Floor Statements

Mr. President, today I introduce the Graduate Medical Education, GME, Reform Act, along with my colleague Senator Kyl. This legislation is a continuation of my longstanding efforts to support our future health care workforce and improve patient care.

While there are a variety of initiatives to support the education and training of physicians, none are more substantial than the GME funding provided by Medicare. This program either directly or indirectly supports every single physician trained in this country. No other Federal or State program can claim this credit.

Unfortunately, the size of the program has led some to propose its funding be cut and redirected toward deficit reduction. The President's Fiscal Commission, the Domenici-Rivlin plan, and even some Members of Congress have made this recommendation. Reducing GME funding by the levels specified in these proposals could be devastating to training programs.

These proposals stem from an assertion by the congressionally authorized Medicare Payment Advisory Commission, MedPAC, that teaching hospitals are overpaid for the education and training they currently provide residents, and that GME funding should be better used to align residency training with key improvements in our health care delivery system. However, the Fiscal Commission and the Rivlin-Domenici plan ignored the latter aspect of MedPAC's recommendation. MedPAC did not recommend removing GME funding from the system. Instead, MedPAC suggested Congress should make teaching hospitals more accountable for the GME funding they currently receive. In MedPAC's proposal, all GME funding would stay in the system to help support and improve medical education and training.

The legislation we are introducing today aligns closely with MedPAC's proposal for greater accountability by teaching hospitals and enhanced effectiveness in the use of GME funding, but with some key changes. One such change would enable hospitals to compete for additional GME funding in order to provide a greater incentive for teaching hospitals to improve their programs.

Teaching hospitals incur higher costs than other hospitals. They invest in the newest technologies and employ the physician supervisors most qualified to train our future doctors. Moreover, as a result of the new health care reform law, many of these hospitals, physician supervisors, and residents will treat an influx of patients beginning in 2014. GME funding is critical to building and sustaining our health care infrastructure and future health care workforce.

It is critical that GME funding remain intact, but that doesn't mean we shouldn't use this opportunity to encourage these programs to do more to better train residents in: primary care delivery, a variety of settings and systems, care coordination, and how to work in inter- professional and multi-disciplinary teams. The new oversight provided for in the GME Reform Act would help to break down the silos in medicine and ensure that physicians work together to provide patients with comprehensive health care.

In addition, the legislation would enhance GME payment transparency, which we hope will help prove to the skeptics that this funding serves a critical purpose.

I am particularly pleased that the Association of American Medical Colleges has expressed support for legislation. While the organization would prefer this legislation be included as part of an overall effort to increase the number of residents trained each year, which I also support, I believe we must begin a dialogue about a sensible and thoughtful approach to improving GME accountability and transparency. I hope my colleagues will take careful look at our legislation, and I look forward to working with them on this important issue.

Mr. President, today I introduce the Graduate Medical Education, GME, Reform Act, along with my colleague Senator Kyl. This legislation is a continuation of my longstanding efforts to support our future health care workforce and improve patient care.

While there are a variety of initiatives to support the education and training of physicians, none are more substantial than the GME funding provided by Medicare. This program either directly or indirectly supports every single physician trained in this country. No other Federal or State program can claim this credit.

Unfortunately, the size of the program has led some to propose its funding be cut and redirected toward deficit reduction. The President's Fiscal Commission, the Domenici-Rivlin plan, and even some Members of Congress have made this recommendation. Reducing GME funding by the levels specified in these proposals could be devastating to training programs.

These proposals stem from an assertion by the congressionally authorized Medicare Payment Advisory Commission, MedPAC, that teaching hospitals are overpaid for the education and training they currently provide residents, and that GME funding should be better used to align residency training with key improvements in our health care delivery system. However, the Fiscal Commission and the Rivlin-Domenici plan ignored the latter aspect of MedPAC's recommendation. MedPAC did not recommend removing GME funding from the system. Instead, MedPAC suggested Congress should make teaching hospitals more accountable for the GME funding they currently receive. In MedPAC's proposal, all GME funding would stay in the system to help support and improve medical education and training.

The legislation we are introducing today aligns closely with MedPAC's proposal for greater accountability by teaching hospitals and enhanced effectiveness in the use of GME funding, but with some key changes. One such change would enable hospitals to compete for additional GME funding in order to provide a greater incentive for teaching hospitals to improve their programs.

Teaching hospitals incur higher costs than other hospitals. They invest in the newest technologies and employ the physician supervisors most qualified to train our future doctors. Moreover, as a result of the new health care reform law, many of these hospitals, physician supervisors, and residents will treat an influx of patients beginning in 2014. GME funding is critical to building and sustaining our health care infrastructure and future health care workforce.

It is critical that GME funding remain intact, but that doesn't mean we shouldn't use this opportunity to encourage these programs to do more to better train residents in: primary care delivery, a variety of settings and systems, care coordination, and how to work in inter- professional and multi-disciplinary teams. The new oversight provided for in the GME Reform Act would help to break down the silos in medicine and ensure that physicians work together to provide patients with comprehensive health care.

In addition, the legislation would enhance GME payment transparency, which we hope will help prove to the skeptics that this funding serves a critical purpose.

I am particularly pleased that the Association of American Medical Colleges has expressed support for legislation. While the organization would prefer this legislation be included as part of an overall effort to increase the number of residents trained each year, which I also support, I believe we must begin a dialogue about a sensible and thoughtful approach to improving GME accountability and transparency. I hope my colleagues will take careful look at our legislation, and I look forward to working with them on this important issue.

In 46 days, the interest rate on subsidized student loans will be doubled. Zeroing in on these budgets that are before us, all of them seem to support the essence of the Ryan budget, which is to allow this to happen. In fact, the Ryan budget in the House not only allowed a doubling of student interest rates, it also recommended eliminating the in-school interest subsidies for student loans, putting middle- class families at a particularly severe disadvantage.

We have 46 days to stop this increase on the interest charges to middle-income students. We have to act. We have seen denial, delay, and disruption. We have not seen the cooperation we need to help students and families throughout this country.

