works: You bring a bill that you know the other side-- well, in fact, this body has already voted on the concept of this tax before and defeated it. They know with that provision in there, this common interest will fail. So why do they do it? Well, you notice this is a motion to proceed and requires a cloture vote. So 40 of us can stop this bill, and will stop this bill in the condition it is in without having gone to committee. But when we stop things, it seems those Republicans think that students ought to be paying more interest. That is the part that is wrong. The part we are disagreeing about is how to pay for it.

Pay for it? We have an economic judgment day coming in this country because of the debt we are running up on a daily basis. That is what put the world into kind of this funk anyway. I am not sure what is going to happen now that France has decided they are not going to have austerity and Greece has decided they are not going to have austerity. Now they have leaders who say they are going to fight any kind of austerity. It could put the world in a real crisis.

But what we are talking about is whether to keep the student interest rate at the low rate that it is right now, and we are going to have to vote on a bill that we are going to have to defeat because of the pay- for in it,

which will make it look as though Republicans want to raise the rates on students, and that is not true.

But the majority prefers to pick a fight rather than help students during these tough economic times. What do I mean by this? After initially reaching out to my staff, indicating their willingness to work toward a bipartisan solution, they leaked their proposal before talking to us, which contained the offset they have in here.

There could be a solution. We have to counter with one and ask that there can be two side-by-side bills. That means we can have one they vote against, so we can say they did not want to keep student rates low, which is also wrong. But somehow we have to figure this out, and we have to do it in a bipartisan way. That means probably neither suggestion that is up right now is the one that is going to work.

The majority would have Americans believe their bill simply closes a loophole used by wealthy doctors and lawyers and other professionals who organize as an S corporation in order to avoid payroll taxes. Well, let me tell you about taxes. If you are in one of those small business S corporations, you pay your taxes. You pay them on the year the company earns them--not the year the dividends are distributed. The year the company earns it, you pay all of the taxes that are due on that piece of money, even though you have to leave it in your business, so you can keep reinventing your business, so you can stay in business, so you can maintain the jobs you already have, and, hopefully, add a few. That is what an S corporation does. It says: We are going to give you this big break. We are going to let you pay your taxes upfront, even though you cannot take the money out.

But what we are talking about here is payroll taxes. Payroll taxes are the money all of us put in as an investment for our Social Security and our Medicare. That is what payroll taxes are. That is what we are talking about now, charging on this money that has already had all the income taxes paid on it and, incidentally, has also had payroll taxes paid on it.

The IRS is already given the authority to check and see if people are taking out a de minimis distribution. There is an amount you have to take out of your business and you have to claim it for salary. You cannot hide it as if you were rich or something. It does not work that way. The IRS has rules. The IRS can claim those payroll taxes. But what we are talking about now is taking those payroll taxes--payroll taxes, remember, are Social Security and Medicare payments; they are investments in your Social Security and your Medicare--we are talking about taking those and subsidizing student loans.

Medicare is in trouble and, once again, we are talking about stealing from Medicare. We did that in the health care bill. We took half a trillion dollars out of Medicare and we put it into new programs. We did not put it into a doc fix. You keep hearing us talk about the doc fix. We are not paying the docs enough that they want to take any new Medicare patients. Well, we did not take the money in Medicare that might have been used and use it in Medicare to keep the Medicare system running. No. We put it into new programs so we could say this health care plan was paid for.

Now we are saying we are going to use those payroll taxes and we are going to use them to subsidize the student loans. When does Medicare ever get the money to pay for Medicare? Oh, that is right, we have a new board now--an unelected board--and this unelected board will tell us each and every year where we have to cut in Medicare in order to pay for Medicare, even though we stripped all this other money out that could have paid for Medicare. What a deal.

Well, here we go again. This tax would end the payroll taxes by shifting them into the student loans. When we are talking about pay- fors, we do all kinds of crazy things around here, and we should not be doing them. We should be a little bit more straightforward, not just with the students but with the American taxpayer. In reality, this is an irresponsible tax increase on small businesses at a time when we need small businesses creating jobs so college students have employment opportunities when they graduate.

In Wyoming, S corporations are family owned small businesses working hard to keep their businesses afloat. As I mentioned, they get to pay their taxes even if they cannot draw the money out and use it. So, for instance, small motels, small architecture firms, and groups of engineers might choose to operate as S corporations. Or they could be a full corporation, and then they would have some of the same benefits Warren Buffett has. Warren Buffett makes millions and he does not have to pay payroll taxes on that. But we did not suggest ending Warren Buffett's payroll tax-free money. We are only going to do this to the small business corporations. Sounds fair? I do not think so.

This will also hurt family businesses in another way. For example, a son who is taking over an accounting practice from his father could be hit with substantial payroll taxes if he owns, for example, 10 percent of the firm, while his father, who is no longer active in the business, retains the other 90 percent.

These are not the tax scofflaws that the majority suggests this tax will impact. They are real, small businesses that are the fabric of the American economy. Small businesses accounted for 65 percent of the 15 million jobs created between 1993 and 2009. So rather than increasing taxes on small engineering and accounting firms, we should be encouraging these businesses to hire new employees. As a former small businessman, I know this will not happen if we raise taxes on the very businesses we depend upon to turn the labor market around.

Recent reports demonstrate the need to encourage, rather than inhibit, job growth and creation. That is what we are talking about: jobs. This year, more than 50 percent of college graduates are either unemployed or underemployed. Graduating in a bad economy, where jobs are scarce and lower wages are the norm, can have negative economic consequences for up to 15 years. With the cost of higher education increasing more rapidly than the median family income, there will continue to be greater dependence on student loans. Unless the economy improves, there will also be a lesser chance that going forward graduates will have the resources to even make minimum loan payments.

The Republican alternative puts forward a solution that takes money out of--and I know the Senator from Iowa hates the word--a slush fund, but it is a fund with rather wide possibilities, and a fund that can be designated by the Secretary. This is not the first time this has been used as an offset. Our President signed legislation that cut $5 billion from the fund to offset the payroll tax bill. Now we are talking about payroll taxes again, but our side is talking about using the same funding source the President used to pay for a payroll tax cut earlier this year. The President also proposed to cut an additional $4.5 billion out of the same fund when he submitted his budget for this year.

I had to go and look and see what some of the uses are for this fund that we would be cutting into because it is spent at the discretion of the Secretary of Health and Human Services and there are not a lot of guidelines. Many of the programs funded by this Prevention and Public Health Fund--often called a slush fund--duplicate existing health programs or waste taxpayer money on some frivolous programs.

