GRASSLEY: You know, employment's (sic) at 9.8 percent, and looking at the balance of the year, next year, given the most optimistic, economists are predicting at least a jobless recovery. The stock market has recovered somewhat because of publicly traded mega-firms having cut costs -- sometimes brutally -- and they've returned to profitability.
Economic policy-makers agree that at least 70 percent of the new jobs will come from the small-business sector. Unfortunately, that's a sector that the president and the Democratic leaders of Congress have ignored. And so let me justify that last statement.
One of the main reasons I opposed a second installment of the financial bailout bill, also the stimulus bill, also the auto bailout bill, and the president's budget and the president's health care plan, is the bad signals it sends to small-business America, the job creators of our country.
The financial bailout has helped big banks and big business, but left small business in a credit crunch. The stimulus bill devoted a very paltry portion of tax relief to small business. An analysis by my tax staff on the Financial Committee found that less than one-half of 1 percent of the tax relief in that stimulus bill went to the small business.
Everyone has been -- everyone's seen very weak results on the spending part of the stimulus bill. The president's budget would have -- would have marginal tax rates on small business likely go up by at least 20 percent. The president's health care plan carries heavy mandates on small business and could drive the already expected high marginal rate to the highest levels of a generation.
These are all the wrong signals to send to the engine of job creation, small business.
Now, along those lines, then, I've introduced a bill to fill the void left in all of the policy-making this year. It focuses on small-business tax relief.
The bill follows the extensive tax relief I got through Congress last year, despite intense opposition from the speaker of the House and the House tax committee chairman, to help small businesses and individuals who have been hurt by the floods and tornadoes of Iowa 2008.
My pending bill, the Small Business Tax Relief Act, would leave more money in the hands of small-business owners, so that they can hire more workers, keep paying the salaries of their employers (sic), and make additional investments to lead to new jobs. In fact, 70 percent of the new jobs are created by small business.
This bill would help create verifiable private sector jobs that will put people to work and help get the economy moving in the right direction.
I'm ready for questions.
Let's start with Kerry.
QUESTION: Thank you.
Senator, do you have any idea why there is such a shortage of the regular flu vaccine? I just got through standing in line for over half an hour at a clinic here. My doctor's office is out of it. And they told some of the people that were in line behind me that they may or may not have enough for all of them.
GRASSLEY: Well, since it's being distributed by the private sector, based upon, I presume, some sort of a formula that -- you know, that's been put together with the help of the CDC, but I don't know that for a fact, but that would be my presumption, you know, I -- I'm not sure that I can give you an explanation.
But I do know that -- that whether it's the regular flu vaccine or whether it's the H1N1, H1N1 has brought prominence to the necessity of getting flu vaccine shots this year, and so I suppose more people are -- are demanding it because they know that it's already hit, you know, with a school closed down here yesterday because of H1N1.
But if you -- even if you don't want that shot or can't get it right now, because you might not be on a priority -- and that priority is being suggested by the health professions and it includes, for instance, people working in hospitals and health care workers and I don't know who else, but they're some of the prominent ones -- anyway, it brings emphasis to it that we never have had this early in the flu season.
Because, in a sense, talking about H1N1, the flu season hasn't ended since it was talked about a year ago right now. It's just been going on and on.
And I think that people are taking advice and it's creating problems for people in your part of the state, maybe all over the country, for all I know.
Mike Myers? No.
(CROSSTALK)
GRASSLEY: Well, go ahead, Mike, and then I'm going to go to Tony Leys of (inaudible). Go ahead, Mike Myers.
QUESTION: Senator, give me, kind of, a review, please, of where these -- where the effort is going now on the health insurance bill.
Are you picking up some support or thorough review of the financial implications from what are some people call moderate Democrats? I'm thinking about Blanche Lincoln and Lieberman. Is the train slowing down?
GRASSLEY: I don't know that yet. So I'll give a process answer to your question.
But where we're going is just, kind of, the normal process that happens after the committee gets a bill. We get a final score from CBO. And if that's revenue-neutral, I presume the bill's going to be voted out of committee this year -- this week.
