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Public Statements

U. S. Troops Readiness, Veterans' Health, and Iraq Accountability Act, 2007

Floor Speech

Location: Washington, DC



Mr. GRASSLEY. Mr. President, when we debated the Senate budget resolution in committee and on the floor over the last few weeks, I raised a concern about the transparency of the budget. One of the problems I pointed out was the over reliance of the budget resolution on unspecified revenue raisers. As ranking member of the Finance Committee, I referred mainly to Finance Committee policy demands that weren't realistically reflected in the budget. I referred to currently expiring tax, trade, and health and welfare spending provisions. The expiring tax relief provisions within the first year of the budget resolution alone amount to $135 billion.

In discussing the budget, I also referred to the track record of the Democratic leadership, while in the minority, of spending the same revenue raising offsets over and over again. There is a clear risk of this deceptive behavior having a real fiscal impact now that Democrats are in the majority. As has been proven over the last few weeks, the Democratic majority can't reduce spending. So taxes are raised to pay for more spending while the spending-driven deficit remains high.

What we have seen is an obsession by the Democratic leadership for going to the tax side of the ledger and gross up the spending side of the ledger. Once again, spending wins out and the taxpayer loses.

Now, comes the Wyden-Craig amendment. It increases popular spending--in this case we are talking about rural schools--and uses revenue raisers to mask the deficit effect of the spending. The budget resolution contains 39 reserve funds that authorize new spending, paid for with unspecified revenue raisers. This rural schools spending program is the subject of 1 of those 39 reserve funds. So, today, Senators WYDEN and CRAIG go to the tax ledger and remove some of the work product of the Finance Committee tax staff to use for their new spending program.

As ranking member of the Finance Committee, I view this effort as an intrusion on the jurisdiction of the Finance Committee. During my tenure as chairman, I am pleased to say that this jurisdiction was protected. I have indicated my concern to my friend, Chairman BAUCUS, that this is the start to a slippery slope of erosion of our committee's jurisdiction.

We have seen that those who advocate new spending can't find a dollar of spending offset within a $2.7 trillion budget. From this fiscal behavior, we can expect that the spending of these amendments will continue to be offset from the same pool of offsets. The Finance Committee tax staff can't do the heavy lifting of finding offsets for every new popular spending program.

By the terms of the Senate Democratic budget resolution, that pool of offsets has already been subscribed for expiring tax, trade, and health and welfare spending.

The Wyden-Craig amendment goes to part of the limited group of offsets and draws from previously passed Senate offsets and a small group of already identified tax gap offsets. These offsets are drawn from the limited group of $43 billion in revenue raising offsets I referred to in my floor statements.

There is a new revenue raiser in the Wyden-Craig amendment. I support it. It would permit section 457 retirement plans to employ a Roth IRA option.

Some will recall from last year's tax reconciliation conference report a similar proposal. The proposal permitted more taxpayers to convert traditional IRAs to Roth IRAs. That proposal met with severe criticism from the Democratic leadership, their allied liberal think tanks, and some in the east coast media who tend to be sympathetic to the views of the Democratic leadership.

I am pleased to see the Democratic leadership has changed its mind. With the Wyden amendment, and the Roth section 457 plan proposal, the Democratic leadership is now on board with the merits of the Roth IRA conversion concept. It will be interesting to see if the liberal think tanks and east coast media are consistent critics or whether they have changed their minds, now that this concept is employed by Senate Democrats. I will be looking for their reaction.


Mr. GRASSLEY. Madam President, the Durbin amendment is a perfect example of why authorizing on an appropriations bill ought to be discouraged. I know many Members are under extreme pressure from their hospitals to support the Durbin amendment, but I would encourage you to read the actual language and consider the consequences of what this amendment actually does.

This amendment will lead to anarchy in the Medicaid financial arrangements. As a result of the amendment, CMS will be prohibited from banning bad-actor States from reinstating the questionable schemes Congress has been trying to root out since 1991. This is because the Durbin amendment broadly--very broadly--prevents CMS from taking any action relating to this rule or any rule that would affect Medicaid or SCHIP in a similar manner.

For years, Medicaid was plagued by financial gamesmanship. States used so-called intergovernmental transfers to create scams that milked taxpayers out of millions, even billions of dollars. An example: A State bills the Federal Government for a $100 hospital charge. The hospital gets the $100 payment, and then the State would require the hospital to give $25 of it back to the State. In my view, that is a scam. What happens, then, to the $25? In the days before Congress and CMS cracked


down on the behavior, the money could go to roads or to stadium construction. That is right, Medicaid paid for roads and stadiums instead of health care for the very poor. Because of the way the Durbin amendment is written, States could return to the financial schemes where they used Medicaid funds for porkbarrel projects.

In 1991, 1997, and again in the year 2000, Congress took specific action to limit a State's ability to use payment schemes to avoid paying a State's share of Medicaid. The Durbin amendment blows all that away.

