Floor Statements

Mr. President, Congress meets in the District of Columbia. The District of Columbia is an island surrounded by reality. Only in the District of Columbia could you get away with telling the people if you like what you have you can keep it, and then pass regulations 6 months later that do just the opposite and figure that people are going to ignore it. But common sense is eventually going to prevail in this town and common sense is going to have to prevail on this piece of legislation as well. I support the resolution of Senator Enzi, disapproving the regulation on grandfathered health plans.

The partisan health care overhaul enacted last March and subsequent implementation represents so many broken promises that I hardly know where to begin. But the resolution of Senator Enzi certainly sheds some light on one of the most glaring broken promises we have seen so far, and is as good a place as any for us to start.

Time and again throughout the health care debate, supporters of the health care overhaul assured voters that even after their proposal became law, ``If you like what your current health plan is, you will be able to keep it.''

The administration's own regulations prove this is not the case. Under the grandfathering regulation, according to the White House's own economic impact analysis, as many as 69 percent of businesses will lose their grandfathered status by 2013 and be forced to buy government- approved plans.

The estimates are even more troubling if you are a small business. Again, according to the administration's own estimates in the regulation, as many as 80 percent of small employers will be forced out of their current plan and into a more expensive government-approved plan. It is no wonder that the grandfathering regulation is opposed by pretty much every employer organization in the country. The National Federation of Independent Businesses, the Chamber of Commerce, the National Association of Manufacturers, and the National Retail Federation have all weighed in against this burdensome and disruptive policy. In every one of those cases, businesses that are members of those organizations want to provide health insurance and have been providing health insurance for their employees, and they want to keep it. They were believing Congress when they said if you have what you like you can keep it, and now they are finding out otherwise.

It is true our economy is in a fragile place right now. Yet the implementation of the new health care law is creating more uncertainty and higher costs for American businesses. How can we ask them to go out and create jobs and hire new people when each new health care regulation adds another layer of bureaucracy and uncertainty? The White House should be making it easier to do business in this country, not harder.

This is not just about confusion, it is also about costs. When employers and individuals make even modest changes to their benefits and lose grandfathered status, they are forced to buy a new government- approved health care plan that in most cases will cost more than their current plan. That means the government will tell employers what benefits they have to cover, to whom they have to offer coverage, and how much they are going to have to contribute.

We have already seen data from health plans saying that the requirement in the new law could drive up premiums by about 9 percent. This is in line with the Congressional Budget Office's estimate that the overall increase in premiums could be as much as 10 percent to 13 percent. When you factor in medical inflation, some people are still seeing premium increases of 20 percent or more after the passage of the health care law.

What happened, then, to President Obama's promise about lowering premiums by $2,500? Are we supposed to add that to the list as another broken promise? Each day it seems as if another news story comes out that shows why the partisan health care overhaul was the wrong approach. Health plans are being forced out of the child-only market. Some have stopped selling in individual markets entirely. Premiums continue to go up at twice the rate of inflation.

The White House's own actuary is telling us that health care inflation will be worse now than it was before the health care reform bill became law. Over 1 million seniors are being forced out of their current national Medicare Advantage or Medicare prescription drug plans, and this is only going to get worse. Businesses are considering dropping retiree health care benefits and possibly dropping health care coverage altogether.

With these kinds of stories coming out on a daily basis, it is no wonder that polls are showing close to 60 percent of the American people opposed to this new law. I support the efforts of Senator Enzi and appreciate that he is willing to shed some light on this issue. There is a lot of misinformation out there and people need to understand what this health care overhaul means for them.

The grandfathering regulation is a clear violation of the promises made by supporters of the health care law that, if you like what you have, you are able to keep it. We owe it to our constituents to fix that misrepresentation.

I urge my colleagues to support the resolution.

I yield the floor.

Mr. President, on January 8 of this year, I requested the Government Accountability Office to conduct followup tests of our Nation's airport security screening procedures. Investigators attempted to smuggle bomb-making materials past security checkpoints in a number of airports around the country. This is something the GAO has done for Congress on several occasions since the 9/11 terrorist attacks.

It is an important reality check for Congress to find out exactly how effective or ineffective the Transportation Security Administration's screening procedures are. TSA has spent a lot of time and money trying to prevent future terrorist attacks, and we are, no doubt, safer in many ways than we were before 9/11. However, it is important to cut through the talking points and the press releases. We need to test the system in real time with real people carrying potentially destructive materials once in a while to find out how vulnerable we still are.

Unfortunately, the Obama administration, which is now responsible for keeping airline passengers safe, does not want you to know the results of these tests. In fact, the administration classified almost every word of the GAO report as ``secret.'' These sorts of classification decisions ought to be made only when the information is actually sensitive for national security reasons. The power to classify information should not be used merely to hide information that might be embarrassing to the administration.

I understand that certain details of how GAO investigators did what they did should not be made public. No one wants to give the terrorists a roadmap of how to attack us again. I do not want to do that, and the GAO investigators do not want that to happen.

That is why I asked them to draft a report that did not include those sorts of details so that a declassified version could be released to the public. The problem, however, is that the Obama administration classified the report anyway.

The key data that should be public are the results. Did the GAO investigators succeed in penetrating our airport security checkpoints? If so, how many times? How many times did they fail? The public has a right to know those bottom-line results.

Those results are not going to help terrorists figure out how to better attack us, and they certainly are not going to give them any more motivation to try than they already have.

Keeping the results secret will accomplish one thing, however. It will ensure that the public has no idea how effective our airport screening strategy actually is, and it seems that is the way the Obama administration likes it.

Therefore, I am asking the TSA Administrator to personally come to our secure facilities here in the Senate and explain his decision. Several of my colleagues joined me in asking the GAO to do this work, including the chairs and the ranking members of the Homeland Security Committee in both the House and the Senate. I invite them to join us and help resolve this situation.

We need to work together to make sure that the entire Congress and the public are aware of the results of this important work while maintaining the security of information that truly needs to remain secure.

I yield the floor.

Mr. President, so far during the 111th Congress, the Finance Committee, of which I serve as the ranking Republican member, has held over 50 hearings. At those hearings, around 200 witnesses offered their testimony and answered members' questions. The witnesses who testify at our hearings are considered to be some of the most qualified experts in their field and their participation is critical to the legislative process. Because of their influence on legislation, it is important that Congress knows to what extent the witness' testimony is objective and if the witness has any significant interest in the outcome of potential legislation.

Three of the hearings held by the Finance Committee this Congress were roundtable discussions on health care reform. These discussions brought 41 witnesses, including industry stakeholders and academic leaders, before the committee to share their expert knowledge on policy options for health reform.

At one of these roundtables, Dr. Jonathan Gruber, a health care economist and professor at the Massachusetts Institute of Technology, testified before the committee on health care reform. I thought he was an unbiased expert, but was later disappointed to hear that he had been paid over $400,000 by the administration to help advance the president's health care proposals. At the very least, he should have been straightforward with the committee and disclosed this financial interest.

In addition to his testimony before the Finance Committee, Dr. Gruber testified in front of the HELP Committee and was also a high-profile supporter of the administration's health care reform effort in the media. In only a handful of his many articles on health care reform did he disclose his financial conflict of interest.

While the propriety of Dr. Gruber advocating for administration positions in the media and other venues while failing to disclose his financial ties to the administration has been called into question, I am especially concerned about his advocacy before the U.S. Congress. When an academic leader comes before Congress to advocate a position, Congress should have confidence that the witness is both independent and objective and not being paid to assist the administration, or any other organization, in its efforts.

Equally troubling is the Department of Health and Human Services, which has been unresponsive to efforts by Senator Enzi and myself to learn more about their practice of hiring consultants to advance the President's agenda.

The fact that this expert was paid by the administration--and hid that fact from Congress--really taints everything this particular advocate told the committees. If Congress had been aware of his arrangement with HHS prior to his testimony, we would have had the opportunity to clarify that relationship with Dr. Gruber before considering his opinions and ideas. Unfortunately, when we learn about it after the fact, it completely discredits the information he presented.

To follow up on this alarming news, Senator Enzi and I sent a letter to Dr. Gruber on January 26, 2010, asking him for details of any other government contracts he might have or might have had over the last 5 years and for details on whether he disclosed his government ties during media interviews, speaking engagements and written works on health care reform.

Dr. Gruber's response failed to answer any of the questions posed in the letter. Instead, the response barely exceeded one page in length, was dismissive of any concern about the lack of disclosure and attempted to excuse his failure to disclose and to explain away the need for any detailed response. Furthermore, Dr. Gruber did not even commit to providing any such disclosure of the financial relationship with the Administration in the future.

Unfortunately, Dr. Gruber's failure to answer our questions came as no surprise. In my 30 years serving in the United States Congress, I have found that chasing answers on the back end is much more difficult than requiring clarity and transparency from the start. And many of my colleagues might be surprised to find out that although many witnesses voluntarily disclose their affiliations or relationships so that they can explain them, no Senate committee currently requires witnesses to disclose potential conflicts of interest.

Dr. Gruber even highlighted this point when he said in his February 23 letter that, ``to the best of my recollection, during the course of my health care reform work with Congress, no Member or staffer ever asked me whether I held any government contracts.''

In retrospect, if we were to have asked Dr. Gruber to disclose his agreements with the administration up front, we would have had the ability to ask him questions in-person, and he would have been given a chance to explain the relationship before testifying, so that his testimony could be given its proper weight. Our failure as an institution to ask for transparency in testimony is a problem that has a simple

solution, a solution that most other institutions that rely on the work of academic experts have already implemented. The solution is to simply ask witnesses who come before the Senate to disclose any potential conflicts of interest up front.

Our colleagues in the House of Representatives are already requiring witnesses to do this and there is no reason why we shouldn't require the same level of transparency from witnesses who come before the Senate.

That is why today I am submitting the Witness Sunshine resolution. This resolution will make the Senate committee hearings more transparent and thus more credible and valuable to the legislative process. It achieves this goal by requiring each witness that appears before any Senate committee to submit a form disclosing outside affiliations and financial interests in any organizations, including government entities, that are directly related to the topic of the committee hearing.

In August, I was happy to learn that the administration is supportive of this idea. In an August 4 letter, Secretary Sebelius wrote me saying, ``Should the Senate Finance Committee or any other Congressional Committee choose to [require witnesses to submit financial disclosure forms in advance of an appearance before the Committee], I would certainly encourage HHS contractors to fully comply with [that requirement].''

So adopting this rule should be an easy decision for the Senate. Our colleagues in the House of Representatives have been requiring this level of transparency for over a decade and now we know that the administration supports the idea as well. The House tells me that their witnesses are not overburdened or discouraged to offer testimony because of this requirement. I have carefully drafted this resolution so that the requirement for transparency similarly does not burden Senate witnesses.

It is time for this body to meet the standards for transparency set by the House and followed in so many other institutions across the country. Supporting my resolution will help ensure that future testimony can be given its proper weight, and end the uncertainty of unknown interests influencing testimony. I urge my colleagues to support my resolution.

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

Mr. President, in a few minutes, the Senate will be voting on the motion to invoke cloture on the motion to proceed to a bill that has been mislabeled the ``Creating American Jobs and Ending Offshoring Act.''

The part of the bill that is attracting the most attention is the repeal of deferral for the income of foreign subsidiaries for importing into the United States. Deferral is the policy that allows U.S. corporations to defer paying U.S. tax on the earnings of its foreign subsidiaries until those earnings are sent back to the United States when, at that point, they are going to be taxed just like every other corporate income.

In general, deferral is not allowed if the income is earned offshore and the reason for it being offshore is solely to avoid tax. What is bad about the bill is it would deny deferral for income that a foreign subsidiary legitimately earns from the sale of goods into the U.S. market.