If it's not revenue-neutral, I presume there's got to be some change in policy, and that'll have to be done in the full committee and then get another score.
So that might put it over into next week. But it's possible, if we get a score today -- early enough today, we'd have the bill done today.
And then don't forget it's got to be merged with the Senate health bill. And then, after you do that, I think the new process here -- and when I say "new process," you know, it's being pushed legitimately at the grassroots that we ought to have 72 hours to read a bill; it ought to be on the Internet; it ought to be out there for the public, and that we ought to have a score.
And I think the group of people that you mentioned, like Lieberman and you didn't mention Mark Warner, but he's another one -- they are demanding that. And I think it's legitimate to demand it here, not only because it's the right thing to do in every piece of legislation, not only because the grassroots of America are asking all of us, "Have you read the bill?," and "Is it read?," and "How much is it costing?
But also the grassroots is up on health care reform because it's restructuring one-sixth of the economy, which Congress probably hasn't ever done before. And so all the more reason to make sure it's done right and everybody understands what we're doing.
But it seems like what I've been able to pick up, we have senators like Lincoln, Bayh -- and I'm reading from a list here -- Landrieu, McCaskill, Ben Nelson, Pryor -- well, let's see -- Webb and Lieberman, and I think there might be even some others that are just -- there might be several reasons why they're together.
I think some of it, in the case of Nelson, would be in reaction to a public -- public option. In the case of -- of Landrieu, public option. Maybe with Lincoln as well. I think I had a conversation with Bayh two or three months ago, and he had some question about a public option. And -- and then maybe the others is just question about is it going too far, and particularly if it's not paid for, or maybe how it's paid for is another issue.
And then you have the 158 Democrats in the House of Representatives that signed a letter to Pelosi saying that -- that you can't tax these Cadillac plans, et cetera, et cetera.
There's -- there's just some nervousness, I guess I would call it -- not any more so than in the Republican Party -- about some of the things that might be in the bill; and maybe even more nervousness about what might be coming down the road when it's merged with the Health bill or even maybe a more radical approach that Pelosi's putting together.
QUESTION: Well, I guess...
(CROSSTALK)
QUESTION: Do you see a coalition emerging from this group you just mentioned that can slow down and rework this bill that does come out of Harry Reid's shop?
GRASSLEY: That would be directly related to these people I named, and maybe some others, and 40 Republicans standing together and say there's not going to be cloture.
But if these guys that I've listed could be coached into cloture because it's simply procedural -- and you've heard that argument -- but it's really the most crucial vote we can have in the United States Senate on health care, the cloture vote, then -- then there could be some changes made.
But if these folks aren't willing to stand and say that they're not going to vote for cloture until such and such changes are made, then I don't think it's going to have much of an impact.
Tony Leys?
QUESTION: Thank you.
QUESTION: Thanks, Senator.
On your amendment to increase Medicare payments to Iowa doctors...
GRASSLEY: Yes?
QUESTION: ... how confident are you that that will be part of the final bill? And how much difference will it make?
GRASSLEY: Well, I think it's got a good chance of being part of the final bill. And I think that it will -- and based upon the receptivity of it by the medical association, particularly in rural America, that it will -- that they feel it'll have a big impact, not so much what we're doing immediately the first two years with the increase -- or making sure that they don't get cut, but coming up with a legitimate formula for determining practice expense in out-years and forcing CMS to do it.
Our bill goes a little bit further than what's been done in the House of Representatives, forcing CMS to take action and change formula. But since there's something very similar in the House bill with -- with what I got in the Senate bill, I think you've got a good chance of it surviving.
QUESTION: In the end, would states that now have high payments -- would they have to accept getting lower payments? And how likely is that?
GRASSLEY: After two years, that could happen. But right now, in the first two years, it's not going to happen.
And -- and if that were -- well, that could -- if you just took my amendment the way it is, that would be the outcome after two years. But you would also have the possibility after two years that "hold harmless" that we have in the first two years could be continued in the out-years.
