GRASSLEY: I'm protesting a provision in the draft auto bailout bill that has nothing to do with automakers.
It's a provision that would prop up a tax shelter I shut down as chairman of the Senate Finance Committee in 2004. This tax shelter bailout within the automaker bailout would have the federal government guarantee obligations that public transit agencies now face because they entered into very controversial deals with corporations, including foreign corporations, where by selling things like the transit's own train cars not to change the way the transit operated, but solely to access cash for them and let the corporations take a tax deduction for depreciation.
When AIG collapsed and its credit rating was downgraded. These transit agencies, the ones who made these lease-backed deals before my legislation shut them down in 2004 were in technical default of the lease-back agreements and millions in penalties were triggered.
I worked hard to shut down these tax shelters as a matter of tax fairness. The IRS has been working to recover money from the taxable entities that participated in the deals. So it's wrong for this auto bailout legislation to reward or bail out transit agencies for participating in these tax shelters. And I don't know who's responsible for putting this in. We found it in the draft of the House bill. And, you know, whoever's behind it ought to raise their ugly head and justify it because I don't think it's right.
Kerry Cathcart?
QUESTION: Thank you. Senator, what are your overall impressions of the Obama transition? And on the nominees, are there any you think are particularly good or some that are particularly problematic?
GRASSLEY: Well, yesterday, as an example, I spent 45 minutes with Mr. Geithner, the secretary designee for Treasury. And I found him to be very -- very up to date on the issues. You know, right now, when he's coming in as secretary of treasury at a time of economic crisis we're in and government's trying to do things like liquify banks, buy up toxic paper.
As president of the Fed bank in New York, he was in the middle of all these things. So he brings that sort of continuity to the efforts of Secretary Paulson. He's very knowledgeable in a lot of areas. I think he doesn't seem to be ideological. So I'm just -- that's the only one I've really met face-to-face with yet. I'll have an opportunity to meet with a lot of others.
But I think, generally, I'd like to give high marks, in answer to your question, in a very general way about names I've heard. I think, for instance, in national security, General Jones, Gates, people of that nature, Secretary of State Clinton, put together a pretty high-class people involved in defense and diplomacy.
It seems to me that he has backed off of a lot of his campaign rhetoric about Iraq and by keeping somebody like Gates on who supported the surge, who has ideas about slow withdrawal so we don't ruin the accomplishments we've had there, increasing the number of people in Afghanistan, of course, the president-elect said he was for that during the campaign anyway.
Most of them would fall into a very well-qualified category. One exception, nothing to do with qualifications because I think Eric Holder is well-qualified. But he's very controversial because of his involvement with the pardons in the previous Clinton administration when he was the deputy attorney general. And I think that that nomination may be approved, for all I know. I don't know how I'll vote on it at this point.
But I think that it's going to take a long time to get him through the hearings. Where, I think, a lot of these other people get through the hearings very quickly.
Now, one thing that I'm going to -- didn't ask this, Kerry, but I want to tell all of you listening that the approach I'm going to have is emphasize oversight, to beg the cooperation of them, even telling them how Bush did not cooperate with oversight as much as he should have under the Constitution and our right to information. But building upon Obama's campaign pledge of transparency and accountability, I think I should have utmost cooperation from this administration on my oversight because I have a reputation of doing equal amount -- from the standpoint of fairness, treating Democrats and Republican presidents in the same way.
And I've ask them specifically to help me get requests for information from the Bush administration that hasn't been as forthcoming as it should have, get that cleaned up after they take over so that they start with a clean slate. So six months down the road, something comes out, you know, that maybe Bush could get -- the Bush agency should get blamed for -- that they don't get blamed for it.
I think it's to their -- it's to their benefit to help me get those answers from the Bush administration so that we start out with a clean slate with this administration. And so these are going to be things I am going bring out and concentrate on more than a lot of substantive issues that may be would normally come up during oversight -- I mean, during a confirmation hearing.
Tom Beaumont?
QUESTION: Senator, you said that you're going to protest the tax shelter provision in the auto bailout package. Beyond that, do you have concerns about the bailout bill, i.e., do you think it has sufficient taxpayer protections? Is there that -- is there sufficient protections for the purpose in there? And do you plan to vote against it simply on the basis of the tax shelter provision you outlined?