The budget before us not only allows this interest rate to double, but it will also, through its tax policies, favor the wealthiest and not those who are struggling in the middle simply to get ahead or simply to stay where they are. One of the other interesting aspects of the proposal is that as we look at this student rate interest doubling, my colleagues on the other side have said: We will fix it. We are for fixing it. But, again, ask yourself: If they are for it, why are they voting for several budgets today that would, in fact, support the doubling? It seems to be an incongruity I cannot understand.

In addition to that, they said: Well, if we are going to go ahead and stop this doubling of the rate, let's do it by paying for it with the prevention fund, which is a program in health care that I think, over time, is not only going to help families all across this country, but it is going to begin to do what we have all said we have to do, bend that cost curve for health care.

Instead of a debate about how to pay for this in a responsible way-- and we are certainly open to proposals if they have them, other than this prevention fund, which I think is a nonstarter--they have suggested that our proposal, which is to close an egregious loophole in the Tax Code, is somehow a tax increase or somehow does not do the job. But Politifact, which is an objective body that looks at these various charges, has evaluated one claim that, in fact, our offset is a tax increase. Here is what they say:

Actually, the bill changed tax rules only for S-

corporations, and only on professionals like lawyers and

accountants who could be taking advantage of the tax code to

avoid paying payroll taxes. The Democrats took the additional

step of saying the rule change would only apply to

individuals who reported more than $200,000 in income.

The bill's intent was to close a loophole on people who are

avoiding payroll taxes, taxes that they are supposed to pay

anyway.

The Republican criticism ``gives the impression that all kinds of mom-and-pop operations might be subject to new, additional taxes, when actually the bill is aimed squarely at high-income professionals who are taking advantage of a loophole.

The claim was rated by this organization as false. We are closing a loophole that benefits the wealthy and some of the most powerful interests in this country in order to allow middle-income families to send their children to school. I cannot think of anything more sensible or anything more fair.

I will just return to the final point about these budgets. As I read them, they, by and large, echo the Ryan budget, which allows for a doubling of the interest rate on students and does other things that will harm middle-income and middle-class people all to benefit the wealthiest through additional tax cuts. That is not good fiscal policy, not good educational policy. It is not good policy for the growth of this country, to invest in education, and it is not fair. I would hope that we would reject them.

I yield the floor.

Mr. President, today I introduce the Servicemember Housing Protection Act, and I thank Senators Durbin, Sherrod Brown, Whitehouse, and Begich for joining me as original cosponsors of this bill.

In 1940, as World War II escalated across the globe, Congress enacted the Soldiers' and Sailors' Civil Relief Act ``to protect those who have been obliged to drop their own affairs to take up the burdens of the nation.'' In 2003, Congress passed a new version of this law to reflect the new challenges of post-9/11 service and renamed it the Servicemembers Civil Relief Act, SCRA. In 2010, in order to address the country's high foreclosure rates and their impact on servicemembers, Congress further amended this law to enhance foreclosure protections.

Also in 2010, when it became evident that military families needed an entity

to serve as a watchdog, provide education, and help monitor and respond to concerns, questions, and complaints about consumer financial products and services, I led the bipartisan effort during the Dodd- Frank act debate to create a new Office of Servicemember Affairs within the Consumer Financial Protection Bureau, CFPB.

Our country has a strong tradition of ensuring that the laws that protect our servicemembers keep pace with the challenges that they face. The Servicemember Housing Protection Act seeks to address one such continuing challenge helping servicemembers with their housing needs so they can maintain a focus on the difficult task of protecting our country.

First, our bill would make it easier for servicemembers to submit their military orders to creditors and get their affairs in order prior to deployment. Currently, creditors require a copy of military orders in order to trigger SCRA protections. However, these orders are often not cut until just before deployment or once the servicemember is already deployed. Redefining military orders as either official orders or a letter from the servicemember's commanding officer would further ensure that a servicemember has more time to prepare for deployment and promptly receives SCRA protections, including the interest rate limitation of six percent on qualifying mortgages.

Second, this bill would extend foreclosure protections to surviving spouses. Currently, servicemembers have a 9-month window of foreclosure protection following service, to provide time to reacclimate to civilian life and get affairs back in order. Our bill extends this nine-month window of foreclosure protection to a surviving spouse. After suffering such an unspeakable loss, a military spouse should not have the additional burden of dealing with immediate foreclosure.

Lastly, this bill would help facilitate the transition from off-base to on-base housing. Due to the shortage of on-base military housing, many servicemembers temporarily find off-base housing until on-base housing becomes available. When a servicemember on a waiting list is given the chance to move into on-base housing, he or she is sometimes unable to terminate his or her off-base housing lease. Including an order to move from off-base to on-base housing as additional grounds for lease termination would allow servicemembers and their families the opportunity to move into the military housing community. We should extend this opportunity, which already is law in several states, such as Florida, Georgia, and Virginia, to servicemembers serving at any of our military bases.

While the men and women of our Armed Forces are protecting our nation overseas, we should do everything possible to protect their families and homes. I urge my colleagues to join Senators Durbin, Sherrod Brown, Whitehouse, Begich, and me, as well as the Military Officers Association of America, in supporting this bill and taking these next steps to add protections for our military families.

Mr. President, today I introduce the Servicemember Housing Protection Act, and I thank Senators Durbin, Sherrod Brown, Whitehouse, and Begich for joining me as original cosponsors of this bill.

In 1940, as World War II escalated across the globe, Congress enacted the Soldiers' and Sailors' Civil Relief Act ``to protect those who have been obliged to drop their own affairs to take up the burdens of the nation.'' In 2003, Congress passed a new version of this law to reflect the new challenges of post-9/11 service and renamed it the Servicemembers Civil Relief Act, SCRA. In 2010, in order to address the country's high foreclosure rates and their impact on servicemembers, Congress further amended this law to enhance foreclosure protections.

Also in 2010, when it became evident that military families needed an entity

to serve as a watchdog, provide education, and help monitor and respond to concerns, questions, and complaints about consumer financial products and services, I led the bipartisan effort during the Dodd- Frank act debate to create a new Office of Servicemember Affairs within the Consumer Financial Protection Bureau, CFPB.