The problem is that there has been no finding that such income is earned outside the United States by a motivation to simply avoid U.S. taxes. So this bill is completely contrary to a whole half century of bipartisan thinking as to when it is appropriate to deny deferral and when it is not. That bipartisanship goes back to President John F. Kennedy's administration, when there was a bipartisan agreement within the Congress and between the President and the Congress that this is the tax policy we should have to make American manufacturing competitive with foreign competition.

To the contrary, there are obviously many reasons for a foreign subsidiary of a U.S. corporation selling goods into the United States. There could be a need to be near to a certain overseas market or the good in question may not be found in appreciable quantities within the United States. Yesterday, I referred to chromium not being available in the United States, as one example.

There could be many reasons having nothing to do with tax policy. But the sponsors of this bill don't seem to understand that fact, that American

manufacturing ought to be competitive with overseas competition or, obviously, we are going to lose business and lose jobs in the process or perhaps the bill's sponsors would admit that curbing tax avoidance is not the point. Perhaps they would instead claim it is all about an effort to create American jobs.

That would be a very good goal, but it is unlikely to create jobs. I fear it would have the opposite effect. The bill may lead to fewer headquarters jobs in the United States, if a corporation, for uncompetitive reasons, decided to move totally offshore and take those headquarters jobs with them. The bill could lead to a loss of American jobs assembling finished products from parts assembled outside the United States.

In the words of the late Senator Moynihan, who was, for a long time, chairman of the Senate Finance Committee, in speaking in opposition to this very same proposal 14 years ago:

Investment abroad that is not tax driven is good for the

United States.

In other words, what he is saying there is, if there is investment abroad but it is not solely to avoid U.S. taxation but has economic substance behind it, that is good for the United States.

He did not say this. Contrariwise, if there is money offshore simply to avoid U.S. taxation, then obviously that is wrong. As an example, Senator Baucus and I have been involved in the Stanley Corporation doing that 6, 7 years ago, and we plugged those loopholes.

I agree with Senator Baucus when he was recently quoted as to this bill saying:

I think it puts the United States at a competitive

disadvantage. That's why I'm concerned.

If there is any doubt about whether I agree with that statement of Senator Baucus, the Democratic leader of our committee, I agree with Senator Baucus.

In addition, there are procedural defects concerning this bill. I wish to start this part of my remarks by relying on a statement Senator Reid said to me privately--he might deny he made this statement, but soon after the 2006 election, when the Senate became a Democratic majority rather than a Republican majority, he said something like this to me: You and Senator Baucus work so well together. I want you to know I am going to let the committees continue to function as they always have, particularly in your case because you have such a close working relationship.

With that as background, things have changed very recently so that every bill seems to be written in Senator Reid's office, not in committee.

This bill before us has not been vetted by the Finance Committee. Does anyone believe that if my friend the chairman were to put this bill before the Finance Committee, it would be approved in the form it is right now? If the idea in this bill had the kinds of merits claimed by their proponents, then they should welcome the Finance Committee reviewing it. Let members ask questions as they review the language. Test the strength of ideas through the committee process.

The Democratic leadership has short-circuited the opportunity to methodically test the bill as good tax policy. Unfortunately, this process defect has been more the rule than the exception. Since the stimulus bill in January of 2009, the Finance Committee has only marked up one tax policy bill, and that was the health care reform bill.

My sense is the Democratic leadership simply does not want this bill to undergo scrutiny of a regular-order process--in other words, the way the Senate normally does business. This bill is presented as a ``take it or leave it'' proposition. Republicans are not supporting cloture because they are not being offered the opportunity to amend this bill with amendments that go to the supposed purposes of the bill. No amendments are allowed on any tax incentives for job creation. No amendments are allowed on measures to prevent offshoring of jobs. In other words, the Senate being a deliberative body of a bicameral Congress--and, obviously, the House is not a deliberative body--the purpose of this body is being neutered by the procedure this bill is going through. For instance, I have amendments dealing directly with the offshoring of jobs. They are bipartisan amendments. But if I vote for cloture, I have no assurance from the Democratic leadership that these amendments will be in order. I will describe these amendments.

The first amendment mirrors a bill the junior Senator from Vermont and I have coauthored. It is the Employ America Act. It would prevent any companies engaged in the mass layoff of American labor from importing cheaper labor from abroad through temporary guest worker programs if they lay somebody off.

The second amendment I filed today mirrors a bill the senior Senator from Illinois, a Democrat, and I have worked on for several years. It is the H-1B and L-1 Visa Reform Act of 2009. It would improve two key visa provisions while rooting out abuse while making sure Americans have the first chance of obtaining high-skilled jobs in this country.

Many Americans are unemployed. Yet we still allow companies to import thousands of foreign workers. These businesses should be asked to look first at Americans to fill those jobs, and they should be held accountable for displacing Americans to hire cheaper foreign labor.

These two amendments go directly to the concerns about job creation and the prevention of offshoring of U.S. jobs. Both amendments are bipartisan. Yet if cloture is invoked, these amendments would fall on the Senate cutting room floor.

Furthermore, I have no confidence, even if the Democratic leadership were to follow regular order for floor purposes, that we could expect anything like a conference committee to work out the issues between the House and the Senate.

In sum, the bill's substance would more likely lead to an increase in offshoring of American jobs and would make American companies less globally competitive. The bill's procedure is very irregular and not in the thoughtful traditions that so dignify the Senate.

For purposes of the contents of the amendments, as well as this procedure, I ask that we vote against this bill.

I yield the floor.

Mr. President, very soon, the Senate will be asked to vote on the motion to invoke cloture on the majority leader's motion to proceed to a bill that is mislabeled the ``Creating American Jobs and Ending Offshoring Act.''

The process for this bill illustrates how the Democratic leadership has dumbed down any efforts to seriously legislate any tax policy issues. To show how far, as a body, we have run off the rails in legislating, let's compare the legislative track record of this bill with the last major piece of tax legislation designed to deal with domestic job creation.

I am referring to the bill that responded to a World Trade Organization ruling against a domestic manufacturing benefit known, at that time, as the foreign sales corporation or FSC program. Dangerous tariffs were pending with respect to many American products. How was that legislation handled?

First of all, the Finance Committee members and staff engaged in a lot of due diligence in crafting the replacement regime, the domestic manufacturing deduction. On a bipartisan basis, Finance Committee staff, principally the tax and trade staffs, met with the interested parties, including officials from the litigating group, the European Union.

Finance Committee staff, Republican and Democrat, negotiated a bill that took the revenue generated from repealing the FSC benefit, added revenue from shutting down tax shelters like the so-called SILO/LILO schemes, and channeled that revenue back into a new broader based domestic manufacturing incentive. That incentive is a 9 percent deduction for domestic manufacturing activity. It is a substantial tax incentive. The Joint Committee on Taxation estimates it is worth $10 billion annually in terms of reduced taxes to domestic manufacturers, large and small. The chairman's mark was a joint mark between my friend, then-ranking Democratic member, Max Baucus, and me.

Ranking Member Baucus and I came up with a bill title. It was the Jump Start Our Business Strength or JOBS bill. The bill went through the usual transparent Finance Committee markup process. Over several days, Finance Committee members reviewed the language, asked questions, and prepared and filed amendments. When I gaveled the committee to order, several amendments were debated. Some were defeated. Some were modified and accepted. Others were discussed and withdrawn. Every Finance Committee member played a role in shaping the bill the committee approved. And it should be noted the only dissents were two members on the then majority side.

When the bipartisan JOBS bill was scheduled for floor debate, then majority leader Bill Frist brought up the Finance Committee bill. Both my friend, Senator Baucus, and I were consulted on the floor bill's contents. At that time the Democratic leadership filibustered efforts to effectively process the bill. Keep in mind there was no dissent in the Finance Committee on the substance of the bill on the Democratic side. As I said before, two members of my leadership, on very principled grounds, voted against this popular bill. Despite opposing the bill in committee, those two members supported the majority leader's efforts to bring the time-sensitive legislation to the floor and process it in a timely fashion.

It took three cloture votes to process the JOBS bill. That is right. Three cloture votes. The basis for the multiple filibusters of the JOBS bill was not opposition to material in the bill. The Democratic leadership filibustered over items not in the bill that they wanted to offer as amendments. The Republican leadership did something we seldom, if ever, see from the Democratic leadership. Majority Leader Frist yielded by allowing votes on those issues, which were not in the bill, but controversial with many in the Republican Conference. Many votes were held on the JOBS bill. Some were designed by those close to the Democratic campaign operation solely to score political points. The Republican Conference, as the majority party at the time, recognized multiple votes were the price to pay to push part of the majority's agenda.

Even if that agenda consisted of doing the people's business by processing a bill with more support on the other side.

The conference committee that considered the JOBS bill was fully open. There was a chairman's mark and several days of amendments between the House and Senate. In the end, a conference report was produced that

garnered a majority of Senate conferee signatures from each side. The conference report passed with overwhelming bipartisan support.

Compare that JOBS bill process with the one for this bill which, as I said at the start of my remarks, is a jobs bill in name only. In the Senate, I have found over the years, that legislative substance and legislative process are symbiotic.

That is, the quality of the process often affects the quality of the substance and vice versa.

Here we are debating a bill whose proponents claim will make a material difference with job creation incentives. We are also told that this bill will materially curtail the offshoring of U.S. jobs. If it were only that simple, I am sure the bill would pass with the overwhelming bipartisan margin the JOBS bill did some 6 years ago.

I have previously discussed the defects in the bill before the Senate. I will not do it again here. But I will say this: Does anybody on the other side really believe if my friend, the chairman, were to put this bill before the Finance Committee that it would be approved in the form that is before the body today? I can tell you this Senator has several amendments that he thinks would improve this bill dramatically.

I would expect those amendments might pass with bipartisan support. This bill, like so many others, was crafted in the majority leader's office and is largely the singular work of two senior members of his leadership. That is not to say anything negative about those members or their interest or work in the area of tax legislation. My point is that, if the ideas in this bill had the kind of merit claimed by their proponents, why avoid the Finance Committee? Why not let the public see it in committee. Let members ask questions as they review the language. Test the strength of the ideas through the amendment process. If the proponents answer by blaming Republican Leader McConnell, I would point out that Senator McConnell isn't on the Finance Committee. If the proponents answer by blaming partisanship, I would ask them to take a look at the Finance Committee ratio.

It has been the most favorable to the majority since the early part of the 1990s. By intentionally skipping the committee of jurisdiction, the Democratic leadership has deliberately short-circuited the opportunity to methodically test the bill as tax policy. Unfortunately, this process defect has been more the rule than the exception. Since the stimulus bill in January of 2009, the Finance Committee has only marked up one tax policy bill, the health care reform bill. As a former chairman, I know the current chairman would not want to proceed this way. Nope. My sense is the Democratic leadership simply doesn't want this bill to undergo the extra scrutiny of a regular order process.

Unlike the 2004 JOBS bill, this bill is being presented as a take-it- or-leave-it proposition. Republicans are not supporting cloture because they are not being offered the opportunity to amend this bill with amendments that go to the supposed purposes of the bill. No amendments allowed on other tax incentives for job creation. No amendments allowed on measures to prevent offshoring of jobs. I have amendments dealing directly with the offshoring of jobs question. They are bipartisan amendments. If I vote for cloture, I have no assurances from the Democratic leadership that these amendments will be in order. Any look back on the way in which tax bills have been processed this year tells me I have good reasons for doubting that a full debate would occur. I would like to briefly describe the two amendments I filed earlier.

The first amendment mirrors a bill that the junior Senator from Vermont and I have coauthored. Known as the Employ America Act, this amendment would prevent any company engaged in a mass layoff of American workers from importing cheaper labor from abroad through temporary guest worker programs. Companies that are truly facing labor shortages would not be impacted by this legislation and could continue to obtain employer-sponsored visas. Only companies that are laying off a large number of Americans would be barred from importing foreign workers through guest worker programs.

