GRASSLEY: I voted against the economic stimulus bill this week because it contained too much spending, including $300,000 for every job created in long-term entitlement commitments that I have ought to come in the regular appropriation bill and not through the subterfuge of a stimulus. I can also say it didn't have enough incentives to encourage investment, risk taking, all which is very necessary for entrepreneurship and the kind of activity that we are all know gets people back to work not only for today, which is the purpose of the stimulus, but for the long haul.
So the bill continues to be managed in a pretty heavy partisan way by congressional leaders. They don't seem to be following the advice of President Obama a week ago Monday when he said Republicans had a lot of good ideas, we ought to look forward and working with them and try to make it more bipartisan.
Most efforts like that to improve the bill and make the expenditure of $838 billion as effective as possible have been shut down. Congress needs to do whatever it can to create jobs and sustainable jobs. And I hope the next legislative effort, whatever that is, starts in a way that avoids this political machine-type outcome and returns to the bipartisanship, particularly, the bipartisanship that's represented by cooperation between this senator and my chairman, Senator Baucus.
I want to do one last issue, and that is a bipartisan bill. As an example, getting back to bipartisanship, a bill called EAT SAFE. That is an acronym that I won't go into the long-term name of the bill. The purpose of the EAT SAFE bill is to improve the tracking of food imports and better detect tainted, unsafe food. The legislation authorizes funding for the Food and Drug Administration and the Department of Agriculture to hire more personnel.
The purpose of finding smuggled food imports, the legislation requires border patrol agents to be trained on food safety becausethey are the first line of defense. And the legislation would require the FDA to certify private labs who are employed to test imported food. And there's no standard for them and no approval by FDA. And that needs to be done.
And then it would set penalties for those same labs that circumvent the U.S. Department of Agriculture's import restriction system.
And I guess I didn't tell you, but that's a bipartisan bill that's being introduced by Senator Casey of Pennsylvania and me.
Mike Myers?
QUESTION: Senator, on the -- you're a negotiator. You're on the conference. Senator Harkin, your colleague, said yesterday that more money should go into higher education, school construction, and such. And he mentioned the $70 billion AMT -- what you just said.
Why shouldn't the AMT be taken care of through, perhaps, regular appropriation process? And will you defend it in conference?
GRASSLEY: Well, I suppose I could raise the same question back about maybe these appropriations he's talking about ought to be done in the regular appropriation process as well.
GRASSLEY: The purpose of the AMT is it's not quite as stimulative as some other tax provisions in the bill, but it is scored by CBO as being stimulus. And I do agree with Senator Harkin, though, on the point that -- of construction generally. Any construction, whether it's school, university, or whether it's highways or any other construction that can be done within the two-year period of time, I would support that.
So I don't disagree with Senator Harkin on that. I might disagree with him on the extent to which, for instance, you put money into programs and you hire and that's only for two years under this bill. And you hire teachers that are going to train more kids and then at the end of two years, are you going to stop that program and get rid of it? Well, nobody wants to do that. So that's an example of a spending program and not a stimulus program. And that ought to go through the regular appropriation process.
If Senator Harkin is saying to me that AMT ought to go through the regular tax process, I don't disagree with that, except we're in a position where, right now -- in other words, because of timing, I don't agree with that. Because, right now, we're in a position where AMT is hitting 23 million Americans. Most of them won't actually be hit for a year from now when they file for this year's income tax, but for the self-employed that have to file quarterly, they ought to be paying that -- if they're middle-income people, part of that 23 million, they ought to be paying that tax now and they shouldn't have to pay it now because it was never intended for them to pay. It was only intended for millionaires to pay it.
So it's -- part of my answer to you, Mike, is process. Part it is substance. There's not really a whole lot of disagreement with Senator Harkin. It's just when and where you do this stuff and why you do it one place as opposed to the other.
And let me get back to your original comment. You said I'm a negotiator. I am a negotiator, but yesterday at 2:30, I was not invited to negotiating. Now, today, I am invited to negotiate. So, you know, who knows whether Republicans are going to count in this process or not.
If they want us to count, I will count. But it could be that this is going to be partisan driven.
Mike Glover?
QUESTION: One brief follow up...
GRASSLEY: Yes?
QUESTION: That was a 2:30 meeting and it was, what, Democrats only, sir?
GRASSLEY: As far as I know. But when I wasn't invited, I wasn't there, so I don't know really who was in the room. But as far as I know there were no Republicans there.
QUESTION: Thank you.
GRASSLEY: Mike Glover?
QUESTION: I'm fine, sir.
GRASSLEY: OK. Thank you, Mike, for being with us.
Jim Boyd?
QUESTION: Brad Ehrlich standing in for Jim Boyd.