GRASSLEY: No, I think if I vote against it, it would on other things as well. Now, the text was -- I think, is up here now. But it was just lately negotiated yesterday between members of Congress pet putting it together. I suppose mostly Democrats and the Bush administration.
So I have not reviewed the specific text. But let me tell you where I think it comes up short. There's no requirement for negotiation of union contracts. There's no -- there's some limits in there on congressional -- I mean, on executive salary that goes beyond even what's in the TARP legislation. But I don't think it's any more enforceable than what was in TARP. And that's not very satisfactory to me what was in TARP. This goes a little further by including 25 executives instead of the top five executives from the standpoint of compensation.
But I think we ought to be mandating some new leadership for some of these companies, and they ought to be working for a dollar a year plus the union renegotiated and the executives earning less for the simple reason that it gives credibility to the negotiation of renegotiation of contracts.
GRASSLEY: And I believe, to some extent, government regulation, particularly, on Detroit is a major problem. There ought to be some relaxation of government regulation until we get these folks whole again, if we really want a strong domestic manufacturing economy. And I think we all do. I think that, you know, we abhor that there's not going to be a General Motors or that Ford's in trouble or there may not be a Chrysler or there may be a joining of Chrysler with General Motors because this is pretty much what America is all about.
On the other hand, you know, we can give $15 billion this month, and in March, we're going to be giving a lot more. So I have a lot of questions about it, Tom.
QUESTION: What regulations would you recommend relaxing?
GRASSLEY: Well, I think on this $25 billion or part of the $25 billion that's going out, the requirements that this money be used to retool right now -- retooling for greener cars is not the issue. The issue is the viability of the company and the viability of the company has got something to do with moving to more cars that are more fuel- efficient, as an example.
Mike Myers?
QUESTION: Senator, on the matter of (inaudible) loopholes you oppose, where (inaudible) you know Charlie Rangel and your staff deals with...
GRASSLEY: You're going to have to -- I can't hear you, Mike.
QUESTION: Is that better?
GRASSLEY: Go ahead.
QUESTION: Is that better?
GRASSLEY: Yes. Oh, that's perfect now.
QUESTION: Thank you.
Why can't you pick up the phone and ask Charlie Rangel what this means? Or maybe your staff is already doing it? This can't be some phantom out there. You can run it down, can't you?
GRASSLEY: Well...
QUESTION: Who's responsible for it?
GRASSLEY: Well, what it does -- I've explained what it does. It's no secret what it does.
Why it's -- who get it in there, I think, is going to be difficult to run down. And I doubt if Charlie Rangel, he may know. And I'm not sure, based on the substance of it, I think that's reason enough. I raised the issue that I'd like to know who did it, but who did it doesn't matter. The substance of it is wrong. And that's the essence of it.
QUESTION: So you're looking for results. Somebody's going to tell you, Senator, that it's omitted?
GRASSLEY: Well, we're working on that. And I think I have Senator Baucus' support to get it out. But I don't know for sure if it's out because I don't know whether those impacts are being made. But I did have a meeting last night with Senator Baucus, and this came up. And he doesn't like the fact that it's in there either. Obviously, as chairman of the committee, he's going to carry more weight on this than I am.
But I'm -- I've got to buy into what they're trying to do because I was chairman of the committee when we closed to loophole.
QUESTION: OK. I'm just wondering, this is going to give so- called red meat to Senate Republicans to say here's another reason to mount a filibuster.
GRASSLEY: Well, if this isn't in there or if it's in there, there's enough red meat in here for some Republicans that it's not going to -- this isn't a key factor in some people having reason to be opposed to it.
Mary Rae Bragg?
QUESTION: Senator, regarding Postville, we're hearing now that with the Agriprocessors going under that community is going to be liable for more than $4 million for the federal loan that they took out for the infrastructure that was necessary to get Agriprocessors in there.
What is it that you can be doing to try and help that community? Or should that community get any help?