Since the recession started in December of 2007, nearly 8 million Americans have lost their jobs and the unemployment rate has nearly doubled. In total, 15 million Americans are officially unemployed, another 8.8 million Americans are working part-time only because they cannot find a full-time job, and more than 1 million workers have given up looking for work altogether.

At the same time, some of the very companies that have hired tens of thousands of guest workers from overseas have announced large scale layoffs of American workers. The high-tech industry, a major employer of H-1B guest workers, has announced over 330,000 job cuts since 2008. The construction industry, a major employer of H-2B guest workers, has laid off 1.9 million workers since December of 2007.

The second amendment I filed yesterday mirrors a bill that the senior Senator from Illinois and I have worked on for several years. Known as the H-1B and L-1 Visa Reform Act of 2009, this amendment would improve two key visa programs by rooting out fraud and abuse while making sure Americans have the first chance of obtaining high-skilled jobs in this country.

The amendment does several things, including: one, requiring employers to try and recruit U.S. workers before hiring H-1B visa holders; two, requiring employers to pay a better wage to visa holders who take these jobs; three, expanding the powers of the federal government to go after abusers; four, creating new rules regarding the outsourcing and outplacement of H-1B and L-1 workers by their employers to secondary employers in the United States; and five, establishing a new database that employers can use to advertise positions for which they intend to hire an H-1B worker.

Too many American workers are unemployed today. Yet we still allow companies to import hundreds, even thousands, of foreign workers with very little strings attached. These businesses should be first asked to look at Americans to fill vacant positions, and they should be held accountable for displacing Americans to hire cheaper foreign labor.

These two amendments go directly to the concerns about job creation and prevention of offshoring of U.S. jobs. Both amendments are bipartisan. Yet if cloture is invoked, these amendments would fall on the Senate cutting room floor.

Unlike the 2004 JOBS bill, I have no confidence that, even if the Democratic leadership were to follow regular order for floor purposes, that we could expect anything like a conference committee to work out the issues between the House and the Senate.

We find ourselves in a very disappointing situation today. Two serious issues are supposed to be addressed in the legislation before the Senate: The first is tax incentives for job creation; the second is measures to prevent offshoring of jobs. No doubt the people who send us here expect us to take these weighty matters seriously. With all the economic pain Americans are enduring, we shouldn't be playing political games. But here we are. We have a bill whose proponents claim is a serious effort.

The Democratic leadership skipped the Finance Committee, and we are presented with a take-it-or-leave-it bill that is really nothing more than a political label. We can do better.

Cloture Motion

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

Mr. President, before I start to speak, it is my understanding I have 30 minutes for our side and I ask unanimous consent that Senator Dorgan be recognized immediately after my time.

Mr. President, I wish to tell my colleagues why I think the bill before us, S. 3816, is not a good approach. This bill is being sold as somehow having the potential to create American jobs, but it would likely have the exact opposite effect. It would lead to a net decrease in American jobs. For that reason, I encourage my colleagues to vote against this bill.

The bill has three key aspects: a payroll tax holiday for employers hiring U.S. workers to replace foreign workers; a denial of business deduction for any costs associated with moving operations offshore; and lastly, ending deferral for income of foreign subsidiaries for importing goods into the United States. This last provision, according to my colleagues on the other side of the aisle, is the principal issue of the three, and from that standpoint, in my opposition, I agree. It certainly is the most dangerous, so that is the one I wish to address in detail.

To understand this partial repeal of deferral, it is best to consider the topic of deferral more generally and then we can consider this particular idea in context.

The term ``deferral'' refers to how U.S. corporations pay U.S. income taxes on foreign earnings of its foreign subsidiaries, only when those earnings are repatriated to the United States. That is, the U.S. tax is deferred until the earnings are paid by means of dividend back to the U.S. parent corporation. Deferral is not a new policy.

Rather, it has been a feature of the tax law since 1918.

President Kennedy proposed outright repeal of deferral, but the then- Democratic Congress did not agree with him. Instead, the Congress and the President compromised. The compromise was this: For the passive kinds of income such as interest, dividends, royalties, and the like earned by a foreign subsidiary, the U.S. parent company would pay immediate U.S. tax whether or not the foreign subsidiary sent the earnings back to the parent. However, for active business income of the foreign subsidiary, there would be no U.S. tax until the foreign subsidiary sent such money to the parent corporation.

In short, the compromise during the Kennedy era was this: For passive income, deferral was repealed. For active income, deferral was still allowed. That compromise is embodied in subpart (f) of the Internal Revenue Code. That compromise was hammered out in 1962 and, with slight tweaks at the margin, that compromise has stayed in place for the last 48 years.

The compromise struck in the John F. Kennedy administration was the right one. Passive income is easy to move from one jurisdiction to another. If a U.S. corporation had a lot of interest income, it was very easy to instead have the foreign subsidiary earn such interest income in a low tax jurisdiction. So when interest income was earned by a foreign subsidiary of a U.S. parent corporation, there was a high likelihood that it was earned in the foreign jurisdiction out of motivation for the sole purpose of avoiding the U.S. tax. But with active business income, there are usually legitimate nontax business reasons for the income to be earned overseas. The reason a U.S. car company sells cars in Hong Kong is not out of some desire to avoid U.S. tax but, rather, out of a desire to sell cars to customers that live in Hong Kong.

So the underlying rationale to the subpart (f) compromise is this: If there is a high likelihood that a particular type of income is earned overseas out of a desire to avoid U.S. tax, then deferral will not be allowed. If there is not a significant likelihood of that, then deferral will still be allowed.

This is a very sensible rationale that was agreed to during President Kennedy's administration in the 1960s, because one of the most fundamental tax principles of all this is transactions should not be tax motivated but should be motivated by business or other nontax reasons. Tax motivated transactions should not be allowed the benefits of the favorable tax treatment sought. This fundamental tax principle prevents the tax laws from distorting decisionmaking and from distorting the economy. And the bill that is now before the Senate called the ``runaway plant'' bill cannot be justified by any similar rationale. They say they want to repeal deferral for foreign subsidiaries having income from importing goods back into the United States. But are they claiming that when a foreign subsidiary of a U.S. company imports back into the United States, there is a high likelihood that the production of the good would have been in the United States but for the motivation to avoid U.S. tax? They would have to be claiming that, if they wanted to be consistent with a half century of reasons why certain specific limitations on deferral have been justified.

But that simply can't be. There are numerous nontax reasons for having a foreign subsidiary of a U.S. parent company import goods into the United States, and I will mention a few. One reason could be that there is only small demand for the product back in the United States as compared to the overseas markets. For example, diesel engine cars are very popular in Europe, comprising 50 percent of all car sales. Here in the United States, diesel engine cars are well less than 10 percent of all car sales. So there is a very good reason for having diesel engine cars made in Europe and not here. Nonetheless, the bill before the Senate acts as if the reason these cars are not made here is because of our tax laws.

It may be that some items simply aren't found in appreciable quantities in the United States. For example, there is no diamond mining or chromium mining to speak of in the United States. A U.S. parent mining corporation with a foreign subsidiary engaged in diamond mining or chromium mining where such diamonds or chrome are imported into the United States may find deferral repealed. This could be true to the extent that the parent had any domestic restructuring at the same time it started up any foreign operations. But obviously the reason for the diamond and chrome mining outside the United States is not tax avoidance. The reason is those minerals are not found here within the United States. So I wish the sponsors of this bill to make clear whether minerals not found in the United States and imported into the United States would be included in this proposal.

I wish also to know whether this proposal would have applied to the Ford Motor Company's ownership of Volvo. Ford owned Volvo cars from 1999 to 2008. During that time, many Volvos were made in Sweden and imported into the United States for sale. If the acquisition had happened after the date of enactment, deferral would be denied in this situation, at least to the extent that Ford may have been shutting down any plants in the United States. However, no one can seriously claim that the reason the cars were made in Sweden rather than in the United States was from the desire to avoid U.S. taxes.

Keep in mind that another foreign car company--let's say Volkswagen-- would not be treated the same way Ford's Volvo car income would be treated. Volkswagen would be better off taxwise on competing auto sales into the United States market over Ford's Volvo, thanks to this bill, if it were to pass.

There are lots of nontax reasons for having foreign subsidiaries of U.S. companies import into the United States. But it seems that the bill before the Senate does not recognize that fact, or maybe it doesn't care. Perhaps the bill is motivated not by a desire to curb tax-motivated transactions but by something else. Perhaps the bill has an anti-free trade motivation. Perhaps the bill is attempting to make it more difficult for American companies to conduct business outside of our country. Whatever the case, the bill's sponsors should make the rationale clear--is it to curb tax avoidance or something else?

Perhaps the bill's sponsors will admit that the bill has nothing to do with curbing U.S. tax avoidance. Perhaps they will say that it instead has to do with preserving and creating U.S. jobs. But if that is their position, that cannot be right. In some limited circumstances, perhaps it would increase employment in the United States, although probably mostly for tax lawyers than anybody else. But whatever the case, the net effect would be to decrease employment in the United States.

Allow me to explain why the net effect of the bill would be to decrease U.S. employment.

First of all, if a U.S. parent company has a foreign subsidiary, then this creates managerial headquarters jobs in the United States that would otherwise not be here. The bill before us might encourage American companies to simply sell off their foreign subsidiaries. This would, in turn, mean laying off employees in management positions at the American headquarters.

A bigger way this bill would hurt employment in the United States would be to discourage assembly jobs in the United States. A U.S. parent company could have foreign subsidiaries engage in manufacturing parts that are shipped back to the U.S. parent. The U.S. parent, in turn, might assemble those parts here in the United States into a finished product. So, yes, maybe this bill would encourage the company to repatriate the parts production, but it is just as easy to imagine that this bill would encourage the company to expatriate the assembly jobs. So this bill is an unacceptable gamble with American jobs.

In the words of the late Senator Moynihan, who preceded me and Senator Baucus as chairman of the Senate Finance Committee--he spoke in opposition to this proposal 14 years ago, so this issue has been around this body for a period of time. He said this: ``Investment abroad that is not tax driven is good for the United States.''

Senator Baucus's concern that this would put the United States at a competitive disadvantage is exactly right. I don't have the exact quote of Senator Baucus, but it was in Congress Daily

recently. I am sorry I don't have that quote for my colleagues.

Senator Baucus very rightly states it. Phil Morrison, the Treasury Department's international tax counsel, criticized this proposal in congressional testimony 19 years ago. Mr. Morrison noted that the bill would be very hard to administer and that it departed from the traditional focus of the limited areas where deferral is denied.

As President Clinton's international tax counsel, Joe Guttentag, explained in 1995, during the Clinton administration:

Current U.S. tax policy generally strikes a reasonable

balance between deferral and current taxation in order to

ensure that our tax laws do not interfere with the ability of

our companies to be competitive with their foreign-based

counterparts.

This proposal has been made year after year for 20 years. I ask that my colleagues again reject it, in an effort to keep American companies globally competitive, to protect American jobs, and to preserve the underlying rationale of why deferral should only be denied in limited circumstances.

Finally, I wish to briefly comment on one other aspect of the bill-- the payroll tax holiday. This, too, has provisions that will be difficult to administer. For example, do foreign workers actually have to be fired to have their employer get the payroll tax holiday in the United States or do they need only to be reassigned job roles?

This provision only scores, according to the Joint Committee on Taxation, as costing $1 billion. Let's make sure we are clear on this point. The other side is seriously considering raising taxes on small businesses--the lead creator of jobs--by tens of billions of dollars by letting top individual tax rates go back up in the year 2011. But in an effort to support job creation, they offer this $1 billion payroll tax holiday.