The fund has wasted millions of taxpayer dollars and even supported potentially unlawful lobbying activity. For instance, a public health clinic in Nashville, TN, used money to offer free preventive services for dogs and cats, not women and children; $3.6 million went to the Minnesota Department of Health to create at least four regional food policy councils, to increase the access and availability of affordable healthy food; $8.4 million to the New York Fund for Public Health to implement a local tax on sugar-sweetened beverages; $3.3 million to the Washington State Department of Health to increase local preemption of tobacco marketing and taxation and support legislation that repeals preemption of tobacco marketing; $3 million to lobby lawmakers in New York for legislation requiring chain restaurants to publicly post the amounts of the calories they serve; $7 million to Jefferson County,

AL, to urge Alabama lawmakers to raise tobacco taxes; $16 million to the County of Los Angeles to help secure a ban on new fast food restaurants around Los Angeles. A lot of that is lobbying activity. Yes, I suppose the end results could be prevention of health care.

This country is coming up on an economic judgment day. We do not have extra money lying around. In fact, when we are talking about pay-fors, we are only talking about paying for whatever new is put in. We do not talk about how we are going to cover the $15 trillion in debt we have out there, the $49,000 every man, woman, and child in the United States owes. It is a heavy burden.

I talked earlier about Greece. Greece only owes $39,000 per person. They are just not trusted as much as the United States. If we keep running up that debt, we are not going to be trusted either. Unfortunately, President Obama and the congressional Democrats would rather play election-year politics than find a solution that focuses on the immediate need of America's students and their families.

Neither bill is ideal. Each spends 10 years of savings in 1 year and neither produces a long-term, sustainable solution. However, the Republican proposal has the benefit of using an offset previously used by the Democrats, as I mentioned. The $5 billion from that fund was used earlier this year to help pay for the extension of the payroll tax holiday, and in this year's budget, the President proposed cutting an additional $4.5 billion.

The Democratic bill raises taxes on small businesses at a time when the Nation needs those businesses to be creating jobs so college students have employment opportunities when they graduate. It is discriminating against small businesses because it does not take in corporate dividends that people get, which are the same thing. It is the dividends they eventually are able to take out of the business. But a big corporation pays dividends to investors and those do not have payroll taxes taken out either.

So no sincere attempt was made by the Democrats to find a bipartisan solution. Both Senator Reid and Senator Harkin reached out to my staff to inquire about the possibility of funding a solution. My staff expressed a willingness to discuss possible offsets, but the Democrats released the details of their proposed S corporation tax prior to any meeting.

When my staff did meet with Senator Harkin's office, his staff indicated the S corporation offset was the only offset the Democrats were willing to consider. That makes compromise pretty difficult. Senator Reid has filed for cloture on S. 2343, the Democrats' bill we are talking about now, and a vote will be held tomorrow at noon. At this point, we have been told we are not going to have a vote on the Republican bill at all.

So cloture tomorrow will fail because there will be no opportunity to put any amendments on this bill, and this is not a perfectly drafted bill. This is something that was put together in a bit of a hurry without having bipartisan input. The reason we have 535 people in Congress is that there are a whole bunch of different viewpoints. The reason we have 22 people on a committee is that there are 22 viewpoints that go into the bill and we can see what unintended consequences there are. That did not happen on this bill.

This has been put together by two or three people or half a dozen staff members or whatever, I am not sure. But it has not had the input from both sides. So our side had to come up with a bill that follows the same procedure. I can tell you neither bill is ideal, and a solution has to be reached for these young people. We are all agreed on that. We are just not agreed on how we pay for it, and we do have a problem with paying for things around here.

I urge the majority leader to pull the bill from the floor, sit down with us, find a solution we all can agree to. This is not an issue over which election-year politics should prevent us from reaching a bipartisan agreement. I am not aware of anybody who is opposed to the extension of the reduction in the interest rate. Incidentally, that is not an interest rate reduction to everybody; it is only to those who have subsidized loans.

If someone is a student who has regular loans, they are not able to participate in this. That would require a lot more money. Again, I urge the majority leader to pull this bill, sit down, come up with a solution both sides can agree on. It is getting tougher and tougher to find pay-fors because we are getting further and further in the hole. We are not going to stop digging, so we better start digging together.

I yield the floor.

Mr. President, I said it before and I will say it again: Neither option is ideal. These ought to be the options we are voting on, but actually we are not going to get to vote on the two options, we are going to get to vote on one option because this is a cloture vote. And this cloture vote will fail. It will fail because it is not a good enough bill to pass. It is not a good enough bill to get 60 votes, so it will fail. And the only purpose of it failing is to say: Look at those Republicans who killed that bill.

There could be a solution, but it isn't a solution by bringing a bill directly to the floor and saying: Take it or leave it. It has to be a solution by sending it to committee and having the people there work out a way that it can be done. We have done that in our committee a number of times, and the bills that go to our committee and then come to the floor are pretty successful. But this one did not go to committee.

So it isn't really two choices we are getting, it is one choice: We can take it the way the Democrats wrote it or we can forget it.

They say this closes a loophole because of the wording regarding there being three or fewer shareholders. Now, I can already hear how people's minds are working. They are saying: OK, if I want to cheat on that--and you have

now taught me how I can--I will add a fourth person. Now your bill doesn't cover it. So it is not written properly. We are not going to stop them by doing what is written in the bill, so it is not going to generate any revenue. If it doesn't generate any revenue, it will not pay for the cost of keeping the health care down.

Besides that, the IRS has guidelines that say how much one should be taking out of their business as wages, and they have to pay a payroll tax on that or they will be taken to tax court. That is the case to which the Senator from Iowa referred. It was a case of an accountant who got caught and was taken to tax court and told he couldn't cheat on his taxes. Now, we ought to have more enforcement like that. It should be pretty easy for the IRS to check and see if there are some S corporations out there that aren't paying any wages. That should be a little computer check since every return gets turned into a digital return now. Some of us help the IRS by sending our forms in digitally to begin with, which saves a lot of input on someone's part. But they can check in a matter of seconds the S corporations that have no wages, and if they have no wages, perhaps they ought to have a much lower limit than what the other side is suggesting.

If we are going to do tax reform, let's do tax reform. To do it this way is the wrong way.

I also heard the comment that this money is not being taken from Medicare and Social Security. Well, the way we do Federal accounting-- and we should be ashamed of the way we do Federal accounting--that can be a true statement, but, in fact, it is not true. Here is how we do it. Here is how we cook the books as a Federal Government. We will collect this tax that should go to Medicare and Social Security and we will put bonds in a drawer and we will spend the money on the reduction in interest rates for the students. That is spending it twice because we are still showing it over here as owing it to the Social Security and Medicare folks. But we do this all the time. Do you know how much money there actually is in the drawer called Social Security? Nothing. There are bonds in there.

I used to listen to Senator Hollings, Democrat from South Carolina, talking about how we were lootin' Social Security--lootin' it--because all we do is put bonds in a drawer and we spend the money. And we have been doing that for decades. So the deficit we are talking about is probably considerably greater than what we are willing to admit. But that is exactly what we are going to be doing here once again. We are going to be lootin' Social Security and Medicare and providing some loopholes for them to keep on doing the same thing they have been doing. We are going to have to get the IRS on that and get it going better.