Our country has a strong tradition of ensuring that the laws that protect our servicemembers keep pace with the challenges that they face. The Servicemember Housing Protection Act seeks to address one such continuing challenge helping servicemembers with their housing needs so they can maintain a focus on the difficult task of protecting our country.

First, our bill would make it easier for servicemembers to submit their military orders to creditors and get their affairs in order prior to deployment. Currently, creditors require a copy of military orders in order to trigger SCRA protections. However, these orders are often not cut until just before deployment or once the servicemember is already deployed. Redefining military orders as either official orders or a letter from the servicemember's commanding officer would further ensure that a servicemember has more time to prepare for deployment and promptly receives SCRA protections, including the interest rate limitation of six percent on qualifying mortgages.

Second, this bill would extend foreclosure protections to surviving spouses. Currently, servicemembers have a 9-month window of foreclosure protection following service, to provide time to reacclimate to civilian life and get affairs back in order. Our bill extends this nine-month window of foreclosure protection to a surviving spouse. After suffering such an unspeakable loss, a military spouse should not have the additional burden of dealing with immediate foreclosure.

Lastly, this bill would help facilitate the transition from off-base to on-base housing. Due to the shortage of on-base military housing, many servicemembers temporarily find off-base housing until on-base housing becomes available. When a servicemember on a waiting list is given the chance to move into on-base housing, he or she is sometimes unable to terminate his or her off-base housing lease. Including an order to move from off-base to on-base housing as additional grounds for lease termination would allow servicemembers and their families the opportunity to move into the military housing community. We should extend this opportunity, which already is law in several states, such as Florida, Georgia, and Virginia, to servicemembers serving at any of our military bases.

While the men and women of our Armed Forces are protecting our nation overseas, we should do everything possible to protect their families and homes. I urge my colleagues to join Senators Durbin, Sherrod Brown, Whitehouse, Begich, and me, as well as the Military Officers Association of America, in supporting this bill and taking these next steps to add protections for our military families.

Mr. President, unless we act quickly, students across the country will face the largest increase of subsidized student loan interest rates in more than 40 years. In the last 40 years, the interest rates on subsidized student loans have never doubled from one year to the next. Yet that is what is happening unless we act before July 1--just 52 days from now.

Unless my colleagues on the other side of the aisle relent and allow legislation to fix this problem to come to a vote, we will see a doubling of the student loan interest rate from 3.4 percent to 6.8 percent for all borrowing going forward for education in the United States related to the subsidized Stafford loan program. I know the Presiding Officer of the Senate, Senator Brown of Ohio, has been taking an active leadership role on this front, along with Senator Harkin, to ensure we can move effectively to prevent this doubling of the interest rate.

We are now in a time where, if you look across the financial industry, borrowing rates are at historical lows. We are essentially providing banks, through the Federal Reserve, with near zero percent interest loans. So it is incomprehensible that at this time, we would actually double the loan rates we would charge students who are going to college. Students and families cannot absorb these increases. It is a tough economy, and they are facing rising tuition and dwindling State support for higher education, making it more difficult and more complicated. To add to their burden by doubling this loan rate is bad public policy.

This will not only directly affect middle-income Americans, but in the longer run, it will affect the competitiveness, the productivity, and the success of our economy in a very competitive global economy.

We have to ensure also that we are not piling more and more debt on students. We have reached a point where student debt is becoming so extraordinarily difficult to bear that it inhibits people from going to school and it inhibits them from pursuing various professions after they graduate from college. If we add to this mountain of debt, we will create a huge financial problem going forward not just for the individual borrowers, the student borrowers, but for our economy.

According to Georgetown University's Center on Education and the Workforce, over 60 percent of jobs going forward will require some postsecondary education by 2018.

That underscores the essential need to go to college. In 2010, only 38.3 percent of working-age adults had a 2-year or 4-year degree. So we are looking at a gap of the prepared individuals with a college education versus those jobs in the not-too-distant future that will require a college education. In order to fill that gap, we have to get more and more young people into school, into higher education and beyond, and by doubling the rate we will not be achieving that goal and that objective.

That is why I introduced the Student Loan Affordability Act in January to permanently keep the interest rate low, and that is why I was joined by Senator Brown of Ohio and Senator Harkin and many others, to step up and to make it quite clear that we cannot afford--for our country's sake and for the sake of many working-class

families across the country--to double this rate.

We should be debating today the Stop the Student Loan Interest Rate Hike Act. This is a fully paid-for 1-year extension of the current rate, to extend it for a year so we can look for a more permanent fix. My colleagues on the other side of the aisle insist they agree that we have to do this, yet they continue to filibuster this legislation. They continue to prevent us from bringing it to a vote. It is clear they have an alternative view in terms of how we pay for it. Well, let's put that to a vote, but let's not stop dead in its tracks a policy that both sides claim has to be fixed and that we have to avoid the doubling of this interest rate.

What we have done is propose to fix this problem and pay for it in a fiscally responsible manner by closing a glaring, egregious loophole in the Tax Code that enables certain wealthy individuals to shirk their responsibility to pay payroll taxes. This loophole predominantly benefits professional service providers such as accountants, lobbyists, and lawyers who derive all of their income from their professional labor. But because they choose to mischaracterize their income as a distribution from a subchapter S corporation instead of wages, they avoid paying payroll taxes.

In 2005, the Treasury Inspector General for Tax Administration issued an audit report calling for action on this loophole which was described as a ``multibillion dollar tax shelter.''

The report also described a disturbing trend of businesses changing their status to the subchapter S corporation for the purpose of avoiding payroll taxes--not for the purposes of expanding employment, not for the purposes of a new or more efficient way to use capital, but essentially a tax dodge to avoid payroll taxes.