According to the Joint Committee on Taxation, 50 percent of small business flowthrough income will be hit by a marginal tax hike of somewhere between 17 percent, on the low end, and 24 percent, on the high end. That tax increase is scheduled to hit these job-creating small businesses in just a little over 3 months. Finance Committee Republican tax staff calculates the effect of that tax hike to be 50 times the benefit provided by this bill. On our side, we don't see the logic of raising $50 in taxes and providing a complicated tax benefit of just $1.

Why aren't we dealing with the real problem for the folks responsible for creating 70 percent of American jobs? Of course, that is small business. We ought to take time out on the tax hit that is coming to small business this December. That is what we ought to be debating on the Senate floor.

But the Democratic leadership would rather spend valuable time talking about a bill that is artfully politically labeled a jobs bill. Given that the bill will lead to a net loss in American jobs, it seems there might be a truth-in-labeling claim against the Democratic leadership.

Let's have votes on real job creation incentives and get out of this gamesmanship. Let's do the people's business and forestall the big tax hike coming at American small business.

I also wish to take some time to address the issue of the estate tax, which is going to expire at the end of this year, at the very same time.

The majority party has had control of the Senate since January 3, 2007. That is 3 years, 8 months, and 24 days ago.

During the 3\1/2\ years of Democratic control, my colleagues have had an opportunity to address the death tax.

More pointedly, the Democratic leadership had a duty to provide certainty in the law as it relates to the estate tax.

My colleagues have had the duty to address the fact that this ill- conceived tax will snap back to pre-2001 law on January 1, 2011.

That is only a little over 3 months away. To be exact, it is 3 months and 5 days from now.

Unfortunately, as this chart shows, the estate tax is not the only piece of long overdue tax legislation.

Mr. President, the practice of ``good government'' is providing certainty in the law.

What I mean is, our country is made up of law-abiding citizens. As legislators, we were hired by these law-abiding citizens to make the law.

When we fail to provide certainty in the law, we fail to do our jobs.

But despite the fact that the Democratic leadership has not acted in over 3\1/2\ years we still have 3 months before the estate tax reverts back to a 55-percent tax rate and a $1 million exemption amount. So Congress still has time to act.

But I am skeptical that the Democratic leadership will indeed act.

Why? Because when my friends on the other side of the aisle were in the minority earlier in this decade, they blocked--let me repeat blocked--Republican efforts to make permanent an estate tax law that law-abiding citizens all across America could rely on.

The first effort was made in 2002. Specifically, on June 12, 2002, the Democratic leadership blocked legislation that would have permanently repealed the estate tax.

In 2004, Republicans in the House of Representatives approved a bill that would have permanently repealed the estate tax. But due to maneuvering by the Democratic leadership, a vote in the Senate was never allowed to occur.

Finally, in 2006, Republicans offered a compromise proposal on the estate tax. Under that compromise, the estate tax unified credit exemption would have gradually been increased to $5 million. The rate would have also been phased in to a 30-percent tax rate.

But again, the Democratic leadership filibustered the proposal to its death.

Mr. President, I believe on our side were practicing good government as it relates to the estate tax.

We were doing our jobs, and providing certainty in the law.

Yet the Democratic leadership stymied the practice of good government.

To this day, the Democratic leadership continues to stymie efforts to provide certainty in the law.

So why is the estate tax being held hostage?

Because a number of liberal leaning Senators would be satisfied if the estate tax reverted back to pre-2001 law--that is, a 55-percent tax rate and a $1 million unified credit exemption amount.

And why wouldn't they? There is $233 billion in extra revenue to spend.

Also, in this hyperpartisan environment that is plaguing the Senate, many policymakers are politicizing the estate tax issue.

What do I mean?

A number of Senators have taken to the Senate floor and characterized a reasonable estate tax rate as a ``give-away'' to the rich.

These Senators also argue that if the estate tax is ratcheted up to a 55-percent tax rate, we could use that revenue to reduce the deficit.

I respect every Senator's opinion, but I question whether these members are actually going to use this revenue to reduce the deficit.

Unfortunately, we have seen my friends' desire to spend, spend, spend. Increasing the deficit one dollar at a time. Not the other way around.

I will acknowledge that due to the budget rules that we must live by here in the Senate, making permanent an estate tax regime at a tax rate lower than a 55 percent will result in revenue loss to the government.

For example, my friend Congressman Pomeroy--a Democratic Congressman from North Dakota--sponsored a bill to make permanent the estate tax at a 45-percent tax rate and a $3.5 million unified credit exemption amount.

When you compare this proposal against what the estate tax would revert to in 2011--a 55 percent tax rate and $1 million exemption--you find that this change in the law would cost around $233 billion over 10 years.

Now, when you compare $233 billion to the $2.5 trillion health care reform bill that was recently signed into law, it is a drop in the bucket.

Also, compare this to our $13 trillion national debt.

But $233 billion is nothing to sneeze at.

While it could be used to reduce the deficit, my colleagues on the other side of the aisle have made every indication that they will simply spend this money.

My colleagues on the other side will gloss over their plans to spend, and instead attack any proposal that includes a tax rate lower than 55- percent as a ``give-away'' to the rich.

I have some news for my colleagues. A large number of Americans who

would be impacted by a 55-percent tax rate and a $1 million unified credit exemption are not ``rich.''

Let me repeat that. Those taxpayers that would be impacted by the estate tax if it reverted back to pre-2001 levels are not wealthy people.

I would like to take a moment and provide my colleagues with a real world example of an Iowan who would not consider herself ``rich.''

Recently, I received an email from Landi McFarland, who is a sixth generation Iowa farmer.

This is what Landi had to say about the impact of the estate tax and her ability to continue the family farm:

. . . As a 6th generation Iowa farmer whose family

homesteaded land in Union county 154 years ago, I have

concerns about current estate tax law. I am 26 years old and

have a dream of pursuing a future in agriculture, the same as

the generations that have come before me.

I currently raise Angus cattle with my parents and

grandparents, where we are tax-paying citizens and supporters

of our local economy and schools. My grandparents are both 84

years old, and own about 90 percent of the land, cattle, and

equipment on our farm. Their combined estates will total

approximately $7 million (the vast majority of this being

farm assets like land and cattle). Recent land values have

escalated the values of my grandparents' estate.

This rise in land values, however, does not increase the

value of what the land produces (Angus cattle sell for the

same price no matter if the land is valued at $1000 or $4000

per acre).

If my grandparents pass away AFTER 2010, and current estate

tax laws are not fixed, my family will not be able to afford

to pay the estate taxes without liquidating the herd and

selling a large portion of the farm ground. This will put an

end to our business that we love, and hence and end to our

support of local businesses through daily business

operations.

In the last four years, my family has worked on estate

planning to try to help ease the burden of estate tax. This

includes taking advantage of the $12,000 tax-free gifting

each grandparent can do per person per year.

However, this only amounts to a total gifting of $48,000

per year, a drop in the bucket for a combined $7 million

estate.

We are one of the oldest Angus operations in the country,

and is all we wish to do is continue our family business that

has been built with our own blood, sweat and tears over the

past years. If current estate tax laws are not fixed, there

will be thousands of small family businesses like ours put

out of business. We need a SENSIBLE and PERMANENT fix.

Thanks for your help,

--Landi

Mr. President, Landi's story is not unique to her. There are more farmers like her in Iowa and around the country.

I want to talk more broadly now about how failing to address the estate tax sunset will affect Iowa farmers.

Over the past few years, farm prices have been escalating dramatically. According to the U.S. Department of Agriculture, U.S. farm prices have nearly doubled in the last decade.

While recent economic troubles have led to home prices dropping, this has not been the case for farmland. In fact, as reported in a recent LA Times article, Wall Street investors have actually turned to purchasing farmland in hopes of finding refuge from an unstable stock market. This in turn has pushed farm prices higher. Based on a recent survey by the Federal Reserve Bank of Chicago, Iowa farm prices are up 8 percent in the past year alone.

Why is this discussion of escalating farm prices significant?

Because this means that should the estate tax law revert to 2001 law, many farmers are going to be surprised to discover they will be considered ``rich.''

Now, I am not talking about wealthy corporate farmers, I am talking about many family farmers, just like Landi, who are taking over a farm that has been passed down for generations.

Mr. President, let me walk my friends through some data.

In 2007, the U.S. Department of Agriculture reported that there were 92,800 farms in Iowa.

In 2007, the average Iowa farm was 331 acres.

According to a survey conducted by Iowa State University, in 2009 the average acre was worth $4,371.

Let's do some simple math. If we multiplied the average acreage of an Iowa farm--which was 331 acres as reported in 2007--by the average cost per acre in 2009--which was $4,371 in 2009--we find that the average Iowa farm is worth $1.4 million.

Mr. President, $1.4 million exceeds the $1 million unified credit exemption amount that would be in place on January 1, 2011, if Congress does not act.

Admittedly, the value of a farmer's farmland does not tell us conclusively whether or not the farmer will be subject to the estate tax. Farmers sometimes carry debt. That would reduce the value of the farm. But they also have assets, including equipment and bank accounts, that would increase the value of the estate.

Let me shift gears and provide my friends with some national statistics.

The Joint Committee on Taxation has told us out of 92,700 estates of people dying in 2011, 49,000 of these estates would be taxable under the 55-percent rate and $1 million exemption. If the law were changed to a 35-percent tax rate and $5 million exemption amount, for example, 3,900 estates would be taxable. That is a ratio of 13 to 1.

For every one estate that would be taxable under a 35-percent and $5 million estate tax regime, a whopping 13 estates would be taxable if the law reverted to a 55-percent rate and $1 million exemption.

Even if the rate were set at 45 percent and an exemption amount of $3.5 million, this ratio is 8 to 1. That is, for every one estate that would be taxed under the 45-percent rate, with the $3.5 million exemption, eight estates would be taxable under the 55-percent rate and $1 million exemption if we do not change the law.

I will conclude this way. Let's now look at farmers who would be affected. Based on the Joint Committee on Taxation in 2011, 3,200 farms would be taxed if the law included a $1 million exemption amount. Compare that to 300 farms that would be taxable if the exemption was $3.5 million.

That means the result of no action will be that 10 times as many family farms will be hit by the death tax. The time for action on the estate tax is now, not a month from now or 3 months from now. We owe it to the farmers and small business owners and their young heirs to give them certainty. We need to give to the tax lawyers and consultants who advise people on their estate planning some certainty.

I yield the floor.

Mr. President, I intend to object to proceeding to H.R. 4862, a bill that amends the Immigration and Nationality Act with regard to naturalization authority. H.R. 4862 would permit Members of Congress to administer the oath of allegiance to applicants for naturalization. I object to the bill because, according to administration officials, it would require Members of Congress to administer the oath of allegiance only at times determined by the Secretary of Homeland Security, notwithstanding the Senate Calendar or the legislative work that is required by Members of Congress. We need to understand what exactly this bill allows or requires and not just rush it through in the waning hours and minutes of this Congress.

Mr. President, I also intend to object to proceeding to the nomination of Norm Eisen to be Ambassador to the Czech Republic at the Department of State for the following reasons.

I object to the proceeding to the nomination because of Mr. Eisen's role in the firing of the inspector general of the Corporation for National and Community Service, CNCS, and his lack of candor about that matter when questioned by congressional investigators. The details of Mr. Eisen's role in the firing and his misrepresentations about that matter are detailed in the Joint Minority Staff Report of the House Committee on Government Reform and the Senate Finance Committee, dated November 20, 2009.

Mr. President, as a parent and grandparent, I have long been concerned about the dangers that face our kids. I have been especially concerned about the large amount of dangerous drugs in this country and their use by anybody but particularly young people. It is clear drug dealers will stop at nothing to get our kids hooked on drugs. All too often, we learn of new and emerging threats to communities that often have negative impacts on our youth. But when these drug threats emerge, it is crucial that we unite to halt the spread of the problem before it consumes families and communities.