I'd like, Senator Grassley, for you to compare when you first took office in '81, we were in a recession. And though Barack Obama said this is the greatest crisis since the Great Depression, this correlates closer to the recession of '80 -'81. What kind of stimulus packages were passed in the early 1980's when you first look office and compare it to the massive amount of money that we're spending right now? Or planning on spending.
GRASSLEY: There wasn't a spending stimulus package. There was a tax cut stimulus package. And it would be the Tax Bill of 1981. I can't give you a figure on the size of it. My guess is it's a lot less than even the tax provisions we have in this one because I think, in this one, just for tax rebate, there's at least $115 billion in this one. So I can only tell you that it was done through taxes and not done through spending except for if there was high unemployment, which there is right now -- about where it was in 1982 -- we would have appropriated money for increase in unemployment compensation or for more unemployment compensation not an increase -- more unemployment compensation.
And then there's the -- there's the things like Medicaid and Medicare that just kind of automatically go up if more people apply because they're entitlement. So I would limit it to no spending except things that happen automatically because of more unemployment and the Tax Bill of 1981.
QUESTION: And I have one quick follow-up question. It's a two- part question. I'm worried about two things. You know, we're talking about $1 trillion in new bank liquidity, you know, whether it's through the toxic bank or however we push that money out and, right now, it's look at an $838 billion stimulus package.
I'm worried about two things. One, the debt load that the next generation is going to have to deal with this and then, second, the devaluating of our dollar because I don't think the Chinese are going to buy up our dollar if it tanks when we shove all this money out into the free market.
GRASSLEY: Well, that's one of the reasons so many of us voted against it is because of the long-term debt. That long-term debt is more related to the $838 billion that you call stimulus as opposed to the bailout because there's some investment in stock of banks and corporations in the stimulus. Some of that we'll get back. Some people are saying we're going to it all back. But it's going to be years before we get it back.
So in the meantime, you've got a great deal of expenditure for interest that would be the same as if it were permanent debt. And so the value of the dollar right now is not a problem, but the value of a dollar when we get inflation, if the Fed doesn't handle it right down the road three or four years, could be the biggest rate of inflation we've ever had in this country.
And the -- and that's what we had in '79 and '80. That's one reason that Reagan was elected president. So let me try to sum it up.
Right now, the value of the dollar is about $1.30, give or take a little bit towards the euro. It's been that way for three or four months. It doesn't look like that's going to change a whole lot. Right now, we're going -- we're borrowing a lot of money or the Fed is putting a lot of its money into these investments that, hopefully, won't be expenditures.
But two reasons why that isn't a problem right now but will be a problem. So I'm not saying that your question is not appropriate. Right now, it's not a problem because you and I as consumers are not spending and corporations aren't spending. And the velocity of money is very, very slow in proportion to where it usually is.
So there's are a big vacuum here that government can fill now without worrying about inflation and decreasing the value of the dollar. But when the economy improves which, hopefully, is less than the two years, but whether it's one, two or three or four years, whenever it starts to improve, if the Federal Reserve does not manage the economy -- when I say manage the economy, I mean manage the quantity of money -- and when it puts things back into the -- and that depends on how slowly or rightly it puts things back into the economy.
In other words, sells off this stock that it's invested in -- we could have hyperinflation. And it's a very, very big danger. And the more that the government does, the bigger potential problem that is even though it might not be a problem right this minute.
So if caution is part of your question, I don't know whether enough caution is being taken.
QUESTION: Thank you, Senator Grassley.
GRASSLEY: Yes.
Mary Rae Bragg?
QUESTION: Senator, I'm wondering are there provisions for oversight in this bill? Or is that something that is going in a separate measure?
GRASSLEY: Well, in this bill, there's not a lot of new oversight. And so it would be done in the regular way through several things: what the Government Accountability Office does, that's an arm of Congress, what inspectors general do within each department, and then what Congress does through its committees of oversight.
Now, that's the stimulus bill. You've got -- you can call it the bailout bill of last October. You can call it the TARP bill, or you can talk about the things that Geithner was on television yesterday talking about.
The TARP bill, that's injection of money into banks and the buying up of toxic paper and helping home foreclosures. There's a lot of new oversight in that bill, but that goes back to October except for Senator McCaskill of Missouri and me working to plug some holes that we didn't anticipate last October.
For instance, one of the things I got in that bill in October is special inspector general. But, quite frankly, he's had problems with the legislation not giving him full authority. So we've tried to amend that to get him full authority that he needs to really do his job.
But there's plenty of oversight in the TARP bill, but nothing special in the stimulus bill.
QUESTION: But to clarify, what the oversight in the TARP bill only applies to what was in that bill or can it carry over into this?
GRASSLEY: Well, it's all in the Treasury Department. So the only way it's going carry over into this would be what the Treasury expands. And I don't think in the stimulus bill, the Treasury is going to be spending much money.