The inspector general reported:

In fact, advising small businesses to shelter earnings from

self-employment taxes through the formation of S corporations

has become a cottage industry. A search of the Internet

yields multiple sites that offer advice, assistance, and

encouragement to sole proprietors to convince them to become

S corporations. The sole proprietors are advised that they

can save thousands of dollars a year in employment taxes

simply by incorporating. It is also possible on the Internet

to gauge the size of the savings using computer-generated

savings amounts based on the user's entries for anticipated

profits and chosen salary levels. Not surprisingly, the lower

the salary chosen, the higher the savings become, reaching

maximum savings at a salary level of $0.

Essentially what is being done in these professional corporations--or at least professional partnerships, these professional associations--is that they have glommed onto a very clever tax shelter. You incorporate as a subchapter S; you have your employer pay the subchapter S corporation; that subchapter S corporation pays you a modest minimal salary, and the rest is dividends taxed at a different rate and not subject to the payroll tax. We are trying to close the tax loophole. Following the indications of the inspector general, a simple Internet search confirms this finding.

For example, one Web site has a section entitled ``How to Reduce Your FICA Taxes If You Own an S-Corporation.'' That section provides a step- by-step instruction on how to use this loophole and even provides advice on how to avoid being caught up in an audit. The Web site advises owners of S corporations to pay themselves the lowest possible salary to reduce their FICA taxes--even if the distributions they take are a product of their labor.

Here is how the Web site explains how to take advantage of this loophole: It explains that as an employee of your S corporation, your salary is subject to Social Security and Medicare taxes, but the net profit of the S corporation is not subject to payroll taxes. The Web site goes on to explain:

. . . the idea is to pay yourself the lowest possible

salary to minimize social security and Medicare taxes. Then

you take the remaining net profit as a distribution, which is

not subject to payroll tax.

This is a loophole we are trying to fix. This loophole should be fixed regardless of how we use the proceeds; but, frankly, we have a situation now where we have a pressing need to help families across this country avoid a doubling of the interest rate on student loans, and we have an egregious loophole that will allow us to responsibly pay for the maintenance of the lower interest rates. This seems to be an issue where public policy is well balanced.

We are told by our colleagues they agree with us you can't double the interest rate. They should also agree with us you can't continue to tolerate this loophole; and this is not only an appropriate way, but, indeed, it seems to me the best way to achieve our objective of preventing the increase to doubling of the student interest rate.

We are working very hard to try to get this bill up for a vote. If there are other proposals with respect to tax loopholes or the ways in which we can pay for this other than the proposal the House has suggested--which is go into the prevention funds for health care reform, which to me is adding to and compounding not only our fiscal problems but also going forward to our health care problems we are open to discussing them.

We are right now recognizing that unless we aggressively have prevention programs, our health care costs will explode going forward. Every day, people talk about the increasing cost of obesity in this society. Well, how do you get essentially a handle on that? You have to have resources for prevention, for counseling, for education, for nutritional programs. When we take those funds away, we run up the bill for health care. That bill ultimately is being paid, in many cases, by the same families who are struggling to find a way to send their children to college.

I urge all of my colleagues to move to get this bill on the floor. If we want to debate about different methods about payment, that is fine; let's take votes, and let's move on to passage.

I think we understand that time is running out. On July 1, the interest rate will double. We have seen progress going back a few months. Our colleagues on the other side were proposing budgets that recognized--indeed, supported--the doubling of this interest rate. In March and throughout the spring, they were assuming and they were supporting measures to double the interest rate. The good news now is they have said, no, you can't do that, we have got to keep the rate at 3.4 percent at least for the next year.

We are one step closer to a solution, but the final step is going to have to be responsibly paying for this proposal. And we have--Senator Brown, Senator Harkin, myself, Senator Harry Reid, and so many others-- not only a responsible way to pay for it, but we have underscored and highlighted what is an egregious loophole, a tax shelter, a very clever ploy to avoid paying taxes on your wages through the mechanism of a subchapter S corporation magically converting them into dividends.

I think we can accomplish two important public policy goals in this legislation: keeping interest rates on student loans at the current level, helping families send their children to school; and closing a glaring loophole for tax dodgers in our tax system.

Mr. President, I yield the floor, and I suggest the absence of a quorum.

Madam President, in less than 2 months--53 days--the interest rate on subsidized student loans will double to 6.8 percent unless Congress acts. If the rate on subsidized Stafford loans is allowed to rise, as many as 7.4 million students across the Nation, including approximately 43,000 students in Rhode Island, will pay about $1,000 more for each year that they borrow, and that is on top of already significant debt.

Some have argued, even while claiming to support keeping interest rates low, that the increase would not be a significant financial burden. Students and families beg to disagree. This would be a significant impediment to completing their education. For younger students starting their education, for those seeking educational opportunities for job transition in midlife, those opportunities would be frustrated also. Right now students and their families are sitting around the kitchen table making tough decisions about next year and whether they can afford to go to school if interest rates double.

One Rhode Island mother wrote me:

Please do not raise the interest rates on student loans. My

son will be in his last year . . . I cannot afford to pay any

more and fear that he will not be able to graduate and still

have all the loans to pay back.

So in addition to frustrating educational advancement, it could leave many students across the country with lots of debt and no degree.

Hundreds of thousands of young people, parents, educators, and members of the faith community and other community leaders have come to us with one simple request: Don't double the rate.

Some on the other side have argued that low-cost Federal loans have contributed to rising college costs and increased student debt. This does not make sense. The maximum amount undergraduate students can borrow in subsidized loans has remained unchanged at $23,000 for the last 20 years. There are many causes that are accelerating tuition, but the amount of available, accessible subsidized Federal loans for students has remained unchanged for 20 years. But increasing the cost of these loans by doubling the interest rate will certainly make college more expensive for families and for students.

We need to address college costs, but having the Federal Government double the interest it charges for students, particularly the low- and moderate-income students, is not the solution. In fact, it complicates the problem dramatically.

My colleagues on the other side of the aisle say they want to stop this from happening. Governor Romney, the presumptive Presidential nominee, says he wants to stop this from happening. Yet they are blocking us from even moving forward procedurally so we can debate these things, so they could offer their proposals to pay for what we agree needs to be done, to stop the interest rate from doubling. They are blocking debate because they refuse as much on an ideological as on a practical basis to change the Tax Code and to close a loophole that is egregious and should be closed in order to allow us to help middle- income families. I think they have taken this pledge with respect to no new taxes to a degree that defeats a practical, pragmatic solution to a problem that they know has to be solved. It has to be solved before July 1.