QUESTION: And wouldn't that raise costs?
GRASSLEY: Yes.
QUESTION: OK.
And do you think it's likely that states like Florida, some of those big, high-cost states are really going to allow cuts in their payments?
GRASSLEY: Probably not.
But the point is that we -- you know, maybe the fact that -- that the trust fund or -- no, in this case it wouldn't be the trust fund because this is Part B. In the case of costs at that time on Medicare as a whole, it might make a factor.
Plus, let's see what they come up with in the sense of -- of bringing equity, you know. You're talking about, for instance, something that might be mundane, but it has a very negative impact on rural doctors when you take rental property, rental housing, as a basis for determining the cost of rent for doctors, which ought to be more commercial.
And -- but that's what they've been using for the last decade, I guess.
QUESTION: Thanks, Senator.
GRASSLEY: Mike Glover?
Ed Tibbetts?
QUESTION: Senator, I've heard varying characterizations of how the Baucus bill would affect the state funding picture for Medicaid. How do you see it?
GRASSLEY: Well, I can quantify it, that after the year 2014, I believe it is -- it could be 2019 -- but, anyway, $33 billion is the figure that would cost the states.
Now, early on there's some help for states. And of the new -- of the new entrants going up to 133 percent of poverty on Medicaid.
And you did ask about Medicaid, is that right?
QUESTION: Yes.
GRASSLEY: Yes. $33 billion. And then there's some help. No state would have to pay more than 10 percent of the new entrants, and those entrants would be between 100 percent and 133 percent of poverty.
So it's -- but I guess the best answer to your question is, just $33 billion over the window (inaudible) that we're -- that we're working with. So the window is between now and 2019.
QUESTION: Is there any way to say how that might trickle down to Iowa? Because I've heard political figures...
GRASSLEY: Yes.
QUESTION: ... in this state call it a rather cataclysmic effect on the -- on the -- on the state's budget. But I know the Urban Institute and the administration had worked together to come up with estimates that characterized them as -- that have been characterized as fairly minimal.
GRASSLEY: Yes. Let me get back to you. I think it is kind of minimal.
But -- but don't forget, even something minimal, when -- like next year the state legislature and Governor Culver is facing at least a $600 million and maybe it's even more than that -- maybe it's $900 million hole that they got to fill, and you're looking at putting more people on Medicaid, and it's a -- it's a mandate that they be put on, it's -- it could be considered.
Plus, Medicaid becoming the highest cost in any -- almost any state budget anymore.
QUESTION: And if I may, with just one other follow-up, can you talk a little bit about how this might affect the SCHIP program, because I think there were some amendments late that had some impact on that, right?
GRASSLEY: Senator -- I think Senator Hatch had amendments in on that. Let's see. No, Senator Rockefeller.
It would -- gosh, that was at midnight. I'm not sure I can tell you exactly. Let me -- I'll have -- I'll have my staff get back to you.
QUESTION: That's all I have.
GRASSLEY: But there is some change before -- there is some change -- here, let me tell you what I remember. I -- I can't define it for you, but there was some change that was proposed to take effect before 2013, and opposition to that was to leave it just as it is, or else let's turn it around.
Or let me make it easy. We'll just have Becky Shipp (ph) call you.
QUESTION: That's good.
GRASSLEY: Tim Rohwer?
QUESTION: Yes, Senator.
In your opening remarks, you mentioned about past challenges, I believe, who had been from Representative Pelosi on tax relief bills.
Now, on this bill that you've just introduced, do you expect that it will go, you know, any -- do you expect any challenges from her, or you know, from the House on this? Or do you think it will go through easier?
GRASSLEY: Oh, yeah, I think so.
I -- I think that -- and plus, it's going to get worse in 2010 if we let it happen. And with the numbers that we have on our side of the aisle, it could very well happen. You're going to end up in a situation where small business is going to have a higher marginal tax rate than corporate business.
Because when you -- when you go under the sunsetting of the 2001 tax bill, you take that up to 39.6 percent. And since most of the small businesses aren't incorporated, you're going to have a higher marginal tax rate for small business than you are for corporate America.