QUESTION: Uh-huh.
GRASSLEY: We -- the bill that I was -- another area of oversight that I tried to get into the stimulus bill didn't enhance people being involved in oversight, but it was going to protect ranking members -- and that would be Republicans that used to be chairman of committees. Sometimes ranking members can't get information from the executive branch as easily as chairmen can.
So I tried to put an amendment in to make sure that a ranking member had access to documents the same as the chairman did. And that bill -- that amendment was not considered by the Senate committee last week when we were dealing with the stimulus bill. So I'm disappointed about that.
But on the other hand, I've had some fair cooperation from Chairman Baucus, so I've been able to get a lot of information along that line. But just in case I didn't have that cooperation, that's why I think Republicans ought to have access to information the same as Republicans -- or, I mean, as Democrats. Or Republican ranking members ought to have access to information the same way a Chairman would.
And I'm not saying that because we have a Democratic president because I've found problems even when I was a Republican chairman getting information from the executive branch. So they're kind of impeding our constitutional responsibility of oversight.
QUESTION: Uh-huh.
GRASSLEY: Tim -- or Mary Rae, a follow up?
QUESTION: No, sir. Thank you very much.
GRASSLEY: Tim Rohwer?
QUESTION: Yes, Senator. I understand earlier, you mentioned -- you mentioned about the bill. You mentioned that it contains too much spending and not enough incentives to encourage investment.
Could you describe -- I know you've talked about this in the past -- what some of these sent incentives are?
GRASSLEY: Oh, the tax incentives. OK. There's two or three that are big. One would be net operating loss carry back. That's companies that are not making a profit today or maybe didn't in two or three years, you could always carry back, I think, two years. This bill allows carry back for five years. Over the long haul, that doesn't cost the Treasury any money. Up front, it does.
Now, there's a shortcoming in this bill that out of $838 billion, only eight-tenths of 1 percent of it have tax incentives for small business. So there ought to be more tax incentives for small business. And an example that I offered in amendment that we weren't able to take up -- and you'd think the Democrats would take it up and have it be their product, not a Republican's product -- and it's just taken word for word exactly what President Obama wants to do to have zero cap gains tax for small business where it's invested for at least five years.
In other words, it's got the principle of encouraging investment in small business because that's the employment machine -- creation machine of our economy. You know, 70, 80 percent of the new jobs are created in small business not in big business.
Then another example that is in the bill would be accelerated depreciation where you would be able to write off 50 percent of your investment the first year instead of spreading it out over a ten-year period of time on an equal 10 percent each year.
And then other one would be what we call expensing where small business would be able to -- I think it's up to $250,000 of investment in depreciated investment would be able to write it off in one year instead of spreading it out over the ten years.
Jane Norman?
Oh, Tim Rohwer...
QUESTION: Just one quick question again. You mentioned too much spending, you know, I mean, in general, you mean like that $838 billion, would you like to see it smaller than that then?
GRASSLEY: Well, it would be smaller under the definition I give you. But I wouldn't care even if it was an $838 billion bill if all that $838 billion was going to be spent in the two years. But it's -- that's stimulus. But there's spending in it that's most -- or over half of the expenditure part that is going to be spent in out years and not going to be stimulative.
I'll give you an example: $12 billion for computerizing medical records. Only 3 percent of that $12 billion is going to be spent in the first two years. A lot of it isn't going to be spent until 2016. That's not stimulative. That's spending. That ought to be done through the regular appropriation process not use the subterfuge of a stimulus package which is absolutely necessary to pass at a time of recession to do something that ought to be done more thoughtfully and not in a two-week period of time but maybe over a period of weeks and making sure against other priorities that take appropriated money.
OK. Jane Norman?
QUESTION: Senator, this provision that you and Senator Sanders won adoption of on Friday on the H-1B visas, did that stay in the bill till the end?
GRASSLEY: Well, yes, it did. But I don't know how it will do in conference. I hope it goes along in conference OK. And, by the way, for Tim and the other people that have heard me say it was spending too much money and I got this amendment adopted, this amendment doesn't cost anything.
It just says that if you're getting money through the stimulus bill, that you should make sure that you hire Americans first. And I said stimulus bill. It applies just to the TARP bill.
If you're getting money from the TARP bill, you -- you've got to make sure that you make a good-faith effort to hire Americans first. And implied in it is if you're going to lay people off, you're going to lay off H-1B workers first before you lay off American workers.
QUESTION: This bill, Senator, has gotten some criticism from advocates for immigrants -- the American Immigration Lawyers Association said it's an example of people in a crisis turning inward and even used the word "reactionary."
How do you respond to that?