This decision is fairly clear. It is a choice between allowing young people to get a college degree or fealty, to a pledge to never, ever raise anything that Grover Norquist says is remotely connected to a tax. It is that simple. Unfortunately, that simplicity is undercutting the hopes and dreams of thousands of American students, and that is what it is coming down to.

One of the other ironies in this debate is what we propose to do. Closing the subchapter S loophole for high-wage earners in professional endeavors is also something that has long been criticized by conservatives. In the 2004 Presidential campaign, the late conservative columnist Robert Novak described the subchapter S loophole as ``one of the last loopholes left in the Internal Revenue Service Code, and it is a big one.'' I don't think anyone would accuse the late Robert Novak as being anything but staunchly conservative in all his views.

The Wall Street Journal, calling out former Senator John Edwards for his use of this loophole in 2004, called it ``a clever tax dodge.''

Again we have a clever tax dodge pitted against helping students go to college. I think helping students go to college should win.

In fact, the Wall Street Journal editorial points out how in practice this loophole is used. In their words:

While making his fortune as a trial lawyer [referring to

Senator Edwards] in 1995, he formed what is known as a

`subchapter S,' corporation with himself as the sole

shareholder. Instead of taking his $26.9 million as earnings

directly in the following four years, he paid himself a

salary of $360,000 a year and took the rest as corporate

dividends.

Obviously at a much lower tax rate but also avoiding payroll taxes.

That is what we are trying to close here. I think it ought to be closed in fairness anyway, but the added benefit is that we are able, by closing this loophole, to prevent the doubling of the interest rate on student loans.

This is a loophole that should be closed. Again, this money will require people to pay directly to the Social Security trust fund and Medicare trust fund these funds which otherwise were avoided through subchapter S, so it doesn't weaken Social Security but it allows us, through the scoring mechanism, to prevent doubling of the interest rate on subsidized loans. It is a win-win proposition.

What they propose is going after the preventive care fund that was part of health reform. It seems to me it is sort of an unfortunate pitting of one program that benefits middle-income families versus another program that potentially benefits all, but particularly middle- class families. Frankly, I think there is another concept here which we all agree about in theory--if we do not enhance prevention opportunities, the cost of health care will be going up and up. What is unsustainable now will become more unsustainable. It is not an appropriate way to deal with this issue.

At a minimum, I hope we can at least get to a serious debate about this. If that is the proposal that Republicans have, let's get it on the table, let's take a vote. Let's take a vote whether you want to close loopholes for very specialized, very wealthy lobbyists and lawyers and professionals, or do you want to impact potential savings on health care through prevention.

I think and hope we can come to a bipartisan agreement. The clock is ticking. The time to act is now. Students and families are counting on us to do the right thing and fix this problem.

I yield the floor.

I have the utmost respect for the Senator from Tennessee. No one is as knowledgeable in education programs as he, the former Secretary of Education, and someone who has a deep commitment to education, not only with respect to his remarks on charter schools but on education in all ways. But he refers to what the House has done. The House, in the Ryan budget, maintains this increase, this doubling of the interest rate. They foresaw, anticipated, and supported the increase to 6.8 percent. Only recently have they apparently had a change of heart and decided that is not appropriate.

The other aspect I think is interesting to note about the House is they have proposed significant reductions in tax rates and they have said they would pay for them by closing loopholes. This is one of the most egregious loopholes that you can find and yet, of course, they will not use this to pay for something which makes a great deal of sense--which they now agree there should be no doubling of the student interest rate.

The Senator is absolutely right, this doubling will not apply to loans that are outstanding. It applies to loans going forward. But if we establish the principle which was embedded in the Ryan House budget, which I think was supported by most, if not all, of my colleagues on the other side, that this rate is going to be doubled to 6.8 percent going forward, that is going to have a significant impact on students who have years to go in college and on people who are contemplating going to college. So the $6 or $7 it may be per month becomes significant overall.

Again, we can get into a discussion about where does this money come from ultimately in terms of was it part of funds for health care, et cetera. But we are facing the choice today of helping students and closing an egregious loophole--one that benefits the wealthiest Americans; it has been criticized by the Wall Street Journal, criticized by Robert Novak, the late columnist--or practically going in and targeting prevention programs. I think we conceptually agree if we don't get a handle on prevention of diabetes, of cancer, of diseases that are costing us billions of dollars, then our task to deal with health care will be immensely more difficult. It is very clear.

What is also very clear is, I think, procedurally the answer is quite straightforward. Let's get on to the bill. Let us go ahead and put these two different proposals on the floor and take a vote. I hope the proposal to close the loophole would pass. But if it did not, at least we would be in a position of preventing the doubling of interest rates on student loans.

With great respect to the Senator from Tennessee, I hope we can move forward, have a vote on the different proposals to pay for it, and then move forward and let people know that their rates will not be doubled.

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

Mr. President, the vote we will take today will affect millions of Americans. If we do not enact legislation before July 1 of this year, approximately 7.4 million students will see the interest rate on their student loans double.

Nearly 200 student government leaders, representing more than 2.5 million college students across the Nation, have asked us to come up with a bipartisan solution to keep the interest rate from doubling this July.

Hundreds of thousands of students, parents, educators, and concerned citizens have called and written to their

Senators and Representatives with a simple message: Don't double the rate.

For them, student loan debt is not a trivial matter. It is a matter of going to school, and it is a matter, ultimately, of the jobs they take and their ability to pay off those loans during their working life.

Without action, students will pay, on average, an additional $1,000 for every year they have to take student loans, if we let this rate double.

Two-thirds of the class of 2010 graduated owing student loans, with an average debt of over $25,000. They are walking out of school with a degree and a huge debt. If we do not fix this problem, beginning today, that debt will be larger for their successes in the years ahead.