There ought to be a lot more options. But that is not what we are doing here. What we should be doing is getting together and figuring out more options, more ways to take care of all of the problems students are having. And they are going to be demanding a whole lot more than what we are doing.

I would remind the Democrats that the President did take $5 million from this prevention fund, and I heard him say that was enough. Well, if that was enough, how come his new budget includes taking another $4.5 billion out of that fund? So I guess he doesn't think that is enough. He thinks there is still more that can be taken--$4.5 billion. This is a $6 billion project we are talking about here, so $1.5 billion another way.

We are just talking past each other, and that is what happens any time a bill comes to the floor if this is the only place we get to debate it. Notice how many of my colleagues are listening to me right now. If there are two people on the floor, it usually means one is getting ready to speak and is not listening to what is being said. That is not a debate. That is not a way to come up with solutions. What we have to do is send these things to committee.

Senator Harkin and I have a way of working on bills in committee, and that is to have people turn in their amendments a couple days ahead of time and we look at those. It is surprising how many times an amendment by a Republican is almost the same as an amendment by a Democrat. The trick is to get the two of them to sit down together and figure out which words need to be changed so that they can both take credit for it.

So this is a frustrating process. It is the wrong way to do it. But I have to answer one more thing yet; that is, I cited some cases where funds were being used from that prevention fund that I thought were wrong and I do think are wrong. The Senator said that if we had some information on that, if we would give it to him, he would make sure the Department of Justice gets on it. Well, now we not only need to have the IRS working, we have to have the Department of Justice working a little bit because there is some pretty good evidence, I think, that some money has been spent for lobbying. In some cases it is called advocacy, but it is by people working the legislators over, and that, in my opinion, is lobbying.

I do hope this bill will be referred to committee, which is where it deserves to be, so that a solution can be worked out. I would hope that if we do have that cloture vote tomorrow, instead of having the bill pulled, that both sides will join in saying ``send it to committee'' and vote against cloture.

I yield the floor.

Could I amend my comments to have the Finance Committee take the bill and work out a solution?

Mr. President, I am glad I had an opportunity to hear the distinguished Senator from Iowa, who is my friend and the chairman of the Health, Education, Labor and Pensions Committee. I wish to address the same subject he did, but I want to hasten to summarize it at the beginning to say that we agree. By we, I mean Governor Romney, the likely Republican nominee for President, President Obama, the House Republicans, I, and others agree that for the next year we should keep the interest rate on 40 percent of new student loans at 3.4 percent. There is no difference of opinion on that.

What is different is how we propose to pay for it. The distinguished Senator from Iowa has actually outlined the difference of opinion very well. What we are saying, what the Republicans are saying, is that in order to pay for the $6 billion it will cost taxpayers to keep that 3.4 percent interest rate the same for the next year, we want to give to students--give them back their own money, the money the Democrats are overcharging them on their student loans. The Senator from Iowa went through a very careful explanation on that which was largely correct. He pointed out that at the time the majority decided it would make the Secretary of Education the Nation's leading banker and put him in charge of administering what is becoming to be nearly $1 trillion worth of student debt--in other words, take it away from banks and make the government the banker--that there was about $61 billion in ``savings.'' That is from the Congressional Budget Office.

Our friends on the other side of the aisle argued those were unnecessary subsidies to banks. Let's say, for the moment, for the sake of argument, they are correct about that. That $61 billion is money students were paying in interest on their student loans. Wouldn't the logical thing to do be to let the students keep the money? If we truly cared about college tuition going up and student loans rising, wouldn't the thing to do be to say: We have done a big favor to you students-- the government has been overcharging you on your student loans, all 18 or 19 million of you who have student loans--so instead of the rate of 6.8 percent, which it is for most students, we are going to lower that rate to 5.3 percent.

That is not my number. That is the number the Congressional Budget Office said. We could have that $61 billion our friends on the other side said the government is overcharging students and we could reduce the average loan of about $25,000 to a 5.3-percent rate instead of 6.8 percent and that would save the average student on the average loan about $2,200 over 10 years. But they didn't do that. They spent it on more government; $10 billion to reduce the debt and $8.7 billion to pay for the health care bill. So what we are saying is in order to freeze this rate at 3.4 percent, let's give to students the money they were paying. Instead of paying for the health care bill, let's reduce the student rates. That is the difference of opinion here.

Of course, our friends on the other side of the aisle have a better way, in their opinion. Not only do they want the students to continue to pay for other government programs, and some money for the health care bill, they want to raise taxes on job creators in the middle of the longest recession we have had since the Great Depression.

Let me go back to the beginning point here. We are talking about something that was reflected very well in the New York Times yesterday. I noticed the Senator from Iowa talked about the New York Times. Here is the national section from yesterday talking about what is going on in California.

Angry about tuition increases and cuts in courses and

enrollment, a dozen students at California State University

have taken their protest beyond marches . . . and declared a

hunger strike.

The fasting protest was the latest display of anger at the

23 California State University campuses. The system has lost

roughly $970 million in state financing since 2008.

The University of California is probably the best public university in the world. It has lost nearly $1 billion in State funding since 2008, and the students are fasting. They are upset about the tuition increases. Why is the tuition increasing? Well, the administrators say if we lose $1 billion from the State for our State universities, the money has to come from somewhere to pay for excellence in our universities, so we increased the tuition. That story has been going on all over the country. Why is that happening?

The President has put this issue on the table. I think we need to discuss it. Why are they fasting in California, protesting tuition increases? In the last year why did State funding for the University of Tennessee and Tennessee's community colleges and Tennessee Tech go down 15 percent last year? The main reason is the Federal Government's health care policies and its

Medicaid mandates on States that are soaking up State dollars on Medicaid that would otherwise go to pay for public universities.

President Obama did not start this policy--it has been going on for 30 years--but he is making it much worse with his health care law. And when it takes effect next year, the Kaiser Family Foundation says that States, which already are spending one out of four of their State tax revenues on Medicaid, will see a 29-percent increase in their spending on Medicaid. What will that do? What that will do is force California, Tennessee, Connecticut, and Iowa to look in their State budgets, to take the money that most likely would have gone for the colleges and community colleges and public universities and instead spend it on Medicaid. Those Federal Medicaid mandates are soaking up money that would otherwise go to public colleges and universities, and as a result of that, universities are raising tuition. As a result of that, loans are up, students are fasting, and the President is on the campaign trail promising to fix it.

Let's talk about his fix. First, it is the political season, so Senators, and all of us, need to listen very carefully when someone begins to stir the crowd about a popular issue, and surely being able to pay for college is a popular issue. We hope all American students who want to have a college degree will be able to go and afford to go to college. Our Federal Government goes to great efforts to make that possible.

Half of the students who go to colleges and universities in America-- there are 6,000 of them--have a Federal grant or loan to help pay for college. We have more than $100 billion in new loans going out this year from the American taxpayer. That is from people out there working and paying taxes--the UAW member, the teacher, their taxes are going to loan more than $100 billion to students this year. The amount of money for Pell grants this year is over $41 billion.

The University of Tennessee in Knoxville is a fine campus where the tuition is about $7,400 a year, which is a good bargain at a great university. Almost all the students show up with a $4,000 State scholarship called the HOPE scholarship. For a quarter of the students who are low income, they have Pell grants that carry them above the amount of tuition. State and local governments have made a great effort to try to make it easier for our young people and older people to continue their education, and we want to continue to do that. There is a bipartisan effort on that.

Now the specific issue at play here, and the one we are likely to vote on tomorrow, has to do with one type of those student loans, and let's try to put that in perspective.

The Democrats have a version and the Republicans have a version. I offered a version which would pay for it by giving back to students the money the government is overcharging them. The Democrats have one that would raise taxes on people who create jobs. But whatever one passes-- if one were to pass--would save average students on new loans about $7 a month in interest payments for the next 10 years. That can add up. That could be $83 in a year, $830 over 10 years. But that is what we are talking about, $7 a month in savings or $7 a month in interest payments on the average loan, and that is for 40 percent of the new loans. So if you have a student loan and it is at 3.4 percent, that is not going to change. There are 40 percent who have student loans today that they took out last year at about 3.4 percent. Most everybody else is at 6.8 percent, which is a good deal lower than you could get with a private loan. A private loan is one where you go to a bank and say: I am going to college and I don't have a job so I need to borrow money. You may get it, but they are going to charge you more because you may not be able to pay it back as well as somebody else.

We have agreed on this--at least we agreed on the policy, but not how to pay for it. The President has agreed on it and Governor Romney agreed on it. For the next year we wish to take 40 percent of new loans and keep them at the 3.4 percent rate, and then later in the year-- earlier next year--when we look at our entire budget, how much money we have to spend, the size of the debt, which is of great concern to all of us on both sides of the aisle, we will see what we can afford to do. That is the first question.

But I am glad the President has been going to college campuses. I am glad he has raised the issue of student loans and college tuition because as a former Governor of Tennessee who cares deeply about education and as someone who was also U.S. Education Secretary about 20 years ago, I have been trying for 20 or 25 years to get Washington to pay attention to the idea that it is ruining our public colleges and universities where these Medicaid mandates soak up the dollars that ought to go to public colleges and universities. Three-quarters of our students go to public universities such as the University of Tennessee or Iowa or Iowa State or California or the community colleges, which are our secret weapon. And even with the rising tuition, those costs are at least reasonable now. I mean tuition at a community college in Tennessee is about $3,000. Nationally the average tuition for a 4-year public university is about $8,200. It is not easy to find the money for that, but it is still within range.

What has happened in the last 25 years? I can tell you what happened in my State. I visited with the retiring president of Tennessee Tech University, a fine engineering school. He said two things: One, over the last 3 years State funding for his university--and for most in Tennessee--has gone down by 30 percent. That is not a 30-percent reduction in the rate of growth, that is a flat-out cut. And why has that been happening? Well, our current Governor, a Republican, and our former one, a Democrat, have said what I know and every Governor knows: when you make up your State budget and you get down toward the end of it, you make a choice between Medicaid and higher education. And because Medicaid is run from Washington with specific mandates on states, the States end up having a stranglehold put on them, and in effect, if they participate in the program, they are forced to make decisions about eligibility and how much they spend, and there goes the money. There goes the money and it doesn't go to the public colleges and universities, resulting in less money, higher tuition, and more loans.

The fasting students in California--if I walked up to them today and said: I bet you didn't know that President Obama's health care policies are the reason you are hungry today, they wouldn't believe that. But the fact of the matter is not just the President's policies but the policies over the last number of years have gradually soaked up money that would make the University of California a great university and left it no recourse but to become more efficient, which it should, and to raise tuition, which it is doing.

I will give an example of how much difference this makes. In the early 1980s, I was a young Governor and I was making these budgets up. I would say: Well, about this much goes to K 12 education, and the courts are running prisons, so I will have to put that in, and then the gas tax goes to the highways. And you get down to the end of the budget and you make a choice between Medicaid, the Federal program that States pay about 30 percent of, and education. I was trying to restrict funding for Medicaid and increase funding for education. I could see where we were headed over the next several years.

I went to see President Reagan. I had made an appointment. I saw him in the Oval Office. I said: Mr. President, let me propose a grand swap. He said: What do you mean, a grand swap? I said: We will take all of K 12 education in the States and you take all of Medicaid. He thought for a moment, and he said that sounds like a pretty good idea. My reasoning was that instead of Medicaid having two masters--one in Washington and the other among all the different Governors--if it had one, it would be managed better. If Washington ran Medicaid, Washington would have to pay for it all and make sure that it could be funded.

I thought then, and I still think today, that almost all of the responsibility for kindergarten through the 12th grade belongs as close to the child as possible--first with the family, then with the classroom, and then with the State. I believe that while there has been some important advocacy from Washington over the last 30 years, if we

had made that grand swap 30 years ago, the Medicaid Program would be run better today and our public schools would be performing better today.

We could argue about that, but the one thing we could not argue about is the difference in money. Back then if we made the swap, the States would have come out ahead by about $4.5 billion. In other words, the Federal Government would have taken over Medicaid and the States would have taken over K 12. The States would have given back to the Federal Government the Federal aid for education and keep their Medicaid money. Four-and-a-half billion dollars was the difference in 1981 or 1982.

What would the difference be today if we made such a grand swap? It would be $92 billion. It would be $92 billion of extra money the States would have if today the Federal Government took over all of Medicaid and the States took over all of the responsibility funding for K 12.

That would mean in a State such as California where the students are fasting, California would probably have an extra $12 billion or $13 billion. Do you think much of that would go to the University of California to continue its excellence? Sure it would. Would much of it go to Tennessee Tech, the University of Tennessee, and the community colleges? It absolutely would.

What happened over the years is that these well-intentioned Federal health care Medicaid mandates have put a stranglehold on Governors, which is why I said when we were debating the health care law that I thought any Senator who voted for it ought to be sentenced to serve as Governor for 8 years and try to implement it.

I mentioned that last year Tennessee's State funding for higher education went down 15 percent. Guess what. State funding for Medicaid went up 16 percent. So there is a direct relationship: Medicaid up, State funding for public universities down, tuition and loans go up, and that is the real problem we have today.

I am glad the President has put this issue on the table. I am glad he is talking about it, and I hope Governor Romney talks about it. I hope what they agree to do is either to repeal the health care law or to repeal the Medicaid mandates and give States more flexibility. We can't pass a law in Washington, as we did 3 or 4 years ago with the stimulus, and say we are going to give you more Medicaid money, but, Mr. Governor and Ms. Legislator, you can't reduce State funding on Medicaid.

Lieutenant Governor Ravitch of New York, a Democrat, wrote an excellent article in the Wall Street Journal. At the time it said: If you tell New York that at a time when we are reducing revenues and say we have to keep spending on Medicaid, we have to cut something else, and the State University of New York gets cut. So New York cuts the State University of New York, tuition goes up, loans go up, and students are protesting.

It is not just the student protests that I worry about. We are at a time in our history when we are in a serious brain-power competition around the world. We have a lot of Chinese scholars who go from American universities home to their universities. In a bipartisan way-- and the Senator from Iowa and I were part of it--we passed something called the America Competes Act a few years ago and reauthorized it so we could properly fund science and our innovation. Government-sponsored research has been an important part of our job growth over the last 30 or 40 years. Where is that done? It is done in our national laboratories or our great research universities. Well, at least half of our great research universities are public universities, such as the University of California, the University of Michigan, the University of Tennessee, the University of Connecticut. If we keep cutting government-sponsored research and the quality of those universities, our job growth won't be nearly as good in the future.

Here is another example of how much that has changed over the years. Thirty years ago in Tennessee, the State paid 70 percent of the cost of a student to attend a State university and the student paid 30 percent. We had an implicit agreement between the government and the student, and we said: If we increase your tuition, we will increase the State contribution by the same percentage. So we kept it at about 70 and 30, and it made it possible for a lot of students to go to college. What is it today? It is 30 and 70. It is upside down. Thirty percent of the support for colleges and universities comes from the State government and nearly 70 percent comes from the students. Why is that? The main reason is Federal health care mandates that put an unrealistic amount of money on top of States, and it is about to get worse.

I mentioned earlier the Kaiser Family Foundation, which estimates that next year States that are already spending $1 out of every $4 for Medicaid will see a 29-percent increase in Medicaid funding. This fast will have to go on a lot longer in California if that is going to happen. We can't cut $1 billion out of the University of California every 3 years and have it remain the best public university in the world. It is just not going to happen. And we can't raise tuition 6 percent or 8 percent every year and make college available to the large number of students that would like to go.

So I am glad the President and our friends on the other side in this political year have raised the issue of rising tuition and student loans. We agree on the little issue before us. We would all like to take that 3.4 percent interest rate and extend it for a year. That costs $6 billion. That would affect new loans and only 40 percent of the students. But we agree on that, the President agrees, and Governor Romney agrees. That is not an issue. The issue is, do we raise taxes on job creators or do we give back to students some of the money we are continuing to overcharge them on student loans? That is the issue. The larger question--and one that I hope we all address this year in our debates and that the President and Governor Romney address in their debates--is, What about the future of our public colleges and universities, where three out of four American college students go? How are we going to maintain their quality and maintain the opportunity for access to them if we continue to impose Medicaid mandates on States that soak up the money that ought to be going for excellence in higher education and the greatest amount of opportunity for students by keeping tuition rates low? That is the real issue.

While President Obama is not responsible for what went on before he became President, he has made that condition much worse. If he is going to bring this up on the campaign trail, I hope he tells the rest of the story, which is that he and his health care and Medicaid mandate policies are a principal part of the reason and I would say the main cause going back over the years as to the reason California students are fasting, Tennessee students saw an 8-percent increase in tuition, and all across the country college presidents know very well that the reason there have been such reductions is because of Federal Medicaid mandates.

I hope we have an opportunity tomorrow to vote not only on the Democratic proposal to keep student loan rates at 3.4 percent but also on the Republican interest rate reduction act that I have proposed, which would also keep the rates at 3.4 percent but pay for it by stopping the overcharging of students to help pay for the health care law.

Mr. President, I yield the floor.

Madam President, I move that the Senate resume consideration of the motion to proceed to S. 2343, and I ask unanimous consent that the time until 2 p.m. be equally divided and controlled between the two leaders or their designees, with the Republicans controlling the first 30 minutes and the majority controlling the second 30 minutes.

Madam President, the clerk just read the matter before the Senate, which is to prevent the interest rate on loans students receive to go to school--the money they borrow--from doubling from 3.4 percent to 6.8 percent. That is the pending matter before the Senate.

Yesterday the Republicans continued to filibuster our plan to prevent that from happening. We do not want the rates to double. We don't want them to go up at all. There are 30,000 people in Nevada who are depending on our doing something to freeze those rates. But what is worse, in my estimation--and I think that of the American people--is that Republicans seem proud of blocking this legislation. Not a single Republican voted to allow the debate to go forward.

This isn't an issue of saying: OK, if I vote for this, this will be the legislation. They would not even let us go forward to debate it. They have said they like the bill, except they do not like the way it is paid for. Fine. Let's get on the bill and offer amendments to pay for it. But no--every single Republican voted no. Every single Republican said: We are not going to allow a debate.

The American people certainly shouldn't be surprised because this has been going on for 3 years, almost 4 years. Everything is a fight. They are blocking legislation that would allow us to stop the increase of the rate on student loans. That is wrong. And the person who signed this legislation into law, making this interest rate such as it is, was President Bush. So I hope Republicans will come to their senses and work with us to accomplish this, but I am not holding my breath because, as I indicated, they seem proud they have stopped another piece of legislation altogether.

Now, what does this mean, that they are hanging together to stop legislation, to stop progress? Well, as we work to create jobs and make college affordable, our colleagues--my Republican friends on the other side of the aisle--operate under a different set of priorities.

In the House, for example, there are efforts now underway to undo a hard-fought agreement of last August to cut more than $2 trillion from the deficit over the next decade. That agreement came after threats by the tea party-

driven House--and now 40 percent of the people over here are tea party advocates--to shut down the government. And they wanted to do that in a couple of different ways: not allowing us to continue funding for government programs, and then, for the first time ever, there was a knockdown, drag-out fight over weeks and weeks as to whether we should increase the debt ceiling in this country. During President Reagan's time in running the country, this had been done dozens of times. But, no, these folks will do nothing without a big fight. As a result of that, we came to an agreement that was bipartisan. Now, some say the agreement was forced upon the Republicans, but they voted for it, an agreement to reduce the deficit, and the deficit we couldn't reduce before August of last year. We said: OK, fine, if we don't do something about it this year, then there will be automatic cuts called sequestration.

Now the House is doing everything they can to walk away from the agreement we made and the bipartisan vote we took. They are doing everything they can. They have a Republican budget, the so-called Ryan budget. And I say ``so-called'' because they are trying to make a reconciliation bill, but they can't do it because they are not following the law to do that. So they not only have reneged on this bicameral, bipartisan agreement to reduce spending, but they have fundamentally skewed priorities because they hand out even more tax breaks to multimillionaires and shield corporate defense contractors, all at the expense of hard-working, middle-class families, the elderly, and those who can least afford it. That is what they are doing in the House. They are going to have a so-called rule today and vote on it shortly thereafter. They would slash investments to strengthen our economy and just shred our social safety nets.

I want to quote from President Dwight Eisenhower. And let me remind everybody that he was a Republican. He was a tremendous President, and each day that goes by, people are looking at him more favorably. Here is what he said:

Every gun that is made, every warship launched, every

rocket fired, signifies in the final sense a theft from those

who hunger and are not fed, those who are cold and not

clothed.

This isn't some leftwing, socialistic-leaning liberal. That was Dwight Eisenhower--a five-star general who led the invasion of Normandy and did many other things, such as starting the National Highway System. Let me repeat what he said:

Every gun that is made, every warship launched, every

rocket fired, signifies in the final sense a theft from those

who hunger and are not fed, those who are cold and not

clothed.

I didn't make that up. That is what he said. In a balanced world--one where a strong national defense and a strong social safety net are both valuable pillars of a successful society--that need not necessarily be true, is what President Eisenhower said. But the Republican plan would enshrine into law a set of unbalanced priorities and ensure the kind of terrible math General Eisenhower envisioned.

Unlike defense contractors and billionaires, ordinary Americans don't have high-priced lobbyists to protect them. That is our job. That is our job. There is not a person on this side of the aisle who doesn't believe it is good that we have wealthy people in America. We have Senators here, Democrats, who are wealthy--certainly not all Democrats, but there are some. We don't look down on people who are rich, but we do have to look out for people who are in need of our help. Most of these rich people have all kinds of lobbyists here to help them, but the people in Henderson, Ely, and Winnemucca, NV, don't have people here to help them. They have us. So Republicans are going after those who can't fight back--hard-working Americans and struggling families.

Let's review a little bit of history again. The sequester isn't the first bipartisan agreement to reduce the deficit. When I became the Democratic leader, I thought--having served on the Committee on Foreign Affairs in the House of Representatives and being very interested in America's involvement in foreign affairs, I took a trip to Central and South America. That was so necessary. And I took Democratic and Republican Senators with me. I was very careful in picking two Senators whom I wanted on that trip. One was Judd Gregg, a very fine Senator from New Hampshire, who has retired, I am sorry to say. I recommended that Senator Gregg be a part of President Obama's initial Cabinet. He agreed to take the job, but something came up, and he didn't do it. But he is a wonderful man. I also wanted Kent Conrad on that trip. And I don't know which one knows more about the inner workings of the finances of this country, Gregg or Conrad, but they are both good, and I wanted them to go together, and they did.

Senators Gregg and Conrad spent hours and hours seated in that airplane working on doing something about the deficit. They both believed it needed some really difficult, hard work, and they decided to do what the base-closing commission did; that is, prepare legislation and give it to a commission that would send it back to us. There would be no amendments, no filibuster, just an up-or-down vote. That was their legislation. They wrote that and brought it to the floor.

As the leader, I decided I would move to proceed to it, and so I did move to proceed to it, thinking it should be a slam dunk. But seven Republicans, who had cosponsored the legislation, voted against it. I couldn't bring it to the floor. That was where Bowles-Simpson came from, as a result of the Republicans walking away from their own efforts to reduce the deficit.

Now, Bowles-Simpson was very difficult. There were 18 members, and they had to get 14 of the 18 to approve it. That didn't work. They couldn't get that many people to vote for it.

In the meantime, President Obama was working as hard as he could with the lead spokesman of the Republicans, the Speaker of the House, John Boehner. John Boehner said: I didn't get elected to do small things, I want to do big things. And President Obama, to his detriment with his base, said: I will do something to change Social Security and Medicare. And all these things he agreed to do publicly. But the Republicans-- John Boehner--could never go against Grover Norquist. The Republicans shake in their boots. They will not do anything, even though the American people by a more than 70 percent majority say people making more than $1 million a year should contribute to what the problems are in this country. So that fell apart.

Then we had the Gang of 6 Senators--three Republicans, three Democrats--who had been on the Bowles-Simpson Commission, who said we should do something about this. They were in the press, they had press conferences, and this was going down the road and doing all kinds of great things. While that was going on, there was a decision made, and a law was passed to create a supercommittee, to which I appointed Senator Patty Murray of Washington to run. No one in the Senate, Democrat or Republican, has more respect than Patty Murray. She worked so hard with the other 11 Members of Congress to come up with something.

A few days before they were to arrive at a decision--and the Gang of 6 members are out here doing all this stuff all the time--I get a letter signed by virtually every Republican Senator saying: We are not going to raise revenue for anything. The supercommittee didn't work there. The Gang of 6 is gone. So we passed this last August to fund government for 2 years and to say if we don't arrive at another $1.2 trillion in deficit reduction during this year, it automatically kicks in at the end of this year or the beginning of next year.

So that is where we are, and the Republicans in the House are trying to change that. So that is what this little history lesson has been all about.

I don't like to sequester. I wish we didn't have to do it. It was a hard pill to swallow, but it was the right thing to do. If we are ever going to reduce the staggering deficit, we are going to have to make some hard decisions. So that is what this is all about. But that is the point: It is hard to do; therefore, we have to do it, to sequester-- which, in effect, would take almost $500 billion from domestic programs and almost $500 billion from defense programs. They were designed to be tough enough to force two sides to reach a balanced deal. It hasn't happened yet.

As I said earlier with General Eisenhower's statement, I didn't make that

up. That is what he said. My complaint about the Republicans being so unreasonable about everything is something where I am not a lone wolf crying in the wilderness. We have two long-time nonpartisan watchers of Congress, one from the American Enterprise Institute, which is a conservative think tank, another from Brookings Institute that wrote an article saying: It is the Republicans. Can't you see what they are doing? Here is one thing they said:

We have been studying Washington politics in Congress for

more than 40 years, and never have we seen them this

dysfunctional. In our past writings, we have criticized both

parties when we believed it was warranted. Today, however, we

have no choice but to acknowledge that the core of the

problem lies with the Republican party.

They further said:

The GOP has become an insurgent outlier in American

politics. It is ideologically extreme; of scornful

compromise; unmoved by conventional understanding of facts,

evidence and science; and dismissive of the legitimacy of its

political opposition.

What brave men to do that, to write these comments--which are true. I have been saying that I don't want to fight about everything. Republicans insist on balancing the budget on the backs of the middle class, seniors, students, single mothers, and those who could least afford it. That is what they are doing over there today. It is their refusal to compromise that leaves us facing the threat of sequester, and it is difficult but it is balanced.

Going back to the August budget agreement now in order to protect wealthy special interests is no solution. Neither is refighting the battles of last year. Democrats agree we must reduce our deficits and make hard choices, but we believe in a balanced approach that shares the pain as well as the responsibility.

Is the sequester the best way to achieve that balance? No. But Republicans refuse to consider a more reasonable approach--one, for example, that asks every American to pay his fair share while making difficult choices to reduce spending. Democrats will not agree to a one-sided solution that lets the superwealthy off the hook while forcing the middle class and those in greatest need to bear all the hardship.

Democrats believe we can protect Americans' access to health care, create jobs while investing in the future, and protect the poor and elderly. But we can't do it alone. It will take work and compromise, and so far Republicans have been unwilling to make a serious effort to achieve that result.

Republicans have rejected our balanced approach. Their one-sided solution to across-the-board cuts would take away from the many to give to the few.

Here is what the plan would do--not all of it, but here is what their plan would do. Remember, they are taking it up over there in the House today.

It would cut Medicaid benefits, increasing the number of uninsured children, parents, seniors--and that is in addition to people with disabilities--by hundreds of thousands, just eliminate them. It would also put seniors in nursing homes at risk. Some of them would have to move out of the nursing home, I guess.

It would punish Americans who receive tax credits to purchase health insurance when their financial circumstances change, causing 350,000 Americans to have no coverage. This would add to the tens of millions who already exist that way.

It would weaken Wall Street reforms, protecting big banks at the expense of consumers. Their legislation would once again target middle- class workers, food inspectors, air traffic controllers, Border Patrol agents, drug enforcement, and FBI agents. They would have to be laid off.

It would cut funding for preventive health care programs that fight chronic illnesses--such as heart disease, cancer, strokes, and diabetes--that cause 70 percent of the deaths in America. Preventive care would be reined in.

It would slash block grant funding in the United States to help 23 million children, seniors, and disabled Americans live independently and out of poverty.

No segment of the population is immune from this painful, absurd Republican plan--except maybe millionaires, billionaires, and wealthy corporations. The Republican proposal cuts Meals on Wheels and reduces food assistance for almost 2 million needy people. One of the Republican candidates running for President said President Obama is the Food Stamp President.

There are more poor people. Our economy has been in bad shape. People are struggling. The millionaires are doing fine. And in addition to what I have already mentioned, this thing that they are taking up in the House today cuts off almost 300,000 children from free school lunches at a time when one in five children lives in poverty.

The U.S. Conference of Catholic Bishops said the Republican plan fails ``a basic moral test.'' This budget sets very clear priorities. The problem is what they are taking up in the House sets up the wrong priorities.

President Franklin Roosevelt said:

Human kindness has never weakened the stamina or softened

the fiber of a free people. A nation does not have to be

cruel to be tough.

So Republicans would do well to remember our Nation is judged not only by the strength of its military, but also by the strength of its values, so says General Eisenhower and President Roosevelt.

Reservation of Leader Time

Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Madam President, here we are again in the Senate on yet another day when families and students across this country are wondering if we are going to do our duty. Are we actually going to move legislation that will keep the interest rate at 3.4 percent on subsidized student loans or are we going to let it go to 6.8 percent-- double--on July 1?

We have legislation and we brought it to the floor. Yet yesterday my Republican colleagues voted to not even proceed to it. I think the people of America are saying that this shouldn't happen. We should be able to work these things out. We should move legislation, not obstruct it.

Everyone now agrees we should keep the interest rate at 3.4 percent. The Republicans say they want to keep it at 3.4 percent and we say we do. The Republicans were initially opposed to this, but they have gotten onboard. That is fine. I have been here on the floor listening to my colleagues talk about this since Monday. Everyone agrees we have to keep it at 3.4 percent and not let it go up, so it ought to be a bipartisan issue. We ought to be able to move this rapidly and move on to other matters. There are other issues confronting us in the Senate. Yet here we are on the floor again today discussing the student loan interest rate.

As I said, we had the vote yesterday to move it forward, but my Republican colleagues blocked us from doing that. They agree we should keep the interest rate at 3.4 percent, but not on how to pay for it. Well, OK, fine; that is a legitimate point of debate and discussion and votes. So why don't we move the bill forward, bring it to the floor, and let's have a debate and discussion on how we pay for it. If they want to offer an amendment, they can offer an amendment and we will vote on it. It seems to me--at least I think--that one of the responsibilities, and maybe privileges but responsibilities, of the majority party in the Senate, whichever party it might be, is to initiate legislation and bring it to the floor. The privilege and responsibility of the minority party is to be able to amend it, to try to make it better as they may see fit. I don't think it should be a privilege and responsibility of the minority party to block everything, but we have seen that happen more and more over the last few years. Republicans won't let us bring a bill to the floor because under the rules it requires 60 votes rather than 51 votes to bring a bill forward. So, again, we are stuck because we can't bring the bill forward.

I hope we have another cloture vote. Let's keep having these cloture votes and maybe Republicans then will say, OK, let's move it forward and let's debate it and move on. So I hope that is what we are going to be doing rather than stopping the process in its tracks.

It is interesting to note that House and Senate Republicans were silent on this issue until students from around the country became aware of the impending increase and made their voices heard. Democrats were already hard at work on the solution. I would remind my colleagues that earlier this year, in the budget debate in the House, an amendment was offered by Democrats during the House budget process to extend the current rate of 3.4 percent. That amendment lost by a straight party vote. Instead, the Republicans proposed to pay for this by taking money from the Prevention and Public Health Fund. That is not an appropriate solution, killing the fund that is preventing cancer and preventing unnecessary diseases in the United States.

My friends on the other side would have us believe that nothing bad will happen if we eliminate the Prevention and Public Health Fund. They call it a slush fund. There is no truth to that at all. The truth is that the elimination of this fund would have disastrous effects on the health of our kids and our families. To eliminate the Prevention and Public Health Fund will cost us billions in the future for taking care of people who have chronic illnesses and chronic diseases and obesity. We know that an investment in immunizing our kids--for example, for every dollar, it saves us $16 in saved health care costs. To eliminate this fund would lead to a resurgence of vaccine-preventable diseases in every State due to the expected loss of more than 1.5 million doses of lifesaving vaccines and nearly 1,100 skilled public health workers.

Again, eliminating the Prevention and Public Health Fund would mean eliminating vaccines for our kids, eliminating public health workers who know how to deliver these vaccines and respond to outbreaks. We would be losing public health staff at the State and local levels.

Eliminating this fund would end support for increased calls to the tobacco quitline, meaning smokers encouraged to quit by the fund's strategic and evidence-based investments thus far would not have the support to keep that quitline going. If current smoking rates persist, 6 million kids living in the United States today will ultimately die from smoking. If we eliminate the Prevention and Public Health Fund, we will be forced to reduce the availability of mental health and substance abuse services to very vulnerable Americans.

Eliminating the fund, as the Republicans want to do, would reduce investment in public health laboratory capacity at the State and local levels, thereby reducing the speed with which we can detect and respond to outbreaks and, yes, maybe even terrorist events. It would cut the number of disease detectives that the Centers for Disease Control and Prevention can train and deploy. These disease detectives are our first line of defense against infectious diseases.

Eliminating this fund would result in layoffs, as I said, of public health officials in every State and community who are working on chronic disease prevention, immunization, health-care-associated infections, and other health problems.