GRASSLEY: Well, first of all, as a practical matter, if Agriprocessors does not get sold and somebody assumes the obligation to pay for this, then -- and Postville doesn't have the capability of paying for it because you can't get blood out of a turnip. Somebody at federal level, USDA and Rural Develop, is going to be to wake up to the fact that they don't have the ability to pay and it's going to, you know, just be like foreclosing on something only there won't be any money come out of Postville for it.
Now, here's -- there's a catch-22 that I would explain to you and then explain to you in direct answer to your question what we could do. But the catch-22 is kind of when do you do this. If there's a prospect for sale, then whoever buying it is going buy this obligation. And just like Agriprocessors would have a responsibility to pay for it. It's quite an asset to the company. It's quite an asset to the community. And there is some community use of it that may be you would say that Postville would be responsible for it because a certain percentage of it is for residential purposes as well.
So ideally, you know, people are coming in to Postville today and tomorrow and, you know, like last week and who know, even today and tomorrow. People coming in to look at it. And there's hope for sale.
Now, if we would -- if they would know that we're going to take action here in Washington $3 million or $4 million, that they don't have to pay for that, then, you know, we're taking some private people that might purchase the thing off the hook.
So I don't know when to make a move on it. But what I would do is -- and I've already had some conversations through staff on this -- talked with people at the U.S. Department of Agriculture to hold any action against Postville in advance or we could even appropriate money here in Washington that would be used by USDA to take care of this so Postville's not stuck with it.
But I think this catch-22 is something to consider because if we can -- if somebody's going to buy this and Agriprocessors, through their normal operations, had the ability it pay back the federal government, then I don't know why we should hook the taxpayers with the responsibility.
So I'm willing to work with the Postville people and try to help them through this one way or another. But I don't know whether it's something we've got to panic about now.
Now, of course, maybe the purpose of your question is that there's some money due in January. And so, you know, January is just around the corner and Postville people are worried about it. But I don't think they have to be worried about it because I think USDA's, without making any real decisions, just doesn't have to push anything in January against Postville.
QUESTION: Thank you.
GRASSLEY: Now, whether people in USDA feels the same way that I've told you about is, I can't say at this point. But I can tell you that we've had conversations with people in USDA about it.
GRASSLEY: Tim Rohwer?
QUESTION: Yes, Senator. I'm sure you've talked to many people during the Thanksgiving break. And I was just curious, is there, you know, the mood, is it any different now ever since the election? Are people more upbeat? Are they still concerned about the same issues? Or are there new issues that they're concerned about?
GRASSLEY: I think everybody -- it's probably not so much. I've talked to people but conclusions you can draw from just consumers purchasing, lack of movement in buying homes, things of that nature.
There's a real cautiousness, I guess I'd say, because I don't want to say that there's panic. But there's real cautiousness on the part of people that's really slowed down the economy.
And people are just being cautious. They don't know what the future holds. And in my -- you heard me say to Kerry that I talked to Geithner yesterday, the new secretary of defense -- or our new secretary of treasury. And talking to him and the fact that -- that, you know, he sees maybe a bigger picture than individual members of Congress do from his position as New York Fed president and secretary designee.
There is a necessity of the federal government taking action to reestablish confidence. And I'm not sure that this can be done just by federal government action. But, you know, since October the 1st, that's what we've been trying to do through the Congress. Since back in the spring, that's what the Federal Reserve System's been trying to do. In taking agency and taking action and taking action.
And thinking of things that the Fed can do that maybe they haven't done in the past. Other actions that can be taken. It's all a matter of building confidence because I think my answer to your question, Tim, is that people are cautious. They don't know what the future holds. They want to reserve -- keep as much in reserve as they can. And it's just slowed the economy up. And it's a direct result of something bigger than that, and that is the credit crunch that's come and everything that's being done through the Fed and through the congressional bailout that was decided in October the 1st is to get the credit moving.
Brad at WHO Radio?
QUESTION: Yes, good morning, Senator.
I wanted to get your reaction to the unfolding situation in Illinois with Governor Blagojevich. You being a state senator, how does that make you feel that basically that Senate seat is being -- was being put up to the highest bidder?