Student loan debt collectively has passed the $1 trillion mark-- exceeding credit card debt. In fact, there are some who speculate this is the new bubble that is coming upon our economy. This is a serious issue.

The good news is that there seems to be for at least the principle of preventing this increase--an emerging bipartisan consensus that we should not allow the rate to double. The bad news is that my colleagues on the other side have chosen to use the student loan interest rate as another opportunity to attack health care. They have proposed to pay for the extension by cutting funds to the Prevention and Public Health Fund, reducing access to immunizations and services that seek to prevent cancer, diabetes, heart disease, to name a few.

The President has already said he would veto this attempt to pit health care against education--health care, which benefits all, but particularly benefits those low-income and middle-income American families and, of course, these education programs that are a lifeline and a mainstay for middle-income Americans.

The other aspect of attacking this prevention fund is, in the long term, if we are ever going to get our hands around the cost of health care in this country--and both sides recognize this is one of the critical obstacles we face in the future--we have to have better prevention. It is difficult to understand how people can say: Let's not do prevention, but we have to cut health care costs. If we could have an effective prevention program, we could, indeed, over years, and with increasing success, reduce or at least begin to flatten that proverbial health care cost curve.

It is interesting to note, the other side is proposing to use health care to pay for this proposal to help middle-income families, but they do not always insist on paying for everything they want to do. They will, frankly--and, I think, eagerly--extend the Bush tax cuts without any pay-for. The House recently passed the so-called Small Business Tax Cut Act with no offsets. And that costs $46 billion--nearly enough to pay for the student loan interest rate at 3.4 percent permanently.

Following this logic, students and their families across the country are probably wondering: Well, why isn't the risk of doubling their interest rate treated the same way as benefiting the wealthiest Americans through tax cuts and businesses through tax cuts? Don't they count as much? Shouldn't they count as much?

We propose to pay for this 1-year extension by closing an egregious loophole in the Tax Code that has enabled certain high-wage earners to avoid paying their fair share into Social Security and Medicare by misclassifying their wages as profits through subchapter S corporations. It is a very small subset of corporations that are doing this, and our proposal is targeted.

This is not the small manufacturing plant that is organized as a subchapter S corporation or the pharmacy or the lumber dealer. These are consultants, these are high-paid attorneys, these are professionals who have chosen to put between themselves and their company or their partnership in another entity purely for the purpose of minimizing their payroll tax exposure. That is a loophole that should be cut regardless of other measures we are considering.

Essentially, this is a very small group of people, as I said. In order to be subject to this proposal, you would have to have 75 percent or more of your gross revenues from professional services. This does not apply to the manufacturer or the merchant. It is lawyers, accountants, lobbyists, and similarly positioned individuals. And it is further restricted to only those who earn more than $250,000 filing jointly. So this is not the struggling underpaid professional. These are people who are doing reasonably well in this very complicated and competitive society.

According to the Joint Committee on Taxation, in 2009 about 15 percent of all S corporations were service businesses as defined in this bill. Yet this small subset is responsible for billions of dollars in lost revenue to Medicare and Social Security.

In a 2009 report, the Government Accountability Office found that in the 2003 and 2004 tax years, individuals used this loophole to underreport over $23 billion in wage income.

This is a loophole that should be closed. I hope my colleagues on the other side of the aisle will take a serious look at it and join us in supporting this bill.

We have 54 days to prevent the interest rate from doubling on subsidized student loans. We have no time to waste.

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

Mr. President, after months of working to ensure that the subsidized student loan interest rate does not double this summer, I think we finally have reached a consensus--middle-income families in America cannot afford a huge increase, a doubling in the interest rate on student loans.

Those who were previously opposed or indifferent to our proposal now are in favor of stopping the doubling of the rate. The most prominent, of course, is the former Governor of Massachusetts, Mitt Romney, who said: ``I fully support the effort to extend the low interest rate on student loans.'' I think that is the consensus. It was hard fought. I submitted the legislation to keep the rate at 3.4 percent originally in January. Now we have reached that consensus.

But the debate has now shifted to how do we pay for it. What I have proposed, and am joined by many colleagues, is to close a loophole that has allowed a self-selected few to avoid paying their fair share of payroll taxes.

The alternative proposed on the other side goes to critical health care benefits for lower and middle-income families. It seems to me entirely unfair to try to provide help to middle-income families by taking away their access to health care. For families who are struggling, education and health care are not something that can be traded one for the other.

Congress should not raise the interest rate on these loans. We have reached that agreement. It is a de facto tax on middle-income families. We have put forward a plan that will avoid the doubling of the interest rate on student loans and will pay for it in a responsible way. We are offering a short-term solution to a long-term problem. But we have to begin. We have to do it quickly. If we do not act before July 1, the interest rate on these loans will double for every loan granted thereafter.

Our proposal is to close a loophole that the General Accounting Service has identified as glaring and, frankly, not substantiated by any need. This loophole involves Subchapter S corporations or S-corps. Immediately, when we say S-corps, we think it must be the local manufacturer or the hardware store and how can we go ahead and impose any further taxes, any further costs on these job creators.

This is not the situation. What is happening is that a very clever and bright group of people have figured out a way to use the S-corp to avoid payroll taxes. It is a small subset of corporations that are doing this, and our proposal is targeted. It is targeted only to those S-corps that derive 75 percent or more of their gross revenue from the services of three or fewer shareholders or where the S-corp is a partner in a professional service business.

Essentially, this is a small group of people who derive 75 percent or more of their gross revenues from providing professional services. It is lawyers, accountants, lobbyists, and folks such as that. The proposal only applies to S-corps or partnerships in the field, where virtually all the earnings are attributable to the performance of services. This is not the local manufacturer, not the local hardware store, not the local dry cleaner or gas station. These are people who perform essentially professional services.

They are avoiding their payroll taxes, and we do not think that should be the case. Furthermore, this proposal exempts S-corp shareholders, partners, and partnerships with modified adjusted gross incomes below $250,000 for joint filers and $200,000 for individuals. So it is targeted within this small subgroup of S-corps to an even smaller group, those who are making $250,000 and above as joint filers or $200,000 and above as sole filers.