Today we are confronted with new and very dangerous substances packaged as somewhat innocent products. Specifically, young people are able to go online and/or to the nearest shopping mall and purchase incense laced with chemicals that alter mind and body. These products are commonly referred to as ``K2'' or ``Spice,'' among other names. I have a chart Members can see behind me. They can see the package varieties of K2 products. I will not go into detail, but look at them.

Specifically, kids are able to actually purchase these products with a great amount of ease. Kids and drug users are smoking this product in order to obtain what they think is a legal high, and the word ``legal'' tends to imply harmless. It is believed K2 products emerged on the scene beginning 4 or 5 years ago. Their use spread quickly through Europe and the United States. According to a study conducted by the European Centre for Drugs and Drug Addiction, most of the chemicals found in K2 products are not even reported on the label. This study by the European Centre concluded that these chemicals are not listed because there is a deliberate marketing strategy to represent this product as somewhat a natural substance. However, K2 is anything but natural. Most of the chemicals the Drug Enforcement Administration has identified within K2 products were invented by Dr. John W. Huffman of Clemson University and for a very worthwhile purpose--research purposes.

These synthetic chemicals were never intended to be used for any other purpose other than research. They were never tested on humans, and no long-term effects of their use are currently known. As more and more people are experimenting with K2, it is becoming increasingly evident that K2 use is anything but safe.

The American Association of Poison Control Centers reports significant increases in the amount of calls concerning these products. There were only 13 calls related to K2 use reported in 2009. Look at the figure for 2010. There have been over 1,000 calls concerning K2 use. So it is very evident: A dramatic increase in a short amount of time of the public concerned about K2 use, probably reflecting increased use of K2.

Common effects reported by emergency room doctors include increased agitation, elevated heart rate and blood pressure, hallucinations, and seizures. The effects from the highs from K2 use are reported to last several hours, and in some cases up to one week.

Dr. Huffman has stated that since so little research has been conducted on K2 chemicals, using any one of them would be like ``playing Russian roulette.''

In fact, Dr. Anthony Scalzo, a professor of emergency medicine at St. Louis University, reports that these chemicals are significantly more potent than even marijuana. Dr. Scalzo states that the amount of chemicals in K2 varies from product to product, so naturally no one can be sure exactly the amount of drugs you are putting into your body when you use these K2 products. Dr. Scalzo reports that this can lead to significant problems such as altering the state of mind, addiction, injury, and even death. I will refer to the death issue in a moment.

According to various news articles across the Nation, K2 can cause serious erratic and criminal behavior. In Mooresville, IN, the police arrested a

group of teens after they were connected to a string of burglaries while high on K2. The local county attorney prosecuting the case stated this was an unusual crime spree. These kids were not the type who are normally seen in the criminal justice system. The county attorney stated these kids had ``no prior record, good grades, athletes, so that got me wondering: is there a correlation between K2 and the crime?''

Another case in Honolulu, HI, shows police arrested a 23-year-old man after he tried to throw his girlfriend off an 11th floor balcony after he was smoking K2.

A 14-year-old boy in Missouri nearly threw himself out of a fifth story window after smoking K2. Once the teen got over his high, he denied having any suicidal tendencies. Doctors believe he was hallucinating at the time of the incident.

K2 use is also causing serious health problems and increased visits to emergency rooms.

A Louisiana teen said he became very ill after trying K2. The teen said he experienced numbness, starting at his feet and traveling all the way to his head. He was nauseous, light-headed, and was having hallucinations. The teen stated that K2 is being passed around at the school. The teen also stated that many people were trying it without fear, assuming it was safe because it was legal. I said that previously in my remarks: a legal drug, it has to be safe is kind of the attitude.

Another case has a teenager in Indiana being admitted to an emergency room with a blood pressure of 248 over 134 after testing positive for

Mr. President, today, I have the distinct pleasure of recognizing before the Senate some of the most talented and brightest young people in the United States. The 2010 Davidson Fellows Award is being given to 20 young students who are under the age of 18 and have already demonstrated superior ability and achievement in the areas science, music, literature, mathematics, and technology. I would like to take this time to recognize each of these extraordinary young individuals and their projects.

In the area of science, we have 12 young students with remarkable projects that have contributed to scientific progress. This includes Kyle Loh, a 16-year-old young man from Piscataway, NJ, who conducted screening of chemical libraries and identified compounds that can help convert human and mouse skin cells into pluripotent stem cells. Pluripotent stem cells have the potential to differentiate into many different cell types. The chemical compounds he identified obviate the need to destroy embryos. Kyle's studies advance regenerative medicine and provide insights into the molecular mechanisms that underlie the conversion of skin cells into pluripotent stem cells.

Jonathan Rajaseelan, a 17-year-old young man from Millersville, PA, synthesized six new chemical carbene complexes of the metal Rhodium. Rhodium complexes act as catalysts in multiple organic synthesis reactions, including the manufacturing of pharmaceuticals and industrial chemicals. The catalytic effects of his complexes make these processes safer, inexpensive, and less

environmentally hazardous by eliminating the need for large quantities of hydrogen gas, a dangerous explosive. Jonathan's work has the potential to contribute to greener methods of making medicines, pharmaceuticals, and other chemical products.

Eric Brooks, a 16-year-old young man from Hewlett, NY, studied the genetic factors affecting metastatic progression of prostate cancer. Approximately 30 percent of men with prostate cancer will die from it, but it is difficult to predict who will get the metastatic diagnosis. Eric developed models based on evolutionary selection to identify genes that may affect metastatic potential either positively or negatively. His observations may be used to design better clinical predictors to indicate who must undergo painful treatment and for whom the treatment is unnecessary.

Meredith Lehmann, a 14-year-old young woman from La Jolla, CA, researched the spread of epidemics. Using trip data from all 3,076 counties in the continental United States, she found long distance auto travel, which accounts for five times as many passenger-miles as air travel, governs simulated epidemic evolution. Large hub airports near population centers are not disproportionately more important in contrast to existing research. Meredith's findings suggest epidemic models should incorporate automobile and air travel data, but transportation network restrictions are unlikely to be effective.

Laurie Rumker, a 17-year-old young woman from Portland, OR, investigated the susceptibility of organoclay to biodegradation by microorganisms within river sediments. Organoclay is a chemically modified clay material used to prevent hydrophobic pollutants from rising into the water ecosystem. Through spectrophotometric analyses and oxygen uptake tests, Laurie found biodegradation of the chemical structures within organoclay which could impair the ability of the organoclay to adsorb and retain pollutants. Laurie's work has important implications for the treatment of contaminated sediments.

Benjamin Song, a 16-year-old young man from Audubon, PA, researched colon cancer biomarkers in urine. Colon cancer is the second leading cause of cancer death in the United States, even with the sensitive but invasive colonoscopy. Benjamin designed and tested polymerase chain reaction assays targeting a known colon cancer epigenetic marker. His work shows potential for a urine test for colon cancer that is noninvasive, fast, affordable, and sensitive. In addition, his method could be adapted to virtually any cancers with known DNA alterations.

Merry Sun, a 16-year-old young woman from Chappaqua, NY, studied therapeutic ultrasound's potential in treating recurrent and metastatic cancers. Traditional therapies like radiation, chemotherapy, and surgical resection are ineffective in immune responses against tumor cells. Merry found that therapeutic ultrasound causes stress and light damage to tumor cells, which alerts the immune system to respond and target the tumor. Her results demonstrate the possibility of a novel, non-invasive, non-toxic cancer therapy that treats solid tumors as well as systemic metastases.

James Ting, a 17-year-old young man from Holmdel, NJ, synthesized bismuth nanowires which demonstrate quantum confinement, the reduction of electrons to a one-dimensional axis. By using physical vapor deposition, he created lawns of bismuth nanowires as well as isolating single nanowires to add to silicon chips. James' research focuses on the creation of single electron transistors, which are useful in the new field of spintronics. The spins of these electrons could then be harnessed and used for information storage and act as the building blocks for quantum computers.

Scott Boisvert, a 16-year-old young man from Chandler, AZ, demonstrated a link between amphibian aquatic environments and the growth of pathogenic fungus, Batrachochytrium dendrobatidis, which has contributed to the loss of over 32 percent of amphibian species worldwide. Using ion chromatography and ion-coupled plasma spectrometry, Scott studied how the water chemistry of a habitat affects the growth of the microorganism. Scott's project has broad implications for understanding the pathogen's propensity to infect an amphibian host and controlling the spread of infection, benefiting conservation efforts.

Janie Gu, a 16-year-old young woman from Morganville, NJ, researched noise reduction of atomic magnetometer systems, advanced devices that measure magnetic fields with extreme precision. To increase the signal- to-noise ratio, she tested the loss factors, such as measurements of magnetic noise produced, of various ferromagnetic materials for use in the magnetic shield around the system, improving the precision by more than 44 percent. Janie's work has applications in the military, medicine, information storage, mineral and oil detection, space exploration and fundamental physics experiments.

Rebecca Jolitz, a 15-year-old young woman from Los Gatos, CA, examined whether hypolithic cyanobacteria, a photosynthetic organism found under rocks in climatically extreme environments, could theoretically have enough sunlight to survive on Mars. Using an original computer program that simulated a million individual beams of sunlight hitting a Martian rock, Rebecca found that there was enough light for cyanobacteria to survive on Mars, indicating that Mars may not be a dead world. Rebecca's research could help to discover the means through which life on Mars may exist.

Sahil Khetpal, a 17-year-old young man from Plano, TX, developed a carbon nanotube-based drug-delivery system for tumor targeted chemotherapy and photo-therapy of cancer, a dual therapy. This versatile platform attacks tumors on two fronts and mitigates the severe side effects associated with conventional chemotherapy. He also investigated a gadonanotube for the development of a new drug delivery system. Sahil's system has the potential to both diagnose cancer at an earlier stage and provide the dual therapy mechanism to efficiently combat it.

In the area of music, there are two talented young musicians that have produced significant contributions to the art of music. Yeeren Low, a 13-year-old young man from East Stroudsburg, PA, explored and experimented with sound in various aspects of music through five compositions. In his portfolio, Art of Sound, his goal is to enrich the body of the contemporary classical music genre, and create new musical expressions and listening experiences. Yeeren is particularly interested in promoting greater awareness and exposure to the richness of the classical music genre, thus contributing to its wider recognition, appreciation and overall advancement.

Kevin Hu, a 16-year-old young man from Naperville, IL, traverses the globe and explores cross-sections of humanity in his violin portfolio, Sociomusicology: Exploring and Sharing the Worlds of Music. His portfolio includes selections of music that, at times, were repressed by political regimes, or conversely, celebrated for their heartbreaking beauty, all while representing an array of raw humanity. Kevin's goal is to present music as a tangible and dynamic tool in human healing, self-discovery, and dignity.

In the area of literature, we have one creative and inspired student, John Michael Colon, a 17-year-old young man from Wayside, NJ. John's portfolio, Art as Empathy: A Study of the Syncretic Potential of Literature, demonstrates the utility of literature and art in society. He writes that although human beings want to communicate their fundamental experience, this worldview is too ineffable to express directly; art and literature articulate this on a visceral level. John Michael proposes through art and literature, the expression of ideas can help tame the tendency to dehumanize others by helping us see their ideas the same way we see ours, inspiring empathy.

We have two bright young individuals whose projects have advanced the field of mathematics. Damien Jiang, a 17-year-old young man from Raleigh, NC, studied the parallel chip-firing game, PCFG. Though not a game, the PCFG is played on a graph, or network of nodes and edges, and is closely related to a variety of mathematical models for complex phenomena such as earthquakes, avalanches, and forest fires. By running computer simulations of randomized PCFGs, Damien studied their tendency to reach a cycle of repeating configurations, and mathematically proved a theorem about its

behavior on a graph. Damien's work has broad applications in disaster preparedness.