I would like to read from a letter from Leslie Norwalk, Acting Commissioner of CMS, released today:

The Durbin amendment is so broadly drafted that it would seriously limit the agency's ability to do the normal program oversight to ensure program integrity. If enacted, it could prevent CMS from disapproving State plan amendments that violate, for example, the 1991 provisions on taxes and donations, the 1997 limitations on limiting Federal expenditures to the State plan, and the 2000 phase-down of upper payment limits.

She goes on to say:

We are deeply concerned that if enacted, the Durbin amendment would reverse this progress and reopen the Federal Treasury to the abuses of the past.

Madam President, it is one thing to complain about the CMS rule; it is quite another thing entirely to overturn 16 years of congressional action with this amendment.

Let us talk for a moment about the rule in question. The core goal of the rule is to limit provider reimbursement to actual cost. What is wrong with just paying actual cost? I know some people consider this a radical idea, but I just don't understand why anyone thinks it is a good idea to have hospitals paid more than the cost so that they can be part of these scams which rob the taxpayers to fund State pork.

Restricting payments to cost is not exactly a new idea. In 1994, the Government Accountability Office recommended that payments to Government providers be limited to cost. This is a fundamental issue of program integrity.

What did the GAO find in their 1994 report leading to that conclusion? The State of Michigan used these questionable transfers to reduce its share of Medicaid programs from 68 percent, which is what it should have been, to 56 percent. The GAO found evidence that in October of 1993, the State of Michigan made a $489 million payment to the University of Michigan. Within hours, the entire $489 million was returned to the State. The report found that in fiscal year 1993, Michigan, Tennessee, and Texas were able to obtain $800 million in Federal matching funds without putting up the State's share.

Congress and CMS have spent the last 15 years combating this behavior. It makes no sense for Congress to roll back the clock and allow these crazy practices to come back.

Over the past 4 years, CMS has been working with States to try to limit these scams. These efforts have not been without their controversy. States have been very concerned about exactly what the new standards are. Senator Baucus and I wrote to the Government Accountability Office and asked them to look into what CMS has been up to. We have been concerned that there has not been enough transparency in what CMS has done.

CMS has now published a rule. It is out there in the--government for everybody to look at. The rule stops improper transfers. The rule limits providers to cost. The rule requires payments matched up to claim. Just good accounting.

Let me speak to that last one specifically--matched up to claim. Too often in Medicaid, States are allowed to bill for services without being able to document that an actual service occurred. We have a program which spends hundreds of billions of taxpayer dollars. We have a rule which requires that the program better document where the money is spent.

What on Earth is going on that I have to come down to the floor to object to an amendment on an appropriations bill that tries to prevent a rule that protects the integrity of the Medicaid Program from going into effect, especially a responsible rule?

In 2005, the Finance Committee held a 2-day oversight hearing on the Medicaid Program. As a part of that hearing, we focused on continuing problems of States recycling funds. CMS has acted to stop that. If some people think CMS has gone too far, then we should review their actions in the Finance Committee. We should call CMS in, make them testify, and ask the tough questions to which we need answers. If we think there are things we should have done differently, then we should legislate. That is the way it ought to be done.

I want us to ask tough questions about the definition of ``Government provider.'' I want to make sure that requiring schools to file claims isn't going to impede access to care for kids. I would like to know if the rule overturns arrangements such as the one the State of Iowa has created to provide a lump-sum payment to the University of Iowa and Broadlawns Hospital in Des Moines to care for the Medicaid patients. That is the right way to operate. We should deal with it in the Finance Committee.

That is why I have, as a general rule, objected to moving legislation in our jurisdiction on appropriations bills. The issues here are extremely complex. They deserve thorough consideration so we can assure the right action.

Instead, we are here with this amendment. No hearings have been held, no testimony submitted, nothing.

This amendment throws the baby out with the bathwater. Then the bathtub goes out, and then the bathroom--this is the whole house. It undoes 16 years of sound public policy.

My amendment allows CMS to move forward to protect the Medicaid Program from fraud, to protect Medicaid integrity, and to ensure payments are not made inappropriately. We should stop an amendment that gives CMS a 2-year holiday from stopping fraud. We should stop an amendment that gives CMS a 2-year holiday from protecting program integrity. We should stop an amendment that gives CMS a 2-year holiday from stopping inappropriate payments.

Members should vote on my amendment so that it forces us to sit down and take a serious look at what we are doing here before we make a serious mistake we will all regret.

Madam President, how much time do I have remaining?

The PRESIDING OFFICER. Forty-five seconds.

Mr. GRASSLEY. At this time, then, I would ask unanimous consent to set aside the amendment before the body and that we take up Grassley amendment No. 701 to the Durbin amendment.


Mr. GRASSLEY. I heard the objection. I can't believe anyone would object. So we are objecting to protecting Medicaid from fraud? We are objecting to protecting the integrity of the Medicaid Program? We are objecting to stopping inappropriate Medicaid payments?

We are making a mistake. I hope this gets fixed in conference, and I am going to work to do that. I regret the objection, but I understand why.

Madam President, I yield the floor.

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