This proposal prevents professional service income from being mis- char-acterized to avoid employment taxes. However, legitimate passive income--if the S-corp is earning income from rents, from dividends, from interest, and certain other gains, those will be essentially treated as such and will continue to be exempt from payroll taxes.

All we have done is close a glaring loophole, done it in a way in which we do not impact anyone making under $200,000, anyone, frankly, who is involved in a corporation whose principal activities are not professional services. I think this is a responsible way to do it. This is a way that can, in fact, respond to the need to responsibly fund this provision for maintaining the student loan interest rate.

The GAO found that in 2003 and 2004 tax years, individuals used this loophole to underreport over $23 billion in wage income. The median unreported amount was $20,127. For most students, that would cover tuition. Let me say this again. What the GAO found was that using this device as an S-corp, people were able to transform what normally would be $20,000 in payroll wages or salaries that would be subject to payroll taxes into a distribution of an S-corp, avoiding payroll taxes.

This is a loophole. There is no other word for it. We are closing it, and we are closing it in a way that is responsible and that will have virtually no impact on the businesses on Main Street USA. In fact, I think if we tried to explain to anyone running the local store that there are some folks out there who were using S-corps to avoid their payroll taxes, they would be, if not shocked, they would, at least, raise objections to that practice, frankly.

So closing this loophole will fully offset the $5.9 billion cost of this 1-year extension on the interest rate and would make the Tax Code more fair. It is a win-win proposition. In fact, according to Citizens for Tax Justice, in their words, closing this loophole will actually help most small businesses, which are currently subsidizing the minority who abuse it to avoid payroll taxes. So I think this is not only the right thing to do in terms of the policy of not doubling the interest rate on student loans, this is an appropriate way to do it, an appropriate way to pay for it.

Even Governor Romney recognizes that at times S-corps have to pay their fair share. This is a quote from the Boston Herald of January 6, 2008.

``When Mitt Romney became Governor in 2003, Subchapter S

corporations that were owned by Massachusetts business trusts

were taxed at 5.3 percent. By the time Romney left office,

the tax rate on these corporations had climbed to 9.8

percent, with Romney declaring the tax increase to be merely

`closing loopholes.' ''

We are urging that the Governor be consistent both in support for avoiding the increase in the student interest rate and closing loopholes in Subchapter S corporations. Both parties must work to find a way to do this. The good news is there is now consensus that it must be done. I am prepared, and I hope my colleagues are prepared to work for a way to pay for it which is fair, which does not take from one middle-class program to offset another middle-class program. We should work together to get this done as soon as we return.

I yield the floor.

I thank the leader for yielding.

Madam President, I am honored to be here today to welcome His Eminence Archbishop Oshagan Choloyan. Archbishop Choloyan serves as the Prelate of the Eastern Prelacy of the Armenian Apostolic Church of America. He has led the Eastern Prelacy since 1998, and he plays a significant role as the spiritual shepherd for several thousand Armenian Americans from Maine to Florida and west to Texas.

In Rhode Island, we are extremely blessed to have the Archbishop as such a strong spiritual and community leader. We continue to benefit from his wisdom, his compassion, and his generous spirit. It is an honor to have him here today as we not only listen to his moving and thoughtful words, but also as we commemorate the 97th anniversary of the Armenian genocide.

Ninety-seven years ago, on April 24, 1915, the Young Turk leaders of the Ottoman Empire summoned and executed over 200 Armenian community leaders and intellectuals, beginning an 8-year campaign of oppression and massacre. By 1923, nearly 1\1/2\ million Armenians were killed, and over a half million survivors were exiled. These atrocities affected the lives of every Armenian living in Asia Minor and, indeed, throughout the world.

The survivors of the Armenian genocide, however, persevered due to their unbreakable spirit, their steadfast resolve, and their deep commitment to their faith and their families. They went on to enrich their countries of emigration, including the United States, with their centuries-old customs, their culture, and their innate decency.

In fact, not only were the Ottomans unable to destroy the Armenian Empire, they strengthened it. And the participation of Armenians worldwide has made this world a much better place. Indeed, my home State is a much better place. That is why today we not only commemorate this grave tragedy but celebrate the traditions, the contributions, and the extraordinary hard work and decency of the Armenian Americans and Armenians throughout the world.

This year I once again join my colleagues in encouraging the United States to officially recognize the Armenian genocide. Denial of this history is not consistent with our country's sensitivity to human rights and our dedication to the highest and noblest principles that should govern the world. We must continue to educate our young people against this type of hatred and oppression so we can seek to prevent such crimes against humanity in the future. It was indeed an honor to be here to listen to the wise words of the Archbishop, to hear his prayer, his reflection, and to go forth knowing that he is a powerful force in our country for tolerance and decency. I thank him for being here today.

With that, I yield the floor.

Madam President, the power of Congress to establish post offices is enshrined in our Constitution, and the U.S. Postal Service has been a valued institution since the earliest days of our Republic. Today, the Postal Service accounts for millions of jobs nationwide. It is essential that we have a viable and effective Postal Service in the long term. Unfortunately, the Postal Service is currently facing critical financial challenges that have been brought on by a number of factors, including the movement to electronic forms of communication. This situation requires immediate attention of Congress.

The bill we are voting on today, the 21st Century Postal Service Act, is not perfect. I am particularly disappointed that the Senate did not agree to an amendment that I supported that would have preserved 6-day delivery, and I am concerned that a permanent switch to 5-day delivery could lead to the further erosion of jobs and the undermining of the Postal Service. However, it is clear that we cannot afford to do nothing. Congressional inaction, coupled with the extreme measures being pushed by the Postal Service's leadership, will result in drastic changes that would seriously undermine our Nation's mail system, beginning with the closure of a number of post offices and mail processing facilities across the country. I am concerned that the changes sought by the Postal Service's leadership will severely undermine the Postal Service's long-term viability and threaten thousands of good jobs. We cannot allow that to happen.