Jonathan Li, a 17-year-old young man from Laguna Niguel, CA, developed a mathematical model and computer simulation to analyze tumor growth and is the first to study motility and contact inhibition, a mechanism that limits cell growth when pressured by neighboring cells. His research also revealed an inherent flaw of the Cellular Potts Model, used to simulate cellular structure behavior. Jonathan's work provides a method to predict the effects of motility on tumor development and can be used to identify cancer phenotypes that chemotherapy drugs can target, potentially improving treatment.

Finally, in the area of technology, we honor three innovative young minds. Anna Kornfeld Simpson, a 17-year-old young woman from San Diego, CA, developed a chemical-detecting robot. She used porous silicon, a material that changes color in the presence of chemicals like alcohols or nerve gas, and simple, low-cost circuit elements to detect color change. The robotic microcomputer then ``sees'' the chemical instead of ``smelling'' it. Prototypes had a 100 percent response rate. Anna's work has applications in security and counterterrorism, monitoring industrial settings for toxins, and exploring locations too hazardous for humans.

Alexander Gilbert, a 16-year-old young man from McLean, VA, developed a computer algorithm which improves contrast in magnetic resonance imaging, MRI. His program has been successfully applied to brain MRI images, enabling more accurate image definition of tissues, such as areas of demyelination, or plaques, which are often present in patients with multiple sclerosis. Alexander's work is pertinent to MRIs of the spine and other areas, and offers the potential for better diagnosis and monitoring of multiple sclerosis and other neurological diseases including Alzheimer's disease.

Gavin Ovsak, a 16-year-old young man from Hopkins, MN, designed a device to allow disabled individuals more effective access to computers. His project, known as CHAD, circuit head accessibility device, is a circuit board integrated onto a baseball hat to replace the functions of a computer mouse through head movements and a bite sensor. Gavin's work is less expensive, more efficient, and uses fewer complex software interfaces than are currently available in the assistive technology market, equalizing access to the social, occupational, and global significance of the Internet.

I often say that America's gifted and talented students possess remarkable potential. These 20 young individuals have demonstrated more than potential. They have already made significant contributions to our society in their short lives and one can scarcely begin to imagine how much they will contribute to society throughout their lives, thanks in no small part to the encouragement of the Davidson Institute as well as their parents and mentors. They are an inspiration and a reminder that if we fully support our most talented young people, we can look forward to a bright future.

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

Mr. President, we have a tax bill before us that is supposed to help small business because small business creates 70 percent of the new jobs. The President says that. I think we have to look at the background of the high unemployment rate, particularly why it is staying up there--maybe not why it got up there but why is it still there.

I spoke last night about a lot of uncertainty that comes because of the cap-and-trade bill, the bank regulatory reform bill, the health care reform bill, the biggest tax increase in the history of the country coming up this fall if we do not intervene and prevent the biggest tax increase, and a lot of other issues out there that tell us how uncertain it is, what Congress is going to do. That uncertainty keeps the entrepreneurs of America from opening up and creating jobs.

If you want to quantify how they are tight-fisted about the situation right now, the last figure I saw was about $2.1 trillion in cash in the treasuries of major corporations of America. They are not making any money by storing that cash, but they do not know what sort of a future this Congress is going to give them, so they are very guarded on any moves they make. Then we have things such as shutting down all the oil drilling--unemploying tens of thousands of people. Then what I am going to visit with you about is the fact we did not pass the biodiesel tax credit December 31 last year when it sunset and that industry is shut down and 20,000 jobs have been lost. It is ironic to me that we spent weeks on a bill that is before the Senate, as legitimate as it is, to create jobs in small business, when, frankly, there are a lot of negative things going on in the Congress of the United States that cause people to be laid off or, because of uncertainty, not to be hired back. I wish to speak about the biodiesel industry.

As we are faced today with a 9.6-percent unemployment rate, I have a solution that will create 20,000 jobs almost overnight. That solution is to extend the biodiesel tax credit today. This tax credit expired December 31, 2009. This democratically controlled Congress has failed to extend it, even though, on several occasions, I and other Members on this side of the aisle have taken action in that direction.

The Democratic leadership claims, as the President does, that they want more green jobs--and I am in favor of that. I am the author of the Wind Energy Tax Credit, as an example. I have been a backer of ethanol. I have been a backer of biomass and this biodiesel tax credit. So there are plenty of opportunities to show that we, on this side of the aisle, support the President wanting to create green jobs. If the President and the Democratic leadership want to do that, they have not acted to prevent the loss of green jobs in the biodiesel industry.

The biodiesel industry has lost tens of thousands of jobs as a result of this neglect. It would be nice if the Democratic leadership's rhetoric met with reality.

I have twice sought to have the biodiesel tax credit simply passed through the Senate by unanimous consent. However, both times my request was objected to by those on the other side of the aisle. Meanwhile, these biodiesel plants in Iowa and throughout the country continue to lay off workers. In fact, most of them are just plain shut down because the democratically controlled Congress has not extended the biodiesel tax credit.

I made a speech similar to this in December, when we were on the health care reform bill. I said: Can't we find some time to pass these tax extenders so we do not let them lapse--and all these question marks. That was 8 months ago, 9 months ago. But somehow we thought last December, since Congress had not been in session on Christmas Eve since 1895, we ought to be in session once in 115 years--or because we just had to pass this health care reform bill before the end of the year because it takes effect by 2014, we couldn't find a little bit of time to keep 22,000 people employed in the biodiesel industry. So we asked for those consents and we did not get them. These workers are laid off because the democratically controlled Congress has not extended this tax credit.

This is a simple and noncontroversial tax extension that will likely reinstate 20,000 more jobs nationwide and at least 2,000 within my State of Iowa. By the way, this is not controversial, and there are 71 other tax provisions that expired December 31, 2009, and I don't know that any of those are controversial. So the biodiesel industry has lost its jobs. These jobs have fallen victim to a tactic used by the Democratic leadership to hold this popular and noncontroversial tax provision hostage in an attempt to advance political objectives.

Just last February I worked out a bipartisan compromise on tax extenders--all of them--with Chairman Baucus to extend the expired tax provisions, including biodiesel.

However, the Senate Democratic leadership decided to put partisanship ahead of the job security for tens of thousands of biodiesel workers by destroying the compromise to which Chairman Baucus and I agreed. So I am here again to try to put tens of thousands of people back to work producing clean and renewable fuel that everybody in this Congress says they support, and the green jobs from these productions.

There is a difference between a biodiesel tax credit and the other tax provisions in the tax extender bill that has stalled in the Senate. The failure to extend the biodiesel tax credit before it expired has ground the industry to a halt because biodiesel is now more expensive than gasoline. Gasoline stations, knowing they cannot sell biodiesel, do not buy it, and biodiesel producers have, therefore, stopped producing biodiesel because they have nobody to sell it to. Consequently, the layoffs.

While the other tax provisions are important, most are not as time sensitive as biodiesel because they are not transactional tax incentives like the biodiesel tax credit but, instead, are based on a taxable year. Unfortunately, now it is clear the larger extenders bill has stalled for the time being. We need to pass the biodiesel tax credit separately.

The last time I sought unanimous consent, which was the second time I did it, one of my colleagues on the other side of the aisle objected. The objection said something like, the biodiesel tax credit was part of a larger extenders bill they were working on.

Now that the tax extenders bill is stalled, the Senate needs to pass the biodiesel tax credit by itself. I ask my colleagues to vote yes to waive the rules and put 20,000 biodiesel workers back to work.

I move to suspend rule XXII, paragraph 2, for the purposes of proposing and considering amendment No. 4433, which is at the desk. Having said my part, I think before Senator Hatch speaks--he will speak about a very popular tax extender that needs to be extended and on which I do not know that there is one single disagreement. It is a noncontroversial provision but has still been languishing here for the last 9 months, and losing jobs as a result of it, at the very same time we are trying to create jobs through a bill that is before the Senate.

I yield the floor.

Madam President, I have 1 minute to speak to my motion to suspend the rules to bring up this bill.

We are on a bill now on the Senate floor that is supposed to create jobs. Hopefully, this bill will create jobs. But it is kind of small compared to what this Congress could do by passing the biodiesel tax credit. It should have been passed before December 31 last year. Senator Baucus and I put together a bipartisan bill to do it in February. That bill was delayed by the majority leader, so we are back here again for a third time, trying to get attention to jobs. This biodiesel tax credit will immediately put 20,000 more people back to work, and 2,000 in my State of Iowa.

I hope we will suspend the rules and create jobs for sure because those jobs were there before December 31 and they will be there on September 17 if we pass this amendment.

Madam President, I ask for the yeas and nays.

Mr. President, while we are talking about taxes, I wish bring up something that is significant to about 26 million Americans. It doesn't deal only with small businesses, but obviously a lot of small businesses are affected by the issue I bring to my colleagues' attention. I do this several times a year. It deals with the alternative minimum tax, a tax that I am sure that out of the 26 million people who might be hit this year if we don't do something, a lot those are small businesspeople.

The AMT was first enacted by Congress in 1969. The alternative minimum tax was created in reaction to some very wealthy and very high income individuals paying no income tax. These high-income individuals were able to do this because they were able to claim a huge amount of tax credits and deductions legally.

Probably the sensible way to have dealt with this problem would have been to curtail the proliferation of those tax credits, tax deductions, and tax expenditures at that time. Unfortunately, that was not the course Congress took when the alternative minimum tax was set up, now 40 years ago. Instead, Congress created this alternative tax system that we call the alternative minimum tax. With the alternative minimum tax, an individual must first calculate his regular income tax, and then he must calculate his alternative minimum tax. The taxpayer compares the two numbers and pays the highest figure of tax owed. I know this is complicated, figuring one's taxes twice--as if the regular income tax all by itself isn't complicated enough--but it has gotten much worse over the decades.

The alternative minimum tax has not merely added complexity; it has ensnared tens of millions of Americans in its clutches. What was originally intended for fewer than 200 very wealthy taxpayers back in 1969 because they didn't pay any income tax--legally didn't pay any income tax--now has grown to ensnare tens of millions of middle-class Americans.

What is really worse is that it was supposed to get everybody to pay some income tax under the theory that if you live in America, even if you take legal advantage of everything the Tax Code allows you to do and still pay no tax, you ought to pay something, so the alternative minimum tax. But now the IRS tells us that there are a large

number of people--not tens of thousands but thousands--who don't pay either the regular income tax or there are ways they don't legally have to pay the alternative minimum tax. So it isn't even accomplishing its original purpose of making sure everybody pays some income tax.

The reason it has grown to include many middle-income Americans is because the exemption amount has not been indexed for inflation. Congress has increased the exemption amount so it would be targeted toward those people it was meant to hit--very wealthy people.

We keep talking around here about patching the AMT. We have done it every year since 2001. Congress has passed the AMT so that only 4 million taxpayers have been subject to it in the past few years. At this point, however, the AMT is not patched for 2010. So unless Congress acts to patch the AMT, rather than only about 4 million Americans being subject to the AMT, more than 26 million will be.

The chart I have here shows my colleagues a breakdown of the number of families and individuals State by State subject to the alternative minimum tax. These families and individuals should be paying the alternative minimum tax right now because Congress hasn't acted so far this year, after 9 months, to do the patch. That means that about 22 million families and individuals are currently scheduled for quite a surprise come April 15, 2011. Roughly 4 million Americans are presumably used to paying the AMT, but the additional 22 million families and individuals currently subject to it may not have realized they are standing in a hole dug by this Congress. Until Congress patches the AMT in 2010, these individuals should either have their wages withheld at a higher rate and/or pay estimated taxes to take into consideration the fact that the AMT has not been patched. But we would have to figure that very few of these 22 million Americans are, in fact, paying the higher estimated taxes in anticipation of Congress not acting on the AMT. They probably do not know.