GRASSLEY: Well, it's very easy to respond to it. Let's look back at what the theory behind H-1B is. And that -- that theory or basis is not being followed. And it's not being followed because, quite frankly, the law is not specific enough. And that's why there's a bipartisan bill called Durbin-Grassley that's in to reform it.
This amendment just follows a little bit along that same theory. And what -- I'm not against immigration. You can tell every one of those lawyers that Chuck Grassley will be for H-1B workers, and I'm not opposed to legal immigrants coming to the country. I'm not opposed to them coming here to work. But there's this kind abuse that companies will hire H-1B workers because they can hire them at a lower wage than you hire -- than you can hire American workers.
And so what Durbin-Grassley is trying to do is just to make sure that every company that wants to use an H-1B worker has made a bona fide effort to find American workers first. And then if you can't find them -- and that's mostly in management and high-tech jobs, then bring them in from the other country.
So I don't know why anybody can find fault with it if we aren't opposed to H-1B workers and H-1B workers, the program is being abused. You've got -- like I said, this program was intended for engineers, technical people, managers. We had the homeland security do a study, and they found out that we had H-1B workers that were coming in and running Laundromats, as an example.
You know, well, and they're supposed to come in and work in certain counties. They weren't working in those counties. And I -- and if you want a lot of examples of abuse, out of 60,000 workers coming in, I think we found out that potentially 21,000 -- let's see, that would be -- yes, up to about a third were coming in and not doing what they were brought in to do. I guess it's more accurate 20 percent -- my staff is reminding me. But it's still a significant amount of fraud within the program.
Or you've got situations like this. We have -- I call them H-1B pimps. There's probably a company set up to process H-1B workers. So I think we had a situation like in Maine. They were stationed in Maine. So Maine pays less than New York City pays. But a lot of these people were working in banks in New York City, as an example, and working for a lot less than Americans, working for Maine wages in New York because, you know, some company would float out thousands of H-1B, bring them in, and they'd be kind of like a Manpower, Inc. organization would do for American workers, for temporary workers, do it for H-1B workers and just refute the purposes of the law.
Jane, you got a follow up?
QUESTION: Yes. This just applies to banks and the TARP though, right? This specific amendment?
GRASSLEY: Yes, I think, as a practical matter, that would be right. Yes.
QUESTION: And why do you think it doesn't have much -- you seem to think it doesn't have much of a future in conference, is that right?
GRASSLEY: Well, I'm telling you, probably in Chuck Grassley had offered that amendment by itself, it would have been, you know, it wouldn't have been -- it would have been rejected because a lot of people don't want to deal with immigration even as an issue that's as clear cut as abuse of H-1B, as Durbin and I have been trying to tell our colleagues over the last three years.
And, by the way, your question about banks, yes. But a more accurate way of saying it would be that any TARP recipient would be covered by the Sanders amendment.
OK. Christinia?
QUESTION: I'm good today. Thank you, Senator.
GRASSLEY: OK. Does anybody else...
QUESTION: Senator?
GRASSLEY: Go ahead.
QUESTION: Secretary Geithner's presentation yesterday on this rescue plan was rather underwhelming for some people on Wall Street. Big sell offs. How do you gauge his proposal and the reaction to it? Was it justified?
GRASSLEY: Well, it may not be all his fault. Part of the fault my lie with President Obama who did an outstanding job in his news conference but he sure built up expectations of what Geithner might say. And then Geithner didn't have any specifics, and more importantly, everybody thought Geithner was going to tackle the housing problem through taking toxic paper out of the banking system. And he was only going to put $50 billion into it. And look at Barney Frank's reaction to that that it wasn't enough.
And so we go down 400 points. You can quantify. You don't have to have (inaudible) like me saying that the Obama administration is screwing up. You can quantify it by a $400 drop in the...
QUESTION: 400 points?
GRASSLEY: Points, yes. I'm sorry. Points.
QUESTION: So where do we go from here? Wait? Patience? What?
GRASSLEY: Well, Congress can't do too much except, in our oversight, bring up the issues that this is no way to build confidence. And they're going to have to go back to the drawing board and be more specific and build that confidence.
I mean, they have got $350 billion out there. Now, we might get involved if it's not enough money and they come back to us. But right now they aren't asking to do that. They're trying to do it through the rest of TARP and through whatever reserves the Federal Reserve has.
But -- so their actions is going to make -- be more determinative than what Chuck Grassley says because you're asking me what do we do now. They've got to do it. I'm going to be encouraging of their doing it. And I'm going to be reserved in my criticism because I think that we can talk ourselves into a worse recession than we're in. And I think the president and Geithner, what they say Monday night and what they do on Tuesday is evidence of that.
QUESTION: Thank you.
GRASSLEY: Anybody else? OK. Thank you all very much.