The 21st Century Postal Service Act includes a number of important provisions designed to put the Postal Service back on solid footing. It will allow for the refunding of overpayments by the Postal Service to the Federal Employees Retirement System and ease

the prefunding requirement for the Postal Service's retiree health benefits. It also strengthens the review process for closing post offices and facilities and encourages innovation by the Postal Service to improve its business model with the goal of returning to profitability.

I am also concerned that the version of postal reform legislation that is eventually passed by the House of Representatives could prove to be very damaging. When the Senate considers the final version of postal reform legislation that is negotiated by the two Chambers, I will carefully consider the changes that have been made before lending my support to its passage.

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

Mr. President, I rise today, along with my colleague, the Presiding Officer, to pay tribute to Lance Corporal Abraham Tarwoe, a Rhode Islander who served in the U.S. Marine Corps.

On April 12, Lance Corporal Tarwoe was killed while conducting combat operations in Helmand Province, Afghanistan. A memorial service will be held on Saturday in Rhode Island to honor his selfless sacrifice, and he will then be laid to rest in his native home of Liberia.

When he was about 7 years old, Lance Corporal Tarwoe left Liberia and started a new life in the United States. He was one among thousands of Liberians who came to the United States seeking safety from a civil war. We are proud that so many of these brave individuals and their families now call Rhode Island their home, and our State continues to be enriched by this strong community.

Lance Corporal Tarwoe enlisted in the U.S. Marine Corps in June 2009. He was on his second deployment to Afghanistan, assigned to the 2nd Battalion, 9th Marine Regiment, 2nd Marine Division, II Marine Expeditionary Force, where he was serving as a mortarman and had additional duties as a military dog handler.

Each generation of Americans is called upon to protect and sustain our democracy, and among our greatest heroes are the men and women who have worn the uniform of our Nation and have sacrificed for our country to keep it safe and to keep it free.

It is our duty to protect the freedom they sacrificed their lives for through our service, our citizenship. We must continue to keep their memories alive and honor their heroism, not simply by our words but by our deeds as citizens of this great country.

Today, our thoughts are with Lance Corporal Tarwoe's loving family in Liberia, Famatta and Abraham Kar, his brother Randall, his wife Juah, and his son Avant, and all his family, friends, and his comrades-in- arms. We join them in commemorating his sacrifice and honoring his example of selfless service, love, courage, and devotion to the Marines with whom he served and the people of Afghanistan he was trying to help.

Lance Corporal Tarwoe is one among many Rhode Islanders who have proven their loyalty, their integrity, and their personal courage by giving the last full measure of their lives in service to our country in Afghanistan, in Iraq, and elsewhere around the globe.

Today, we honor his memory and the memory of all those who have served and sacrificed as he did. He has joined a distinguished roll of honor, including many Rhode Islanders who have served and sacrificed since September 11, 2001.

All of these men and women who have given their lives in the last decade in Afghanistan and Iraq have done a great service to the Nation. It is a roll of honor. It is a roll that Lance Corporal Tarwoe joins, and it should be for us a roll not just to recognize and remember but to recommit, to try in some small way to match their great sacrifice for this great Nation.

In Lance Corporal Tarwoe's situation, it also should remind us that this young man, born in Liberia, who came as a child and to Rhode Island, demonstrates to us all that being an American is about what is in your heart, not necessarily where you were born or what language you may have spoken as a child. It is about believing in America--believing so much that you would give your life to defend the values that we so much cherish.

Mr. President, I rise today, along with the Presiding Officer, my colleague, Senator Whitehouse, to pay my respect and honor the life of Sergeant Maxwell R. Dorley, a distinguished and beloved member of the Providence Police Department, who passed away tragically in the line of duty.

Sergeant Dorley's personal story, which began in Liberia is another example of the extraordinary contribution of the Liberian community to the State of Rhode Island, along with recently deceased Lance Corporal Tarwoe of the U.S. Marines. Sergeant Dorley's story is also another example of inspiration and hope for all of us.

At the young age of 7, Sergeant Dorley followed his aunt, Hawa Vincent, to Providence, beginning his own chapter of the American dream, and he wrote a remarkable chapter in that great story of America. Sergeant Dorley attended Mount Pleasant High School, and not only graduated at the top of his class earning admission to Brown University, but he also befriended Kou, who would become his wife and partner for 27 years. His love and devotion to his family was so deep and genuine that when their first child, Amanda, was on her way, Sergeant Dorley declined admission to Brown University and began working four jobs so he could support his new family.

At this early stage in his life, Sergeant Dorley chose to prioritize his new family over himself. And as he did

so many times throughout his life, Sergeant Dorley thought about others before he thought of himself. His example of hard work--four jobs to support the family--is the story of America, coming here from someplace else, working as hard as you can to build a strong family and contribute to a strong community.

From helping his family pay off the notes on their cars to gathering old and used police uniforms for his fellow police officers in Liberia, Sergeant Dorley exemplified the best of what we expect from our public servants--a deep commitment to serving others for the greater good.

While terribly tragic, Sergeant Dorley passed away last Thursday doing what he knew best, helping others by trying to come to the aid of his Providence Police Officers, Edwin Kemble and Tony Hampton, who were trying to break up a fight.

Today, we offer our deepest condolences, and our thoughts are with all of Sergeant Dorley's family, friends, and colleagues, but especially with his mother Miatta who is traveling from Liberia, his wife Kou, and daughter Amanda, his son Robert, and all of his beloved family. We join them in celebrating Sergeant Dorley's many contributions.

Despite his short time with us, he gave us much, and we honor his memory and his service to the people of Providence as a Providence Police Officer.

The loss of Sergeant Dorley is also a reminder of the great sacrifice and incredible courage of all of our Police Officers who voluntarily put themselves in harm's way to preserve the peace and stability that allows us to enjoy our own lives. Today, we especially salute the service and sacrifice of Sergeant Dorley, and we honor the legacy he leaves of serving others and prioritizing the greater good over his own personal interest. We have indeed lost a remarkable individual and a great example of selfless service. Again, we offer our deepest condolences to his family.

Mr. President, I yield the floor.

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