See, and we -- one of the things that I did in the 2001 tax bill when I was chairman of the Finance Committee, we brought equity between small business and big business -- big corporate business at 35 percent marginal tax rate.
Now, they're not going to increase the corporate tax rate. In fact, the corporate tax rate ought to be reduced. But it has a significant impact on small business formation if you have a higher marginal tax rate than corporate America.
And I can't give you any figures for the 2001 tax bill, but I remember when we reduced marginal tax rates down to 28 percent for individuals, including small business, in the 1986 tax bill, between 1986 -- and they went back up under President Bush when he -- when he changed his tune about "Read my lips: No tax increase," and he agreed to one in October of 1990, we had a phenomenal explosion of small business during that four-year period of time and because people are encouraged.
Then one other thing I can probably didn't say that I should have said in my opening statement is that when -- when small business has these higher marginal tax rates, and they tend to operate more off of cash flow than they do off of -- off of loans, then you reduce their cash flow by increased marginal tax rates, then obviously you're going to curtail their expansion and curtail their business to hire new workers as the engine of small business they no longer are.
Christinia?
QUESTION: Hi, Senator.
I was wondering if you had heard any follow-up from the treasury secretary in response to the letter you and the other Republicans sent last week.
GRASSLEY: No, we have not. But I'll -- I'll make a check just in case something came in today and we'll get back to you.
Do you want to leave it that you'll get back to her either way or -- or -- yeah, we'll get back to you either way, whether we got an answer or didn't get an answer.
QUESTION: Thank you.
GRASSLEY: But remember, I assume you're talking about the one in regard to TARP.
QUESTION: Yes, I'm sorry.
GRASSLEY: Are you done, Christinia?
QUESTION: Yes, thank you.
GRASSLEY: OK.
Kathie Obradovich?
QUESTION: Senator, are you getting a little impatient with the continued silence from this alleged mystery candidate who's supposed to be challenging you?
GRASSLEY: No. Let me tell you why: Because, you know, I've already got three opponents. I think two that are very serious. And you can't take anything for granted. If you did take something for granted, Iowans wouldn't take you for granted. They take this very serious if their political leaders take them very much for granted.
So I look at -- you know, I won't name my opponents, because you aren't supposed to do that, but there's two out there and possibly three out there already, and you have to take them seriously.
First of all, they're out a year ahead of time. And those -- normally, I get an opponent a month or two before filing. And so, I have opponents now out there 12 months against me. And -- and they're making good use of -- of various tools that are out there that they can use: you know, YouTube and Facebook and their Web site and e-mail and stuff like that.
The other thing is, I -- I had a conversation with a senator I won't mention from another state. But I was telling him about my opponents and that I -- I can't take them for granted. And he said, you know, I took what he considered a third -- a third -- let's say a third-level candidate against him and he said, "Before it was over, he was the first rate candidate and I only won by, you know, a small percentage. Not even 1 percent."
So, you know, that's a lesson to me as well. But it's not a lesson I need, because I'm running hard for reelection. And that's the only way you can do it, because, as you know, in politics, 24 hours is a -- is an eternity.
QUESTION: Thanks, Senator.
GRASSLEY: OK. Anybody else? I've gone through the list. I didn't mean to leave anybody out, but jump in, anybody.
Oh, I did leave out Sue of WHO. OK. She's probably just recording.
Who -- who jumped in here?
QUESTION: It's a math challenged Mike Myers. Would you repeat that figure regarding the Medicaid costs of the...
GRASSLEY: Yes, sure.
QUESTION: ... because overall, sir, or it was applied to Iowa alone?
GRASSLEY: No.
$33 billion nationally over the next 10 years.
But -- but don't forget -- remember, it doesn't even kick in until the year 2014, I believe. So -- so it's -- effectively, it's $33 billion over six years -- five years -- five or six years.
QUESTION: I think I understand. OK. Thank you.
GRASSLEY: Yes. Anybody else?
OK. Thank you all very much.
END