The third quarterly estimated tax payment is due today. Literally right now, taxpayers across the country are under the legal requirement to pay their estimated tax. They should be using the form depicted on this chart, the form 1040-ES. I hope I am not here in January when the final estimated payment is due.

It is disappointing that Congress has created a situation where law- abiding citizens who still trust in Congress to look out for them are at odds with the law, even if only temporarily. The betting money is that Congress will get this job done before the end of 2010, but in the meantime, confusion reigns.

In many ways, people simply do not know what to do about this. As I said, taxpayers don't know how much estimated tax to pay. The IRS doesn't know what forms to be preparing for publication. Tax software firms don't know how they should program their software. Tax professionals are not sure what to advise their clients. Government revenue estimators don't know whether to count the AMT patch in or out. And most important, our fellow Americans don't know how to plan their financial affairs. Can they afford that vacation or can they afford a new car? Can they afford some additional gift to charity? Should they contribute more or less to their 401(k)? The answers to these questions turn in part on whether Congress patches the alternative minimum tax.

So what is to be done? The 2005 bipartisan tax reform panel had two different tax reform options: the simplified income tax and the growth and investment tax. But under either option, the bipartisan tax reform panel said that Congress should simply repeal the AMT. I think that is what has to be done.

Don't forget the philosophy behind it 40 years ago, not indexed. That is why we have to patch, is because 200 people, maybe only 150 at that time, were not paying any income tax. Progressives thought: Well, everybody living in this free country, even if they legally don't have to pay any income tax, ought to pay ``some tax.'' So that is the philosophy behind it. We have not argued so much with that philosophy over the last 40 years. But we are in a situation where the IRS says there are some people in America who legally don't have to pay income tax or the alternative minimum tax. Does that make sense? Why would we have that law on the books if it is not fitting its original intention?

That is what I would favor--complete repeal of the AMT. If that isn't to be done, I would favor then a permanent patch of the AMT. Given Congress's actions in this area, it seems likely we will patch it year after year after year, so wouldn't it help with everyone's plans to simply do that once and for all? That is the question. That would be the way to do it. It is predictable.

But allow me to address the AMT in the context of statutory pay-as- you-go. The statutory pay-as-you-go was enacted earlier this year as part of the majority party's debt limit increase. Some on the other side of the aisle have described statutory pay-as-you-go as a fiscally responsible way in which to address the 2001 and 2003 tax relief extensions.

Statutory pay-go provides that all the regular tax relief for taxpayers under $250,000 is permanent. Statutory pay-go, however, only provides for a patch to the AMT just for 2 years: 2010 and 2011. So what is going to happen in the next year, come 2012? There are at least four possible options.

Option 1 would be: In 2012 and after, AMT will not be patched. But I do not really think that is an option Congress would seriously entertain--then or now--to add another 20 some million people paying this tax that middle-income taxpayers were never supposed to pay in the first place.

Option 2: In 2012 and after, AMT will be patched and paid for with new taxes. That would be consistent with what we call statutory pay as you go, but does anyone think that would make sense, pay for tax relief with new tax burdens?

Option 3: In 2012 and after, AMT will be patched and paid for with spending cuts. In general, I believe that we need to use spending cuts to tackle our deficits and debt. But we know our friends in the Democratic leadership are allergic to spending cuts. So, as much as we would like to reign in the record spending spree of the last 18 months, I don't see my friends on the other side agreeing to cure their allergy to spending restraints. They've rejected roughly $270 billion in spending restraints since adopting the much ballyhooed statutory pay-go regime.

But then there is option 4: In 2012 and after, AMT will be patched and not paid for. That certainly is an option I am very open to and quite possibly what Congress will ultimately do and has done in the past. Money that wasn't supposed to be collected in the first place shouldn't be relied on as revenue and so doesn't need to be offset.

However, if the AMT is patched and not paid for, then there is a hidden $1 trillion revenue loss in the package. This means the deficit impact of the so-called fiscally responsible package is understated by $1 trillion. The so-called fiscally prudent statutory pay-as-you-go legislation likely has a $1 trillion understatement of the deficit impact.

If fiscally responsible is understating an increase to the deficit by $1 trillion, I wonder then what fiscal irresponsibility would be. The AMT is a serious problem and needs to be addressed in a comprehensive, permanent, prompt, fiscally prudent fashion.

I yield the floor.

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

Mr. President, we have the Small Business Jobs Act of 2010 before us. For more than a year now, the mantra of my colleagues on the other side of the aisle, meaning the majority party, has been: jobs, jobs, jobs. Unfortunately, the only jobs the policies of my colleagues on the other side of the aisle have created are government jobs. The legislative fixes proposed by the other side have fallen short in creating private sector job growth.

I have a chart here that will show unemployment reaching a high of 10.1 percent in October 2009. The administration promised that unemployment would not go above 8 percent if we enacted their $800 billion stimulus bill. Moreover, they asserted that 90 percent of the jobs would be in the private sector. The unemployment numbers have come down from their high in October, but this has not been the result of a robust hiring in the private sector. To the contrary, many people are simply no longer counted as being unemployed because they have stopped looking for work. For those who did find work, many found work with the U.S. Census Bureau helping to complete the 2010 census. The unemployment rate reached a low of 9.5 percent in July but once again has ticked up to 9.6 percent as 114,000 temporary census jobs ended. While those who put their faith in the stimulus package believed that this summer would become known as ``recovery summer'' due to all of the stimulus projects underway, it actually has ended in what a National Public Radio story termed as an ``economic pothole.''

To be fair, the private sector employment number has inched up slightly in the past few months. For August, the Bureau of Labor Statistics reported that private sector employment payroll edged up by 67,000. However, the problem is that around 150,000 jobs need to be added each month just to keep up with the growth in population. So basically, by adding 67,000 jobs, we are treading water too slowly to keep our head above water. Moreover, as pointed out in the September issue of the National Federation of Independent Business Small Business Economic Trends, 45,000 of those 67,000 private sector jobs were in education and health care. These jobs are heavily dependent on government spending, and that means these are not typical small business jobs on Main Street.

It is clear, however, that the small businesses remain pessimistic about the economy and are hesitant to hire new workers. According to the National Federation of Independent Business's most recent survey-- and we have a chart here on this point--a net negative 1 percent of business owners plan to create new jobs in the next 3 months. A net negative 8 percent of business owners expect the economy to improve. Only 4 percent of the business owners said it was a good time to expand. A net negative 30 percent of owners reported higher earnings. This last component is especially important for businesses when it comes to hiring new employees since businesses need to know that revenue generated from an additional employee will exceed the costs.

Given the current unemployment rate, it is not surprising, then, that we are once again looking at ways to create jobs. Hence the bill that is before the Senate. The question remains: Are we going to continue to look to the government to be the job creator or are we going to realize that job creation

and real economic growth comes from the private sector? This question also brings to mind that government doesn't create wealth; government consumes wealth. So if we are going to increase the economy in this country, it has to be done through the private sector.

The bill before us appears to recognize the importance of the private sector--in particular, the importance of small businesses and entrepreneurs in getting our economy back on track and getting the employment numbers to move in the right direction. I have been beating the drum for some time now that if we want to get our economy back on track, we need to focus on small business. After all, small business is responsible for creating 70 percent of the jobs in our economy. That is not a Republican percentage put out there by my party. That is also a figure I have heard the President of the United States, our President, say in speeches as well--70 percent of the new jobs are created in small business.

During the debate on the $800 billion stimulus bill, I pointed out that it contained too little in terms of provisions aimed at small business. In all, less than one-half of 1 percent of the stimulus bill was tax relief for small businesses. Unfortunately, my concern that the stimulus bill provided too little relief to small businesses has proved correct. Since the stimulus bill was signed into law, small businesses have been hemorrhaging jobs. According to the ADP national employment data, since the stimulus was enacted, small businesses, which are those defined as fewer than 500 employees, have lost a net amount of 2.6 million jobs. During this same time, large businesses, which are those with over 500 employees, lost a net amount of 716,000 jobs. According to this data, small businesses have accounted for nearly 80 percent of the decline in employment since the stimulus bill was signed into law.

With the consideration of the small business package before us today, I hope this body is finally starting to get serious about tracking unemployment through a true jobs bill. Compared to previous stimulus or jobs bills promoted by the majority, this small business bill has a rather modest cost, with tax provisions totaling about $12 billion. It is targeted at job creation by providing small businesses with incentives to invest in new equipment, expand their operations, and ultimately hire new employees. The bill includes provisions that would encourage small businesses to invest in new equipment and real property by increasing the amount of capital expenditures small businesses can expense. For equipment, the amount that can be expensed is increased to $500,000 and for real property, to $250,000.

Moreover, it encourages investment by providing additional first-year bonus depreciation. It promotes entrepreneurship in another way by increasing the amount allowed as a deduction for startup expenditures. It increases access to capital by allowing 100 percent of gain from investment in qualified small business stock to be excluded from income. It also takes the general business credits out of the alternative minimum tax for those sole proprietorships, flowthroughs, and nonpublicly traded C corporations with $50 million or less in annual gross receipts. Another way is increasing access to capital by extending the 1-year carryback for general business credits to a 5-year carryback for small businesses.

Finally, this bill promotes small business fairness by limiting harsh penalties that have been imposed on small businesses by the IRS and equalizing the tax benefits for health insurance that self-employed individuals may receive to those received by employees.

In regard to the Small Business Administration provisions, I strongly support many of the bipartisan provisions included in the bill. This legislation would increase small business lending by lowering small business loan program fees while at the same time raising loan guarantees and lending limits. Specifically, this bill extends the fee reductions and eliminations for the Small Business Administration's 7(a) program and 504 program and the 90-percent loan guarantee limit for the SBA's 7(a) program. I am pleased that these well-established, effective measures have been included in the bill. Raising the 7(a) guarantee rate and reducing lenders' and borrowers' fees in the 7(a) and 504 loan programs has been enormously successful. These modifications, which expired in May, have led to a significant increase in lending capacity and access to capital.

I am a supporter and, in fact, have been a leader of the many bipartisan small business provisions in the current small business package. I am an original cosponsor of S. 3604, standalone legislation introduced by Senator Snowe, the ranking member of the Committee on Small Business and Entrepreneurship, which would extend the same Small Business Administration lending provisions that are in the bill currently before the Senate.

Additionally, many of the small business tax incentives included in the small business package were taken from legislation I introduced last year entitled the ``Small Business Tax Relief Act of 2009.'' Of course, there are differences and additional provisions I would have liked to have been included, but, as with any piece of legislation in the Senate, there is a need to compromise if you want to get anything done. My bill generally would have made the small business tax provisions permanent law. I believe this would have provided small businesses with certainty and promoted job creation over the short run as well as the long run. However, the Senate small business package generally only makes the tax provisions applicable for 1 year. That gets us back to the point that the word ``uncertainty'' crops up so often when used by small businesses as well as big businesses--the uncertainty of what Congress is going to do or the fact that when they make policy, they don't make it for a long enough period of time.

That word, ``uncertainty,'' is the one reason jobs are not being created. It is kind of a sin that Congress would bring about this sort of uncertainty--or maybe the executive branch of government is bringing about some uncertainty--when, in fact, corporations have a historically high amount of cash just lying around. The last figure I saw was $2.1 trillion, and with $2.1 trillion, one would think there would be a lot of jobs expanded, except the people who could do it don't know what Congress is going to do to them next, so they are taking caution. Well, if we could reduce that caution and encourage them a little bit by letting them know what we are doing over the long haul, it would go a long way to getting this unemployment down.

Getting back to what I said, I would have liked to have seen in this bill an additional provision from my bill included in the final package. This provision would have provided small businesses with a 20- percent deduction off of their small business income. It is unfortunate that this provision was left out. This was the largest and most important provision of the bill I introduced in the summer of 2009.