An elimination of the prevention fund--again, I use the word ``elimination.'' The Republican proposal wouldn't just take some money from the prevention fund, it would kill the prevention fund. It would take every single penny out of it.

My friends on the Republican side say: Well, President Obama in his budget took money out of the prevention fund. In fact, Democrats joined with Republicans earlier this year in taking $5 billion out of the life of this fund to help pay for extending the unemployment insurance program for the remainder of this year, as well as extending the payroll tax cut. They use that example to say, Well, we can kill the whole thing. I must be very frank.

I was not in favor of that $5 billion cut, but be that as it may, as I used the analogy yesterday, it is one thing to take a couple of pints of blood and another to take all the blood. A person can live if a couple of pints of blood are taken; they can live and get healthy. That is what is happening to the prevention fund. The Prevention and Public Health Fund is alive and well and doing its job even though some money is taken out of it. What the Republicans want to do is take all the blood out and kill the whole program.

President Obama has said he will veto this bill if there are any cuts in the Prevention and Public Health Fund. So there has been a line drawn. We took some money out of it before, but no more. That is it; no more money is coming out of this prevention fund because of the good it is doing in this country.

An elimination of this fund, which the Republicans want to do, would stop in midstream across our country efforts to address the risk factors for heart disease, diabetes, obesity, and cancer--the leading causes of death and health care costs. Yesterday in this Chamber I read from a new Centers for Disease Control and Prevention report that finds that if we could prevent the obesity rate from increasing past its current 34-percent rate right now, we could save nearly $550 billion in the next 20 years.

In 1980, the obesity rate was right at about 15 percent in this country. Today, as I said, it is 34 percent. If it increases at the rate they expect, looking at all indicators now, 42 percent of all Americans will be obese by 2030 and one out of every four of them will be severely obese. That means a huge increase in adult onset diabetes and all the accompanying health care risks and costs, including heart disease and stroke, that accompany obesity.

We know how to address it. We have evidence-based programs that we know work in keeping the obesity rate down. That is what the prevention fund does. The Republicans want to kill it. They say no, get rid of it.

Cuts to our chronic disease prevention programs would mean 120 million Americans--1 in every 3 citizens--would lose access to preventive services. It would mean $103 million no longer available to States and counties and local jurisdictions to provide these services. Over 20 million Americans in rural areas in New York and in Iowa and all across this country would no longer have access to preventive services and programs.

The American people get it. Our citizens, whom we represent, get it. They understand. A poll was taken which said that voters overwhelmingly support more investment in prevention. This is from a 2009 public opinion poll: 71 percent of Americans polled said yes, do more, invest more in prevention. Our fellow citizens are crying out to us for help. They want help. They want to know what to do. How do they change? What can we do in our communities, our schools, our workplaces, our clinics, our community health centers? What can we do so that we don't get sick, so we don't get obese or diabetes, so we don't have heart disease? Most people don't know what to do. They need some help. They need information. They need support.

That is what this prevention fund does. We know it works. We know. We have evidence-based programs out there that work. The Centers for Disease Control and Prevention is doing an outstanding job across this country in these programs: from community programs, to public health infrastructure, to clinical preventive services, research, tobacco prevention programs, detection and prevention of infectious diseases, and training and preparing the public health workforce--all of this.

That is why prevention is not just something people go into a doctor's office to get a shot for or get a prescription for and people get a pill for. Prevention encompasses a lot of different things-- everything from newborn screening, immunizations for children, school- based programs, and better food and nutrition in our school meals for kids.

Communities change the way they operate and do things--more walking paths, more bike paths. The other day there was something said about Illinois had used some of this for signage and walking paths for kids. I pointed out, yes, they did. What happened is the number of kids walking to school increased, and that cut down on the number of buses they had to use. It saved the school some money, and the kids got healthier.

I have often used the example that when I first moved to Washington in 1979, when I was in the House, my wife and I purchased a home in Virginia. We still live there. One of the reasons we bought it was because we were about a mile away from a school, a high school. We thought: That is great. The kids can just walk to school. Little did I know there were no walking paths to the school. It was a busy street. There was a sidewalk for a little ways, and then there was not one. The kids could not walk. So they had to take a bus just to go 1 mile.

So, again, communities putting in sidewalks, safe passages for kids to do that, that is healthy living. I have seen instances in my own State where communities have put in walking paths for the elderly, for senior citizens, so they do not have a lot of steps and things to go up and down. You would be amazed how many people use that and stay healthy.

Supporting systems in our workplaces, making our workplaces more healthy, helping businesses understand what they can do to provide a healthier workplace for people--examples abound all over this country.

I say to the Acting President pro tempore, I am sure I do not know all the instances in New York State, but I will bet you communities there have gotten together and thought about how to make life a little bit more healthy, how to support a more healthy infrastructure for their people.

Some communities are coming up with very ingenious ideas. I say more power to them. That is what the Prevention Fund is for--to help them, to encourage them, to give them the kind of support they need to provide that healthy living.

I have said many times, it is interesting that in America it is easy to be unhealthy and hard to be healthy. One would think it should be the other way around. It should be easy to be healthy and harder to be unhealthy. It is just the other way around.

So what we are trying to do with some part of the prevention fund-- not all of it; part of it--is to make it easier to be healthy, to make that an easier option for people.

So if we both agree--Republicans and Democrats--on the fact that we need to keep the interest rate on student loans at 3.4 percent, then the debate is just on the offset. As I have said, Republicans want to kill the prevention fund. The American people have said loudly: No, we do not want to do that. We want more investment in prevention. We do not want to get sick. We do not want to get obese. We want to quit smoking. We want our kids to be healthy. We want them to have healthier food, better exercise. Republicans are saying: Well, we are just not going to do that. I guess we will pay more for it in chronic illnesses and diseases down the line.

Well, our offset is one that I think is legitimate and sound, closing a loophole in the Tax Code. That means more money would go into the Social Security and Medicare trust funds, and it would help us keep the interest rate at 3.4 percent.

Education has always, and I hope will always, remain a bipartisan issue here. I urge my Republican colleagues to come to the table with a serious offset--a serious offset. If they do not like what we have proposed, please come with something that is serious. Eliminating the prevention fund is a no-starter. As the President said, he would veto it. So why push it?

I think this is an opportunity for all of us to come together and show the American people this body is not broken; we can work with each other and get things done for the good of our people. Again, I encourage my Republican colleagues to allow us to move forward on the bill. Do not keep blocking it. If they want to offer a different offset, fine. Not this one, not the elimination of the prevention fund because that is not serious. That is not going anywhere. If they have some other ideas, bring them forward. As of yet we have seen nothing from my Republican colleagues other than stopping the bill--stopping it, stopping it, stopping it.

So I hope they will come to the table, and I hope we can move this bill forward.

Madam President, I yield the floor.