GRASSLEY: Well, it's criminal. And that's not just an adjective, that's a fact. And people that are involved in it ought to know better. I just can't visualize the sophistication of these people that rise to power in these bigger states of our country.
Take the New York governor last fall and his involvement with prostitutes. Take this governor with what he's trying to do. You know, it seems to me -- I just can't visualize somebody being so stupid. And in the process, going to suffer not just politically but personally for it. And their family is going suffer. And why they care.
So that's -- that's my reaction. And it's going to be a while, I think, before this Senate seat is filled. And that's to the detriment of the people of Illinois who are entitled to two senators and ought to have two senators. And there's several routes that they're going to go. Maybe impeach the governor, put the lieutenant governor in. Get the lieutenant governor to appoint somebody. Call a -- change the law so that the seat is going to be filled by special election instead of by appointment by the governor. Things of that nature.
And so it's just an abomination. And for those of us that are -- choose public service as a profession, as I have, it's a bad mark on all of us. You know?
QUESTION: Thank you, Senator.
GRASSLEY: Anybody else? That's the list. Anybody have a follow-up?
QUESTION: Senator, will you have any opportunity before Barack Obama becomes president to sit down and talk to him either privately or in a small group and, perhaps, talk about your oversight concerns?
GRASSLEY: I don't think so. He's so busy and he's spending all of his time in Chicago. And if he wanted to meet with me, I'd sure meet with him. Now, he did call me on November the 13th, very short phone call, opening up communication, wanting to work in a bipartisan way, citing the fact that I work closely with Max Baucus as chairman of the Finance Committee. And so of our committee is going to be involved in programs that the president is pushing.
And so, you know, as a kind of an obscure U.S. Senator as I am to have a president-elect who I haven't talked to a lot in my lifetime even those I've served with him for four years, you know, it's kind of impressing and sets a tone that -- that is going to be beneficial to him and, hopefully, beneficial to some of the things that I'm trying to accomplish.
Anybody else?
QUESTION: This is Christinia from the Hawkeye.
GRASSLEY: I'm sorry we didn't have you on our list, but we're glad to have you with us.
QUESTION: Sorry. Thank you. I just was wondering, you set out a couple of releases on flood funding not being released. And I was just wondering I guess, what the holdup been and do you think this could delay any future appropriations?
GRASSLEY: Well, first of all, the money is appropriated and $24 billion is out there for about 18 states of which Iowa is going to get a big chunk of it. The reason the figure grew between June and October is because we had Galveston, you know, Ike and Gustav hurricanes and a lot of damage done there.
And but the law is pretty clear that you get benefits based upon the damage that's been done. And so the money is there. Now, what these press releases are about are getting the money released from the bureaucracy.
Now, for some of these programs, it's pretty specific in there that a certain amount of it was supposed to be released within 60 days after we passed it. Now, I think we're -- October, November -- I guess we're by that 60 days now.
There's a lot of programs involved, I don't want to say that every program is the same. And some might require a certain longer length of time to get the money out. But we're trying to preclude what happened with the money -- with the smaller amount of money that we appropriate in July didn't get out all during the rest of July, during August, and it was well into September before we got a lot of (inaudible) funds released.
So the money is there. And then your question about will this sort of stall any future needs that we have, I don't know what those needs are, but I do know, in the case of Katrina three years ago, that we probably have appropriated, over a period of three years, five different times to make up for what we didn't know early on was needed.
We're probably in the same position, somewhat, for Iowa and the Midwest, maybe even for Galveston. You try to decide X number of dollars are needed. A year later, you find out that didn't take care of it all and so you appropriate some more money.
And that tends to be a non-controversial consensus sort of thing to do as long as it's, you know, there's a designated need for it. And so I don't think it's anything to worry about, but -- but it's something that Senator Harkin and I are going to have to stay on top all the time.
Say, I wanted to correct for Mary Rae Bragg, if she's still on.
QUESTION: Yes.
GRASSLEY: I said that in January the next payment was made for Postville.
QUESTION: Right.
GRASSLEY: And it's June.
QUESTION: Oh.
GRASSLEY: So there's no immediate problem.
QUESTION: Good enough. Thank you, sir.