However, in all, the tax provisions included in the Senate small business package provide real relief to small businesses. They generally have the support from Members on both sides of the aisle. In fact, you would have thought this small business bill would have been a slam dunk. However, the Democratic leadership has used the small business bill as a political football, scoring political points. The majority leader refused to allow the small business bill to be considered under regular order. The majority leader filled the amendment tree, thereby limiting amendments that could be offered. The Democratic leadership and the administration then proceeded to blame Republicans for blocking relief for small business. This is despite the fact that the Democrats were unable to get their own Members in line on the small business package. It still remains unclear whether the Democrats in the House, with their large majority, will pass the small business bill should it pass this body.

Moreover, the waters of the small business package were further dirtied by the inclusion of a controversial lending provision that would create a $30 billion lending fund. This fund is designed to provide billions of taxpayer dollars to banks for the purpose of making loans to small businesses. To me and to many experts, the fund resembles the TARP bailout program, which has been badly mismanaged.

Elizabeth Warren, head of the TARP Congressional Oversight Panel, expressed skepticism that the fund would be effective in increasing small business lending.

She stated that:

Such a fund runs the risk of creating moral hazard by

encouraging banks to make loans to borrowers who are not

creditworthy.

The Special Inspector General of TARP stated that:

In terms of its basic designs, its participants, its

application process, and perhaps its funding source from an

oversight perspective, the [small business lending fund]

would essentially be an extension of TARP's Capital Purchase

Program.

There is also disagreement about the cost of the program. Proponents argue that the lending fund will raise $1.1 billion. However, the Congressional Budget Office has indicated that if you score the fund on a fair value basis, the program would score as a cost to taxpayers of $6.2 billion. The Congressional Budget Office has indicated that the fair value basis is a more comprehensive measure of the cost than estimates done on a cash basis.

Many Members in this body voted for the Emergency Economic Stabilization Act in 2008 because we were led to believe our economy was on the brink of failure. We were told the Treasury Department would purchase toxic assets. But after its passing, the executive branch changed course and picked winners and losers. Where? Not on Main Street but on Wall Street.

We should not be fooled again by the same officials at Treasury who have mismanaged TARP and have been less than transparent with the American people about how the taxpayers' money has been spent.

I compliment my friend, Chairman Baucus, for diligently pressing the tax provisions in this bill. There are many good things in this bill, but I believe it could have been better. Unfortunately, the Democratic leadership is more interested in scoring political points than actually providing relief to small businesses. If the majority was actually interested in passing small business relief, a small business package could have been put together that would have garnered 80, 90, or more votes. But instead the majority leader filled the tree, prohibiting amendments being offered to improve the bill.

The small business fund in the bill just doesn't have the safeguards in place to ensure that recipients are creditworthy or that taxpayers may be made whole in the end.

Should this bill be signed into law, I will do my part to make sure the implementation is in the best interest of the taxpayers as well as small businesses.

Watch-Dogging the Watchdogs

Mr. President, I want to speak about watch-dogging the watchdogs.

I first started watch-dogging the Pentagon in the early 1980s, when President Reagan was trying to ramp up the defense budget. A group of Defense reformers were examining spare parts pricing. We found the Pentagon buying a $750 toilet seat and $695 ashtrays for military airplanes.

That experience taught me an important lesson: If you are going to watch-dog the Pentagon like the inspector general, or IG, is supposed to do, then you better sharpen your wits and have the tools of the trade ready.

One of the most important oversight tools is the simple tool of the audit. The audit is the IG's main weapon for detecting and reporting fraud, waste, and theft. Mr. President, I am sad to report that the IG's Audit Office at DOD is not ready to tackle fraud and waste. The lack of IG audit readiness comes at a time when aggressive audits are sorely needed.

Secretary Gates recently announced that he wants to cut $100 billion in wasteful spending. But he is relying on the Pentagon bureaucrats to eliminate it. Asking those who created the waste in the first place to then turn around and get rid of it is not a good plan. He needs a better mix of weapons. To win this declared war on waste, Secretary Gates needs the independent backup from the IG. Unfortunately, the inspector general's Audit Office is AWOL doing policy audits instead of financial audits.

Policy audits are not known for exposing waste. Last year, I received a series of anonymous letters alleging mismanagement and low productivity in the IG's Audit Office. This is a huge Audit Office. It has 765 auditors and an annual budget of $90 million.

In response, I and my staff conducted an indepth review of all the pertinent issues. That oversight report was just completed, and I forwarded it to Secretary Gates with recommendations within that report for corrective action.

My oversight should fit right in with Secretary Gates' plan to cut waste at the Defense Department. My people in Iowa are aching for some commonsense fiscal policy in Washington.

My oversight report puts the spotlight on a good starting point. That oversight report indicates this vital piece of inspector general oversight machinery--the important tool of the audit--has been disabled. It is broken, leaving hundreds of billions of tax dollars vulnerable to fraud, waste, and abuse, outright theft.

The status quo is totally unacceptable. The IG's audit machinery needs to be brought back up to standard.

IG Heddell needs to hit the reset button. He needs to refocus the audit effort on priority areas consistent with the inspector general's core mission, which is to detect and report fraud, waste, and abuse.

The problem identified in my oversight report is twofold. The first big problem is the broken Defense Department's accounting system. That system is incapable of generating accurate and complete financial data.

The success or failure of an audit turns on the quality of data available for that audit. Unfortunately, the quality of Defense Department data presented to auditors should probably be rated as poor to nonexistent. The consequences are then predictable. Auditors consistently report ``no audit trail found.'' But what does ``no audit trail found'' mean? It means critical supporting documentation and data are missing. Vital records are not available for audit. Money has been paid out but for what? When there is no audit trail to follow, that question gets no answer.

The ``no audit trail'' finding is like a bad toothache that doesn't go away. The IG's own audit manuals warn that a ``no audit trail'' scenario is a red warning flag. It is a very common indicator of fraud. So we have clear-cut indicators of fraud that show up in one IG report after another and, do you know what. Nothing seems to happen. It is like the IG is howling in the wilderness. There is no followup, no corrective action.

Why is this being tolerated? How many more times does the IG need to be confronted by such obvious signs of fraud before decisive action is taken?

Maybe next time the auditors can't find an audit trail on a big contract, they should ``lock the doors and call the law''--just drop a net on the place and call for backup.

This brings me to my second audit issue. The IG's Audit Office has allowed itself to be buffaloed by the ``no audit trail'' scenario. It just backs off and rolls over instead of attacking the problem head on with solutions.

The heart and soul of my financial oversight operation is a contract audit.

In the government, there can be no expenditure of public money without a written binding contractual agreement. That document must specify what goods and services are to be delivered. That is the law. That is where the money trail starts, with a contract. That is where audit work should begin. It is square 1 on the audit roadmap.

Beyond the contract, there are a number of critical data points or, you might say, dots. These should pop up on the auditor's radar screen. These may include contract modifications, recorded obligations, inspection and receiving reports, invoices, and payments, eventually.

To get a handle on fraud and waste, auditors then need to connect all the dots between the contract that starts over here at the beginning and the final payment of money over here. They need to make all of the hookups. For example, when contract requirements can't be matched with payment, well then, bingo; there is a potential problem.

This is what is called a full-scope, end-to-end audit. This is what auditors must do to document and verify fraud and waste. Doing that work positions them to answer two key oversight questions: Did the government get what it ordered at the agreed-upon price and schedule or did the government get ripped off?

Top audit officials repeatedly and consistently told my investigators that doing genuine contract audits was ``impossible, we can't do it, it's too difficult.''

One audit appears to illustrate and typify the seemingly impassable obstacle, or brick wall, perceived by the auditors. The report is entitled ``The U.S. Air Force's Central War Reserve Material Contract.'' It is report No. D-2009-108.

Instead of attempting to verify payments at the primary source, which is the Defense Finance and Accounting Service, the audit team opted for an unauthorized shortcut. When you are following the taxpayers' money to see if there is fraud involved, you are going to find some shortcut?

They chose, then, to rely on payment data provided by who? The contractor, DynCorp, the target of the audit. Even using this flawed audit procedure, examiners were unable to match contract requirements with payments. Then when they could not do it, they just give up. The report concluded:

The government did not know what it was paying for. . . .

It may have paid for services DynCorp did not perform.

The auditors then simply turned a blind eye to the potential fraud here in this instance.

One hundred sixty-one million dollars went out the door, and for what, we don't know. The report does not tell us. It does not nail down all of the pertinent facts. It is inconclusive and unfinished. The auditors just kicked the can down the road, bucking it to another Defense Department audit agency.

Clearly, auditing large, complicated Defense Department contracts where there is no audit trail to follow is, we have to admit, a daunting task. But that does not mean it is a mission impossible. It can be done. It has to be done. Senior managers refer to this task as ``audit trail reconstruction work. It is labor intensive pick and shovel work.''

Today, the inspector general relies on small rinky-dink 5- or 10- member audit teams. That doesn't cut it. The IG needs to deploy much larger teams consisting of 25, 50, or even 100 auditors or more to tackle the most egregious contract jobs. And I don't mean hire more than the 675 employees who are already there eating up $90 million.

Let me make one point crystal clear right now--and I am repeating because I think it is important. I am not suggesting the IG needs to hire more auditors. This should be done within available resources. What I am saying is this: The audit office needs to switch from a large number of small teams to a small number of large teams. That would be a reallocation of audit resources. The top audit office official said it would be possible ``to cobble together such an audit team to look at one of the big weapons programs.'' However, doing that would ``deplete resources needed to meet other priorities.''

The ``other priorities'' referenced by this top official are probably wasteful reviews of the Department's policy and procedures--in other words, doing policy auditing instead of doing financial auditing.

In 2009, the audit office did not conduct one in-depth contract audit of a major weapon system or contract. Aren't major weapon systems an audit priority? The record suggests that it is not an audit priority.

To this Senator from Iowa, this is an astonishing revelation. The inspector general is not doing contract audits. How can this be? If the IG is doing contract audits, then the office of the IG is not or should not be open for business--ought not to be spending that $90 million.

The core IG mission is to detect and report fraud, waste, and abuse to the Secretary and to the Congress and to recommend corrective action. To detect and verify fraud and waste, auditors need to be on the money trail 24/7. That is where most fraud occurs. They need to be connecting all the dots between contract signing over here and the last payment being made over here.

Instead of trying to do contract audits, the audit office gave up and moved to greener, easier pastures. Most audits now focus on policies and procedures. In moving in this direction, the inspector general has strayed far from a core mission costing $90 million. Today's preference for policy audits yields zero benefits to the taxpayers. These reports cost about $800,000 apiece. Cranking out worthless policy audits may not qualify as misconduct, but it surely is a blatant waste of precious tax dollars, at $90 million a year.

The current focus on policy audits helps me understand why 765 auditors--with an annual budget of $90 million--could not root out any measurable fraud or waste last year. The IG there at the Department of Defense needs to hit the reset button and refocus the audit effort on the core IG mission.

First, he needs to resume full-scope contract audits to root out fraud and waste. Second, the audit office needs to aggressively review all the Defense Department's plans and programs for deploying a modern accounting system. It needs to offer specific recommendations that would help the Department reach the 2020 readiness goals.

I am receiving assurances from the IG at the Department of Defense that he is moving smartly in the right direction. The signals from that office are very encouraging. Yet I remain skeptical. The audit office still seems to think that full-scope contract audits are a nonstarter and policy reviews are highly relevant. We need a change of course.

Mr. President, I yield the floor.

Mr. President, I ask unanimous consent that the Senate proceed to a period of morning business with Senators permitted to speak for up to 10 minutes each.

Mr. President, I submit the following notice in writing: In accordance with rule V of the Standing Rules of the Senate, I hereby give notice in writing that it is my intention to move to suspend rule XXII, paragraph 2, for the purpose of proposing and considering the following:

After part IV of subtitle A of title II, insert the

following: