the presiding officer: the senator from washington. mrs. murray: i ask unanimous consent that the quorum call be dispensed with. the presiding officer: without objection. the clerk will report the motion to invoke cloture. the clerk: cloture motion. we, the undersigned senators, in accordance with the provisions of rule 22 of the standing rules of the senate, hereby move to bring to a close the debate on the motion to proceed to calendar number 99, s. 1249, a bill making appropriations for the department of transportation and housing and urban development and related agencies for the fiscal year ending september 30, 2014, and for other purposes. signed by 18 senators.

the presiding officer: by unanimous consent, the mandatory quorum call has been waived. the question is: is it the sense of the senate that debate on the motion to proceed to s. 1243, an original bill making appropriations for the departments of transportation and housing and urban development and related agencies for the fiscal year ending september 30, 2014, and for other purposes, shall be brought to a close. the yeas and nays are mandatory under the rule. the clerk will call the roll. vote:

vote:

ao vote:

the presiding officer: are there any senators in the chamber wishing to vote? are there any senators in the --

are there any senators in the chamber wishing to vote or wishing to change their vote? on this vote the ayes are 73. and the nays are 26. three-fifths of the senate duly chosen and sworn have voted in the affirmative and the motion is agreed to. under the previous order cloture having been invoked all postcloture time is yielded back and the question is on the motion to proceed. all those in favor say aye. all those opposed, same sign. the ayes appear to have it. the ayes do have it. the motion is agreed to. the senator from washington. mrs. murray: madam president, the senate has now agreed on a bipartisan basis to move to th the -- the presiding officer: the senate will come to order.

the senator from washington. mrs. murray: madam president, the senate has now agreed on a bipartisan basis to move forward on the transportation and housing bill. i want to thank all of our colleagues now as we move forward on this appropriations bill. we will be open for amendment. i know there are members who have a number of issues that they would like us to consider. i would urge them to bring us, senator collins and myself, the managers of this bill, as soon as possible so we can begin to work our way through them. so as we go into recess for lunches, please, would the members work with both of us so that we can manage this in a responsible way and move it to final passage. and i appreciate all the work of my ranking member, senator collins, the members of the committee and all the senators who are working with us to move this bill forward. thank you, madam president. i yield the floor. the presiding officer: the clerk will report the bill. the clerk: calendar number 99, s. 1243, a bill making appropriations for the departments of transportation and housing and urban development and related agencies for the fiscal year ending september 30, 2014, and for

other purposes. the presiding officer: under the previous order, the senate previous order, the senate >> the white house is urging congress to pass a bipartisan compromise on student loans that would offer lower interest rates for the next few years. the white house released a statement this morning urging swift passage of the deal negotiated over the last few weeks by democratic senator joe manchin of west virginia and

republican senator richard burr of north carolina. under the deal interest rates would be linked to the financial markets. interest rates on subsidized stanford loans doubled to 6.8% on jewel 1st. the senate may vote on the measure this week. a house judiciary subcommittee looks into a path for citizenship for children of illegal immigrants a republican plan is being written by majority leader eric cantor and judiciary chairman bob goodlatte and that hearing is to get input into their proposal. c-span3 will have live coverage of that hearing this afternoon at 2:00 eastern. >> i think, sort of interestingly the korean war in a sense sort of helped the south koreans, unify themselves in a way that was not there before. when the communists came down,

they were brutal, right? and a lot of the south koreans turned against the communists from the north and that sort of solidified i think their sort of sense of national cohesion and identity. but i think, you know, they miscalculated because had he waited it is very possible that the south probably would have, it is possible that it would have disintegrated on its own. >> 60 years after north korean troops crossed the 38th parallel, sheila jager looked at a war that never really ended. sunday night at 9:00 on afterwards. part of booktv this weekend on c-span2. >> that role of the first lady, she becomes the chief confidant. she is really in a way the only one in the world he can trust. so he, unloads to her, talks to her. they all, they have all done that. they're all strong women. and of course they accompanied

usually a strong man to where he was but, i would say that is their main role as confidant to the president. >> our original series, first ladies influence an image, examine the public and private lives of these women and their influence on the presidency. watch the on core presentation of first ladies from martha washington to ida mckinly. starting august fifth on c-span. [applause] >> senate majority leader harry reid spoke yesterday about legislative priorities in congress. over the next half hour he touches on changes to senate filibuster rules, the health care law and chances of completing spending bills before the new budget year starts october 1st. >> thank you everybody. [cheers and applause]

>> thank you. thank you. thank you. thank you. thank you. thank you. thank you. thank you. [cheers and applause] >> thank you. [laughter] we are so indebted, the country's indebted to you. remember we had a historic election. not this last one, the one before. it was a amazing election and we came back here after the president was elected the first time and did some things that are important he. we could never have done what we did but for the enthusiasm and the vigor of that first election. remember, we came back here and did more than any congress has ever done in the history of the country. it was amazing what we did. lilly led better was the first thing we did.

[applause] we did, we took on the credit card companies and won. [applause] we, for the first time in the history of the country, they had been trying for decades, fda took over tobacco. we, we, and then we had a few little goodies like dodd-frank. and never be embarrassed to say it, obamacare. [applause] that's just a small smattering of the stuff that we did. but you know, at that time we had 59 senators and for a very short period of time we had 60 but that was basically on paper because senator kennedy was so sick. he really wasn't able to be with us but we got a lot done because of that. then we came back and we had 53

democratic senators. we were able in the second congress of the president to do some good things. but then everybody knew we would be down and out. you never do, when there's a re-election, we, everyone knew we would not pick up seats but we did, we had 55 democratic senators. as a result of that we've been able to maintain our own and then do some. i think it is important what we understand what we have worked on together. this has really been a team effort. we've done some good things. in the re-election of the president. why did he get re-elected? he got reelected because people appreciated what he had done and what he tried to do in spite of all the obstacles in his path. we know people looked at romney and said, we've tried that before. it doesn't work and it didn't work and the people overwhelmingly voted for president obama for re-election. thanks to you. but we have had untoward obstruction this last congress,

unbelievable. as i said in last week several times during the six years that lyndon johnson was leader one filibuster. during the time i've been leader about the same period of time as lyndon johnson, i have 420 filibusters. we went through last week, we had to. we had 15 nominees on the calendar. the average waiting time was nine months. the nlrb had been waiting two years. they, the republicans were happy with having no labor department. they opposed perez, secretary of labor. we were able to overcome that. we now are going to approve two new people for the national labor relations board. remember, if we hadn't done something bit first of august, there would be no longer any labor department. all it would be would be gone.

so, thank you very much forgiving us the lift to be able to get this done. it was important to the american people that the president is entitled to his own team. it is not right that we have people been waiting for years to get approval. it has never happened before in the history of the country. what we did last week will change that. and they always know, they will always know that they can't treat us like that because i can always come back and do what i was going to do anyway. [cheers and applause] so the reason i mention this to you, it is important. ofa is strong and powerful and we want it to be. remember, the president will be only as strong as his congress. so we've got to do everything you can to help nancy pelosi elect more house members to get

rid of this stuff we have going on in the house which is really hard to understand. and remember, the strength of the president is in the mighty senate. we have to have enough to stop mcconnell and what he doesn't do. [applause] and we have some good things going on around the country. we are not going to go down easy. we're going to stay up. i talked to michelle nunn today. i think thrill be important announcement of georgia tomorrow. that is samp nunn's date. she is really good. i hope everyone understand after 21 days, in the great state of kentucky, the race is tied. [applause]

45-45. grimes versus mcconnell. and he got a primary opponent today. he tried to make love to the tea party and they didn't like it. [laughter] because now, now, the tea party, the tea party is, candidate against him in the primary. so help us maintain our majority in the senate. now i've been told we're going to have some fun and take some questions. and, only instructions i have, go to the left, then grow to the right. [laughter] [applause] okay. where are these questions? [laughter]

yes? >> yes, i'm lewis burgess, and from indianapolis, indiana. i'm very happy for your presence being here. i had a concern because i've been pushing sensible gun control. i have a document out, i sent one to dianne feinstein. i sent one also to all our, two senators and also andre carson in anderson. how are things looking? because i strongly feel, when i watch the panel on tv talking about sensible gun control laws, when they talk about the second amendment, which is says a well-regulated state militia for a free state, they don't want to talk about that they talk about the second part, a right to keep and bear arms and the media has not done its part in making sure they get that out there because what i state in that document, i talk about the well-regulated state militia for a free state. we have got 50 states.

those 50 states have a national guard. and you're assault weapons and high-capacity magazines belong to the national guard, the military and the law enforcement agencies. [cheers and applause] >> without getting into all the constitutional ramifications here let's just make this real simple. if a person has mental problems, and they're a felon, shouldn't they have a background check where when they purchase the gun? [applause] the answer is yes and we, we're going to continue to see if we can pick up some more votes but this issue is going to stay with us. we're not going to let up. the nra for the first time since i've been around has some opposition. not only opposition from the people who believe in all this

gun control, not a felon or somebody who is disturbed, have a background check, it's people, you know, it's, so, so simple because, that's not the only opposition they have. now they have opposition from within. the gun owners of america are pushing the nra further and further to the right and as a result of this, we've got help now. we've got bloomberg. we've got gabby giffords and we have organizations around to oppose nra. they should start feeling, they might feel good right now but their best days are behind them. [applause] >> my name is karen and i come from new jersey. i'm sorry. i get emotional. what i would like to know when will the judiciary nominees be

presented to the senate to be approved? >> we've done, we've put a lot of pressure on them. we're doing pretty well with that. we have the biggest concern we have today is with the d.c. circuit and republicans have stopped us since justice roberts went to the supreme court. he was on the d.c. circuit. we only got the last couple months one replacement. we're still three short. we're going to continue to push on that. the d.c. circuit is the second most important court in the country and republicans have stopped us from putting people on that and we're going to move on that quickly. [applause] yes? >> hi, i'm [inaudible] i wanted to know -- >> also obama's state, you know. >> it is the president's state too. and we've known them both for quite a while. we're a big blue state

obviously. we also are very close to wisconsin, very close to indiana. we know how to phone. we know how to e-mail. we know how to write a check. what else can we do in terms of boots on the ground with a number about these issues as well as protecting voter rights in these states that are threatening us? >> you pretty well summarized what all of our jobs are including mine. the only thing i would add i repeat what i said before. make sure you understand how important the senate is to present obama's success. over here. yes? >> i'm alexandria from jacob town, pennsylvania, allison's short's district. i was wondering about the affordable care act. congress putting 35 attempts to repeal the law -- >> i think we're up to 47 now. >> 47 excuse me. and, the republicans in the senate saying oh, we have to repeal it or defund it. how about presenting a bill

saying you want to defund and repeal congress's health care? [applause] >> what we, what we did to our credit is made sure that we are part of the, we're going to go into exchanges ourselves. so we've done that. [applause] that was part, that was part of the obama, that was part of the law we passed but i would also note, a number of these really vocal tea party folks that serve in the senate, one of them gave a statement, a press event, they said, we're going to, we're going to get rid of obamacare because we will close the country. we'll get rid of obamacare when it comes to the cr and debt ceiling but we'll keep all the good parts of obamacare. [laughter] can you imagine that? yes? >> monica from new york city.

john carson mentioned early they're leader pelosi gave volunteers advice on how to drive representatives nuts. and i'm wondering if you could give us advice on how to help those senators that agree with our positions, to take leadership roles? >> i'm sorry, who to take leadership roles? >> those senator who is agree with our positions, who champion our causes but are not taking leadership roles. >> well, think think they're doing a pretty good job, i think your senator, your senators from new york. schumer is not a shrinking violet. he is out there in front on everything. he did a great job on immigration. kirsten gillibrand is way out front on the issue dealing with sexual harrassment in the military, sexual assaulting in the military. so they're way out front on this. i don't have many senators that

don't understand how important their jobs are. one of the things, one of my roles is to try to, on occasion, tamp down the enthusiasm of the leadership of these folks. but if you have somebody, especially in mind that you don't think is doing enough, let me know and i will give them a jab. [applause] >> senator reid, james page from st. louis, missouri. i'm sure others like i have watched with great concern the supreme court's recent decision to take some of the steam if you will, some of the accountability, out of the voting rights act. i'm very concerned about that happening as we're entering the 2014 and 2016 election cycles. it is my understanding that the supreme court is pushing the,

the voting rights act to congress and i kind of wanted to get your thoughts on what can be done to preserve the voting rights act in states who have demonstrated actions that are counter to that act? >> the supreme court of the united states made i thought one of the worst decisions in history -- [applause] one of the worst decisions in its history with citizens united, okay? i didn't think they could top that for backed but they did. what they did in repealing parts, the most important parts of the voting rights act is just horrible. to show you how bad it is, they put a big bow and ribbon around what has been going on in this country for some time recently. that is stopping people from

voting. to show how serious they are about this, in texas the morning after the supreme court decision they gerrymandered all the house districts in texas. they don't have to worry about anything now. they not only did that but they put into effect immediately their photo i.d. so this is going on all over the country and it's hard to comprehend, i was talking to my staff earlier today. think about this, i said to my staff. we have a large segment of our population who are being prevented, they can't vote. early voting was a modern-day miracle to allow more people to vote. many jurisdictions now because of this, they have cut it off. no early voting. so it's terrible. senator leahy is going to do hearings on this we hope that we can move forward on this legislation but it is going to be hard because we have 40% of the republicans in the senate

are tea party folks. they follow what the tea party does. so this is a big issue. i'm terribly disappointed in the supreme court and that texas example is one of better once. i think maybe one more question or two and i've got to go. they're giving me that. >> hello, senator, my name is lynn kerry and from wisconsin and i'm proud to say we elected tammy baldwin and that -- [applause] and i'm proud to say we elected senator -- not proud to say we elected senator johnson. >> i was going to say, don't be cocky. look who else you sent us. >> in a recent small group discussion with him, he flatly denied climate change changes and the scientific evidence that supports that. so today i was excited to hear about a climate change denier award or recognition to those senators and i'm wondering if there will be anything in the

senate that will be acknowledged for those who disregard or dismiss the scientific evidence regarding climate change? >> last week i made several statements in nevada both in the northern part of the state and southern part of the state. we have had two devastating fires. the one, 10 miles out of las vegas. just outside las vegas we have 12,000-foot mountain, mount charleston. we had a fire that burned there for 16 days. it burned square miles, not just acres, it was devastating and we had another big one up in douglas county in northern nevada and i said to everybody within the sound of my voice these fires are caused by global warming. it's happening. our winters are shorter. our summers are longer, hotter and drier.

we had these fires sweeping the west, burning millions of acres and the next day i came out and i doubled down on it. i don't back off from that at all. i in church this sunday, i introduced myself to a handsome young man and he told me was from the marshall island. i didn't know anything about the marshall island and he said that there's 50,000 people live there. they have got a thousand islands. i said how are things going? he said really bad. climate change is ruining our islands. i don't know, he works in the embassy here. i don't know how much he knows but this is something people who can see and feel what's going on, know something strange is happening to our environment but we've got to start talking about it and doing something about it. we can no longer watch all these devastating things like sandy and these fires in the west and just think it's happening just because it's happening. it is happening because we have to do something to stop, stop

the ravages of climate changing. [applause] and there is far too little said about this. okay. over here. >> hi, there, senator. i don't mean to be glib. i just, my name is liz mcconnell and i want you to know that in this country there are mcconnells who will try to dot right thing. [applause] >> okay. one more question here. [laughter]

>> senator, you being a wise, knowledgeable man, what should people like us be doing in order to have politically valuable input into, the arena we might not usually think of, something you might be able to tell us to do that might help us push you areour causes further and have productive careers throughout the rest of our lives? [applause] >> first of all, you're here recognizing there are things that have to be done in our country. we're in this, anything you do in life you can't stand still. you either go forward or we go backwards. in spite of all the terrible things and the obstruction that we faced, we're going forward, not nearly fast enough but we're going forward but the number one issue that's facing america

today is jobs especiallily for young people. we have to do more to create jobs and this mantra the republicans have is that the federal government can't be spending money is wrong. remember, we need to do some construction work on your highways our roads, your dams, our water systems, sewer systems. [applause] and, this is not dollar we appropriate here and we turn it over to some government entity and they dot work. what we've done in the past and it has worked so well, for every billion dollars we spend doing these infrastructure development programs, creating jobs, it creates 47,500 jobs for every billion dollars we invest. and that's high-paying jobs for a lot of jobs spin off from that don't pay as much and these are

job that come from the private sector. this money is given to the private sector to do this stuff. that's what we have to get back to doing. think what would happen in america today if we had some help, if government didn't have a million people who have lost their jobs, firefighters, police officers, school teachers. think what would happen if government could function by hiring people who could help make government more efficient? how much better off we would be if we were doing some things to help our universities. you know what is happening, we're doing this student aid bill pretty soon but what's happened with students, we have pell grants and they're wonderful but what's happened there has been such limited state support of education, all they do is raise the tuition, so young men and women have to go out and borrow more money and more money and more money. they get out of school, they have huge debts facing them and the job program isn't very good.

so we have to start spending some money. we reduced the debt by 2.$6 trillion. even the european nations today determined over the weekend they had to start developing they had to start spending some money. they will stop their austerity as they have in the past. that is what we have to do. that would be the right thing to do, young man, so we create an economy that was vibrant and strong and take us back to the clinton years. remember the clinton years we were, he created 22, more than 22 million jobs and during the process reduced the debt for the first time in generations. [applause] i think, i think my time is up. i'm grateful that you would come from all over the country. ofa, it's first time in the history of the country that a president has gone on to be effect wall in carrying out programs he was elected to do. he can't do this on his own. he can do it with your help and i hope with the help of the

senate. the president is a wonderful human being. i have seen him up close. i so admire this man and seeing how close, we talked last week and i told him i was so concerned about, he was telling me, you know, i'm glad you were able to get this done. i know it was hard. i said, my job is so inconsequential compared to yours. every morning you get up, think what he gets up to every morning? his briefing what is going on around the world. i have seen this good man, he has changed before my eyes. i have seen that hair turn from, i am, i seen it turn from coal black to now he has hair as gray as mine [laughter] it took me a while to get mine but he hasn't. he is, i, all the time that i have known him, i've seen him in the most difficult situations a human being can find himself. i have yet to hear him be derogatory toward another human being.

he is, he is, he tries to be constructive. he is smart and he sees where we need to go and he is having a tough time taking us where he knows we should go. with what you're doing here, with the little bit i'm doing, we're going to help this man be the best president we've ever had. thank you. [cheers and applause] >> about a half hour ago the senate approved a motion to move forward on spending the next budget year for transportation, housing and community development programs. the new budget year begins october 1st. congress is working to get spending bills passed before then. also pending in the senate, federal student loan interest

rates. the subsidized student loan rate doubled on july 1st. we'll have live coverage when senators return from their weekly party lunch meetings at 2:15 eastern. oregon senator ron wyden warned today that america could become a surveillance state with the government tracking u.s. citizens through their smartphones. here's a look at some of his comments. >> but fact that this has made it to the floor of the house of representatives is unquestionably good. it is another step, as i've outlined, in the march to a real debate. we wouldn't have had that seven, eight weeks, you know, ago. we have been, as i tried to outline this morning, chipping away, day after day trying to make our case and now as of what i read late last night, this debate is going to be on the floor of the house of representatives and later today

we're going to see members of congress start debating the real issues. i mean i assume very early on they're going to start a discussion about what i call the false choice where you can either have your security or your liberty. and as you heard me describe probably in root canal-like detail i don't think that's the case. i think when elected officials do their job we can do both. the fact this is on the floor of the house of representatives later today is unquestionably very good for the cause that we're outlining today. >> a house judiciary subcommittee looks into a path of citizenship for children of illegal immigrants. a republican plan is being written by majority leader eric cantor and judiciary committee chairman bob goodlatte. this hearing is to get input into their proposal. c-span3 will have live coverage of that hearing this afternoon

at 2:00 eastern. >> i think, sort of interestingly that the rianne war in a sense sort of helped the south korean, south koreans unify themselves in a way that was not there before. when the communists came down they were brutal, right? and a lot of the south koreans in essence turned against the communists from the north and that sort of solidified i think their sort of sense of national cohesion and identity but i think, you know, he miscalculated because had he waited it's very possible that the south probably would have, it's possible that it would have disintegrated on its own. >> 60 years after north korean troops crossed the 38th parallel, sheila ja-fer looks at a war that never really ended, sunday night at 9:00 on

afterwards, part of booktv this weekend on c-span2. >> federal trade commissioner edith ramirez was a among a panel of witnesses at a senate hearing on prescription drug patents. a senate judiciary subcommittee spent the morning looking what is called pay for delay deals. that is when brand-name drug companies seek to eliminate competition by paying generic manufacturers not to sell their products for a certain amount of time. s.

>> all right, good morning, everyone, welcome to today's hearing where we're going to examine the pay for delay settlement agreements. we welcome our witness and federal trade commission chairwoman ramirez, who is appearing before our subcommittee for the second time this year. so we thank you for that. last year analysts estimated that our country spent $325 billion on prescription drugs and they predict that drug sales will rise by more than 4% in the year 2014. generic drugs which can cost as much as 90% lower than brand-name drugs helped rein in the costs. for example, a brand-name drug that costs $300 per month might be sold as a generic for as little as $30 per month but for several years pay for delay deals have robbed consumers of cost saving generic drugs. at the very core these deals involve collusion between brand and generic competitors to keep

generic competition off the market. let's be very clear about what these deals are all about. a brand-name drug company pays, they pay their generic competitor cash or another form of payment in exchange the generic delays its entry into the marketplace. that is why we call them pay for delay. so the brand company wins because it gets to maintain its monopoly and the generic company wins because they get paid more than they would have if they came to market. but american consumers and american taxpayers lose out on lower-cost generic drugs to the tune of billions of dollars each year. $3.5 billion according to the federal trade commission. now this wasn't always the case. from 2000 to 2004 after courts found these agreements to be illegal there wasn't a single pay for delay deal among the settlements entered into between brand and generic companies, not

one. so pharmaceutical litigation can be settled without these cash sweeteners to delay generic competition. it wasn't until 2005 when two circuit courts said these deals were not subject to antitrust scrutiny. that which we began to see dozens of pay for delay deals each year, directly related to those circuit court decisions. the effect of these court decisions has been blunt. last year the number of pay for delay settlements ballooned 40% over the previous year. the ftc identified 40 pay-for-delay deals involving 31 brand name drugs with combined annual u.s. sales of more than 8.3 billion. these pay for delay deals are about more than drug companies and their lawsuits. they're about real people and they're about quality health care. cake karen winkler for example. she suffers from multiple sclerosis and was prescribe ad drug which helps combat fatigue.

because a pay for delay agreement kept generic competition off the market for six years, the drug cost her $500 per month even with insurance. as a result she would skip pills or split dosages. in 2011 she had to stop taking it all together against her doctor's orders because it got too expensive. meanwhile the ceo of the company made, that made the drug had this to say about the pay for delay deal. quote, we were able to get six more years of patent protection. that's $4 billion in sales that nobody expected. unfortunately that $4 billion came out of consumers pockets including karen's. this issue is also about taxpayers and the federal budget. medicare is the largest buyer of prescription drugs. if pay for delay deals limit generic entry then taxpayers get stuck with the bill for higher

priced brand-name drugs. the supreme court's decision in ftc v. activists was a turning point. the court finally said what we've been saying for years. that pay for delay settlements harm consumers and deserve to be scrutinized under the antitrust laws. the court said that the payments may provide, quote, strong evidence that the patentee seeks to induce the generic challenger to abandon its claim with a share of its monopoly profits that would otherwise be lost in the competitive market. while this was a major step forward there's still work that needs to be done. that's why senator grassley and i have introduced bipartisan legislation to further combat pay for delay agreements that keep cheaper generic drugs off the market. our bill would make these back-room sweetheart deals between brand name and generic drug companies presumptively illegal. it does not make every agreement illegal but it does require the drug companies to prove to a judge that a deal in question is

not anticompetitive. that is a measured approach that strikes the right balance to insure that companies will have the ability to settle cases. they just can't do so without payments to delay competition and harm consumers. so today we will hear from chairwoman of the ftc who has choana steadfast commitment to fight for consumers and lower cost drugs by challenging pay for delay agreements all the way to the supreme court. american consumers are counting on you, to fight these deals so that consumers have access to affordable generic drugs. miss ramirez, we look forward to hearing from our second panel where i think we'll have a lively debate about pay for delay deals, the need for legislation and the contours of the supreme court's decision. with that i turn to our ranking member, senator lee, for his opening remarks. i know that senator grassley is going to make a few remark, and senator franken, you're welcome

to as well. senator lee. >> thank you, madam chair. pharmaceutical patents are extremely valuable and it's for good reason that they're valuable. on average it takes 10 years and a billion dollars to develop and gain fda approval for a new drug. the intellectual property in that new drug allows developers and researchers to recoup their enormous investment. those drugs that gain approval and for which there is market demand have the potential not only to defray the initial outlays, but also to make their owners sizable profits as a reward for the risk undertaken and in the process of securing both the patent and later the fda approval. both this recoupment of investment and these process are jeopardized by lawsuits that are filed by generics who seek to invalidate drug patents so they can enter the market. our laws incentivize these

lawsuits by generics by granting first generic challenger a period of dual exclusivity with the brand name manufacturer. faced with even the remote prospect of losing their valuable patent, not to mention the substantial litigation cost, some brand name manufacturers have chosen to settle lawsuits filed by generics instead of litigating to the merits of the issue of patent validity. in some issues the settlements involve the patent owner paying the challenger generic company millions of dollars and allowing it to enter the market before the expiration of the patent in exchange for simply dropping its lawsuit challenges the patent. . .

>> in a case presenting this very issue. in its recent ruling, the court rejected both sides of the argument as extreme because in the court's view, reverse settlements may be sometimes anticompetitive and sometimes not, a one size fits all rule would be improper. rather, the court held the courts should analyze reverse settlements using what in antitrust law has long been be called the rule of reason. federal courts have fearly a century of experience in

applying the rule of reason to cases and controversies brought before them. proper judicial administration of this approach protects consumer welfare, the touchstone of all of our antitrust laws. in the event some pharmaceutical manufacturers are entering into patent settlements to shield a weak patent from scrutiny and to divide among themselves a patent's unjustified monopoly, the rule of reason will insure such agreements do not stand. at the same time, the rule of reason comports with an objective, evidence-based approach to antitrust law. it insures that social policies or other priorities apart from consumer welfare are not imported into antitrust analysis. where reverse settlements have procompetitive effects, the rule of reason will wisely stay in the goth's hand. -- government's hand. the rule of reason thus benefits consumers both by protecting

against high prices and by respecting intellectual property and preserving the innovation that leads to important advances in science and in particular in health care. any proposal with respect to reverse settlements must, therefore, be weighed against the proven ability of the rule of reason to balance and effectuate both of these important policies. i look forward to hearing from the witnesses, and i thank them for being here today. >> thank you very much, senator lee. senator grassley. >> yeah. this is a very important hearing that we're having to learn more about pay for delay agreements. i think they harm drug competition. this is an issue i've been working on for a long time, and i'm surely pleased to have a teammate in senator klobuchar so that we can stop these abusive deals. we should be doing all we can to see that the american consumer has access to lower priced drugs

and do it in a way that, to get those lower prices as soon as possible. the reality is that these deals between brand name and generic pharmaceutical companies delay the entry of generic medicines in the marketplace, and i don't see how these agreements are competitive on how they -- or how they benefit the consumer. in my opinion, they only end up keeping drug costs artificially high for consumers and the tax paying public. further, these agreements threat en the long-term sustainability of federal health programs, particularly medicare and medicaid. so i commend the federal trade commission for being vigilant in this area. i urge the commission to continue protecting the american consumer by continuing to take action against drug companies engaged in anticompetitive agreements. and, mr.-- madam chair, i have a written statement from senator

vitter that would like, that he'd like to have entered into the record. senator vitter also agrees that pay for delay settlements are a problem and would like to see congress do something about it. and i think he has ideas, but they're not dissimilar from what you and i are trying to accomplish. >> very good. and i appreciate your leadership on this issue and senator vitter's statement will be included in the record. senator franken? >> i'll save my opening for my question period. i think it'll have more power. [laughter] >> thank you. senator blumenthal? >> as so frequently happens, i'm going to follow senator franken's lead. [laughter] without seeking to emulate his sense of humor. but i just want to thank you, madam chairman, for having this hearing and to our ranking member as well. this hearing is critical to our health care system and to american competitiveness. thank you very much. >> well, thank you very much.

i would like to now introduce the distinguished witness on our first panel, ms. edith ramirez is the chairwoman of the federal trade commission. she was sworn in as commissioner of the ftc on april 5, 2010, and designed -- was designated as chairwoman by president obama on march 4th of this year. prior to joining the commission, ms. ramirez was a partner in private practice in los angeles representing clients in intellectual property, antitrust and unfair competition suits. ms. ramirez, if you could rise. do you affirm that the testimony you are about to give before the committee will be the truth, the whole truth and nothing but the truth, so help you god? >> i do. >> thank you. please begin with your statement. >> chairman klobuchar, ranking member lee and members of the subcommittee, thank you for inviting me to testify today about the federal trade commission's effort to stop

anticompetitive paper-delayed patent settlements among pharmaceutical companies. as members of this committee are well aware, these agreements not only raise substantial antitrust concerns, but also undermine the golden spirit of the hatch-waxman act. stopping these anticompetitive patent settlements has been a top bipartisan priority at the commission for many years. the reason the commission has been so concerned about these settlements is that there is so much at stake for consumers. ftc economists have found that, on average, these settlements cost consumers $3.5 billion each year, and taxpayers ultimately bear a significant portion of this burden because of the increased costs to medicare, medicaid and other government health programs. the ftc has taken aggressive action to combat these harmful agreements beginning in 2000 with our administrative litigation against

schering-plough. that case ended up before the 11th circuit which adopted the overly per dissive scope of the patent test effectively immunizing paper delay settlements from antitrust scrutiny. we continue to investigate and litigate paper delay cases. the commission's ongoing efforts culminated before the supreme court this spring in the activist case where the court considered the commission's challenged patent settlements involving the replacement drug andrujel. the commission alleged that they agreed to delay rollout of a generic version for nine years until 2015. applying the scope of the patent test, the 11th circuit had affirmed that the district court's dismissal of our case because the settlements did not challenge competition beyond the expiration date. soon after the ruling, the 3rd

circuit rejected a private case involving another brand name drug and held paper delay agreements presumptively unlawful. this created a circuit court split that set the stage for the supreme court's review of the issue. the activist position was a significant victory for american consumers, taxpayers and competition. the supreme court made clear that paper delay agreements between brand and generic drug companies are subject to antitrust scrutiny. although the court did not declare them to be presumptively illegal, it did find that reverse payment settlements have the potential for genuine anticompetitive effects because they permit a brand name drug company to eliminate the risk of competition, maintain a monopoly and share the benefits with its potential competitor. in light of the supreme court's decision, federal courts must now consider antitrust claims challenging reverse payment settlements and decide them under a rule of reason standard. the supreme court ruled courts

must assess the drug company's justifications for the payments including if the payments were for something other than potential competition. the court was also clear the anticompetitive effects of a reverse payment settlement can be determined without mitigating the -- litigating the you underg patent claim. the commission's work is far from over. harmful paper delay settlements will not suddenly dis appear, but there's now a path forward to stop them. we will continue to focus our resources on investigating and damaging those anticompetitive settlements likely to cause the most consumer harm. these efforts will begin with our two pending paper delay cases, activist and the cephalon case pending in philadelphia in which we will seek to prove that the agreements at issue violate the antitrust laws. we will also comet to review the pharmaceutical patent settlements filed with the agency pursuant to the

modernization act and report to the congress and public on trends and developments as well as investigate those settlements we believe violate the law. in addition to enforcement work, we will look for opportunities to utilize the commission's extensive experience and expertise in this area by filing amicus briefs and private litigation in order to assist courts that are deciding paper delay matters. we believe that all of these efforts together with a strong statement made by the supreme court and activists will provide a significant deterrent effect. i look forward to continuing work with the members of this committee on how best to use the antitrust laws to promote the interest of consumers in gaining access to lower cost generic drugs. i'm happy to answer any questions that you may have. thank you. >> thank you very much, madam chairwoman. earlier this year the ftc released its annual report on paper delay agreements. it showed that in fy-2012 there were 140 settlements between brand and generic firms and 40 of them involved pay for delay. now, you mentioned pursuing some of the cases, one that was in

court in philadelphia and some other ones. just to make clear, what are the -- what is the commission now going to do in light of the supreme court decision with the 40 pay-for-delay agreements? >> chairman klobuchar, the top priority for the agency will be to continue and press forward with two pending litigation matters in this area. as i mentioned, the activist case and the cephalon case. so those will be the top priority. our aim will be to prevail in those matters and show that the agreements at issue are, in fact, violative of the antitrust laws. in addition, we intend to press forward with pending investigations that we have as well as review settlements that have been previously filed with the agency pursuant to the medicare modernization act and review them in light of the activist decision by the supreme court as well as to continue to vigilantly monitor any new agreements that are filed with the agency. in addition, we do also aim to, as appropriate, file amicus

briefs in connection with private litigation matters involving the paper delay settlements. >> right. that's a lot, and i assume these are very complex agreements. and are you going to put additional resources in light of -- how are you going to handle that given sequestration and everything else? >> this issue has been a top priority for the agency for many years, and we're going to continue to devote as be resources as necessary to achieve our aim to put an end to these practices. >> would it be easier to do if the bill that senator grassley and i pass to make things clearer? >> i want to emphasize that the activist decision was an important step forward in our, and it strengthened our ability to tackle these complaints. at the same time, these lawsuits are resource intensive and time consuming, litigating one of these suits to judgment can take many years. i do believe that the legislationing that you've proposed, that you and senator grassley have sponsored would create more of a bright line rule and also create more of a

deterrent effect, and it could help further our effort to stop these practices. >> yep, that's our focus here. generic and brand name companies, we're going to hear from them on the next panel, argue that paper delay deals can be procompetitive because the settlement may allow for entry for one to two years before the patent expires, and if the case was litigated to completion, it would be 5-10 years before the patent expires. what's your response to the criticism? isn't generic competition one or two years prior to the patent expiring better than waiting until the patent expires? >> the issue we're concerned about here is that a reverse payment has the potential to eliminate the risk of competition. that was the language the supreme court used, and i agree with that. so the issue here is that a payment will distort the competitive process and lead to delayed entry of generic competition than otherwise would have existed absent the reverse payment. >> exactly. i mean, i was just struck by the fact that there were settlements

before but not with the pay-for-delay element until those circuit court cases came out. >> absolutely. and let me also emphasize that in our review of these settlements, we find the vast majority in the pharmaceutical industry between pharmaceutical companies do not involve reverse payments s. so the position that the ftc has taken does not impede the ability of these firms to settle. >> exactly. drug companies say that having the ability to settle patent litigation is critical to promoting their ability to innovate and develop the next great miracles of modern many medicine. what is your response? i assume it's along the lines of what you just said, that the vast majority of these settlements don't involve the pay for delay. >> absolutely. the supreme court recognized this and the activist decision. what we are trying to stop are anticompetitive settlements. we're not trying to impede settlement of disputes that don't, that do not violate the antitrust laws.

>> and do you think limiting pay for delay settlements unreasonably constrains the ability to -- [inaudible] and, therefore, taxes innovation? >> i don't. again, we're trying to promote competition, innovation. we want to prevent any type of reverse payment settlement that would distort the competitive process. >> exactly. and then one last thing, a little different topic. while we're on this topic of pay for delay, another area where patent and antitrust law intersects is patent trolls. last month i sent a letter to the full commission calling on it to improve your proposal for a six-piece study to examine patent trolls. what is the status of the 6b proposal, and how soon do you think they can get the study under way? >> i agree that a study would be a valuable mechanism that could be used to evaluate both the harms and efficiencies of activity. the agency's in the process of

evaluating whether such a study would be valuable, and if the commission determines that it is, this then we're going to proceed -- then we're going to proceed expeditiously. >> okay. i liked your quote when you talked about this and the need for the study, you said that the use of patent trolls, quote: allows operating companies to exploit the lack of transparency in patent ownership to win a tactical advantage that could not be gained with a direct attack. could you talk about the harm that that does to consumers in competition? we're going to be having a hearing on a related matter on standards next week on the subcommittee. >> we're concerned in examining the increased litigation activity of patent entities that there may be a significant tax on competition by virtue of exploiting flaws in the patent system. so it's an issue that does raise complicated questions, and i want to make sure i'm not condemning all patent activities.

that's why i believe the study would be appropriate so we can more fully understand the impact of these activities. >> okay, thank you. and i just want to, again, thank you for your work. when that court decision came out, i couldn't help but thinking of all the work there's going to be for the lawyers but also work for the ftc which is already strapped with some of the resource issues we have. i'm more trying to figure out how we can, one, help consumers and, two, make this help most possible, and to me, it's passing this bipartisan legislation. and, again, we're not including all settlements, we are just looking at these pay-for-delay settlements as you so well point out. so thank you very much, and i will turn it over to senator lee. >> thank you very much for joining us today, madam chairwoman. i appreciate your testimony and your insight on these issues. want to talk just a little bit about our cruise of the term -- use of the term pay for delay today.

this causes me some concern that we use this term this broadly, because in your testimony you used the term pay for delay to refer to a whole category of reverse settlements among pharmaceutical manufacturers. without qualifying that term further. now, it's my understanding that these settlements do not extend the term of the patent but, in fact, most of the time they end up shortening the term of the patent. by housing the generic manufacturer -- by allowing the generic manufacturer to enter the market before they otherwise would be able to enter the market assuming that the patent itself is valid. and, in fact, it would make no sense for a brand name manufacturer to make such an attempt, to attempt to extend the length of the patent on the underlying drug because in order for that to work, in order for

that to be effective, they would have to settle with every possible potential competitor out there who might choose to somewhere the market on that drug -- enter the market on that drug once the patent term expires. and doing that is not something that's allowed under our patent law and would present plainly anticompetitive impacts which would create actionable antitrust problems. so that's really not a possibility. so with respect to the reverse settlements that we're discussing today, one can argue that the agreements delay the entry of the market, of the generic into the market if and only if we assume that the generic is entitled to enter the market immediately. that is prior to the expiration of the patent. but to assume that requires us to assume at the outset that the patent is, in fact, invalid. be and so do you agree that none

of the agreements that we're talking about today extend, first of all, the terms of the patent beyond the life of the patent? >> i agree with that. >> okay. >> but i don't agree with the rest of your -- >> okay. >> -- assertions. >> so why is it then appropriate to use the term pay for delay with respect to a reverse settlement that applies to a drug, the patent attached to which is, in fact, valid? how is that paying for delay if the generic is not entitled to enter the market prior to the expiration of the patent term? >> i believe that pay for delay is an accurate characterization of these type of anticompetitive reverse payment settlements, and the reason is that a reverse payment allows a brand to, as

the supreme court put it, eliminate the risk of of competition. and induces a generic to agree to a date of entry than would otherwise have taken place in the absence of a particular payment. so our position does not assume that there would be immediate generic entry, it merely raises a concern from an antitrust perspective about the way that a reverse payment can distort that negotiation process in the normal competitive process. >> right. but if you assume the patent's validity, you would agree the generic manufacturer's not going to be able to enter the market until the end of the patent term, right? >> correct. but your assumption is that the patent is, in fact, invalid. the objective of the hatch-waxman act is, one of them is to incentivize generic companies to challenge weak patents in order to introduce lower cost generic drugs.

so one can't assume that the patent is necessarily valid, and that's precisely what the concern is, that the payment will, in fact, induce a generic challenger to abandon a claim of valid the city and a claim of noninfringement, and that's what raises the anticompetitive concern. >> okay. but our legal system and the world of intellectual property, our laws create a statutory presumption as to the patents of validity. would you agree with that statement? >> i agree with that. >> okay. so if, in fact, our laws create a statutory presumption of the patent's validity, then why are you so quick to assume that all of these so-called reverse settlements can appropriately be described as pay for delay? >> well -- >> wouldn't they just appropriately be described or more appropriately described as pay for resolution of

uncertainty as to the patent's validity? i mean, we do, in fact, have this presumption, and if that presumption is valid, if it's called for by law, i don't know why you would want to presume the opposite, because i think you have to presume that the patent is invalid in order legitimately to call it pay for delay. >> i disagree. i'm not presume disturb i'm not making any particular assumption between those two. i'm also not saying that every single reverse payment settlement is, in fact, anticompetitive. rather, that there is a category of them, and i believe there is a tendency for these types of settlements to, in fact, likely lead to anticompetitive consequences. so the concern here is a payment that is intended to, again, induce a patent, generic/patent challenger to abandon the claim and to delay its entry into the market. >> okay. okay. be. >> and the inquiry is precisely

to ascertain, the inquiry we would engage in is to ascertain whether, in fact, it was for purposes or delay as opposed to other legitimate reasons. >> right. okay, so the use of pay for delay refers to the fact that you could in some circumstances have some of these that are collusive, perhaps the patent is invalid and what they're paying for is something nefarious, something that they're not entitled to. >> what they're paying for is delayed generic entry. these types of payments permit and incentivize the brand name firm and the generic firm to split monopoly profits. it's advantageous and more profitable for them to do that than to simply proceed with the litigation. okay. if you're presuming that such a thing could happen but you're not presuming that it's always the case with all of these reverse settlements in this

context, isn't that an appropriate occasion to use the rule of reason analysis? >> i agree with the holding of the supreme court. i mean, we're fine testing these settlements under the rule of reason. at the same time, i do believe that litigating these cases can be costly and time consuming, and i also believe that a bright line rule such as one that was proposed by the legislation that chairman klobuchar and senator grassley are proposing would create more of a deterrent effect. again, my concern is that these types of payments -- which are unusual and only seen in the pharmaceutical industry context and even within that context are only a small minority of settlement agreements -- these elevate the antitrust risks and pose a significant detriment to competition. so that's the concern. that's why i do believe the rule of reason standard is an

appropriate test and we tend to apply that going forward, i do believe that declaring them to be presumptively invalid would also further help us to put a stop to these types of settlements. >> my time's expired. thank you very much. >> thank you very much, senator lee. and just to make clear, the chairwoman has stated this bill that senator grandsonsly and i have that -- grassley and i have that has bipartisan support would not affect a vast majority of the drug settlements and even for the pay to delay settlement, it creates a presumption that they are invalid and illegal which can be overcome if the pharmaceuticals and generics are able to prove somehow that the procompetitive benefits outweigh the anticompetitive harm. so while we call it a bright line rule which it is, it does have some exemptions that can be proven in court.

so that's how it works because we are aware of all these unique characteristics of these agreements. we just feel that right now the supreme court has opened the door, which is great, but we still have a reason to want to make clear what the presumption is here instead of putting it as a burden be on the ftc. >> are yes. thank you for that. >> yes. i thought you'd like that. [laughter] chairwoman ramirez. senator frank p. >> thank you -- franken. >> thank you, madam chairwoman, for your work on this, and i will be in the next panel asking the professor about in this very issue. in his brief, i believe to the supreme court, he says the figure approaches 75% in litigation that these patents are, when they're challenged, turn out to be invalid. but i'll ask in the next panel. i've really enjoyed working with the chairwoman on this legislation to bring down

prescription drug costs for minnesota's senators -- seniors. and senators. [laughter] soon. it's an issue that we both care about deeply. i'm proud to sponsor the klobuchar-grassley preserve access to affordable generics act. it's a good, bipartisan bill, and i know that you've taken great care, both of you, great care and effort in drafting it. i am also, i'm grateful for your support, madam chair, for the franken-vitter fair generics act. what our bill would do is fairly simple. it provides subsequent filers with an exclusivity period if the first filer relinquishes that privilege in a pay for delay deal. making this change to the law willty diminish the incentive to enter into these pay for delay agreements in the first place

and fewer pay for delay deals will result in more prescription drugs on the market which in turn drive down prices. chairman -- chairwoman ramirez, the ftc reported that in fiscal year 2012 there were 40, as we've heard, 40 pay for delay settlement agreements. that's a record high. in your view, what accounts for the increase in these deals, and do you anticipate that they will remain prevalent in coming years unless congress and the ftc acts? >> i think there are two main reasons why we've seen the steady rise in these types of settlements over the years. the first is that there is an incentive for the brand name manufacturer and the generic manufacturer to split monopoly profits. so that's one powerful incentive. in which the two firms end up gaining at the expense of consumers. secondly, i also believe that the scope of the patent test

which had been adopted by a number of courts over the years led to an overly permissive standard that encouraged these types of settlement agreements. my hope is that with a strong statement that's been made by the supreme court, that in and of itself will prove to be a strong deterrent against these types of settlements, and we certainly intend to enforce the law aggressively under the standard that's been set by the supreme court. so my hope is that the combination of those things will help put an end to these types of settlements. >> in the activist case as we've heard, the court said that pay for delay agreements need to be analyzed on a case-by-case basis, sort of a middle approach. as the ftc begins litigating cases under the activist decision, what kinds of evidence will it use to show that pay for delay agreements are anticompetitive in particular

cases and what sorts of things will the ftc look for in the patent settlements that are filed with the commission? >> i believe that the supreme court provided some useful guidance in the activist decision. the kinds of issues that we're going to be addressing are, number one, is there a payment or other form of compensation? what is the size of that payment? what's the purpose of the payment? is there a legitimate justification for the payment and, also, we're going to be examining the competitive effects of any, of any such agreement. so those are the issues that we would be looking at and litigating under the rule of reason standard that's been set out by the court. >> would it consider pay for delay, whether the pay for delay settlements have disproportionate effect on seniors? is that -- >> that's certainly a concern of ours and one of the reasons that

we're seeking to put an end to paper delay agreements because to the extent that seniors do share the disproportionate burden when it comes to drug charges, they clearly are impacted. so that's a concern of ours and, certainly, one of the reasons that we are trying to combat these. >> thank you. thank you, madam chair. >> thank you very much, senator franken, and thank you for your work in this area. senator grassily. >> yeah. and thank you, madam chairwoman, for coming to help us with this important issue. supporters of pay for play settlements claim that legislation to establish a presumption of illegality for these kinds of settlements is, quote: unnecessary and inconsistent with long standing principles of antitrust and patent law, end of quote. so, chairwoman, do you believe that pay for delay legislation like the klobuchar-grassley bill is, quote: unnecessary and inisn't with the long standing principles of antitrust and

patent law, end of quote, end of question? why or why not? >> i don't agree with that statement. as i've indicated, we see the activist decision as a victory for american consumers, and we're pleased to move forward seeking to put a stop to anticompetitive reverse payment set almost -- settlements under the rule of reason standard the supreme court has set forth. at the same time, my view is that it is, again, resource intensative, time consuming to litigate these cases to judgment. and i believe that the proposed legislation that declares reverse payment settlements, anticompetitive reverse payment settlements to be presumptively invalid but at the same time hows settling parties to overcome that presumption would be a quicker way of putting an end to these types of settlements.

>> in your, on another point, in your written testimony you state that, quote. the medicare modernization act is truly a notice and filing provision. alone it does not grant the agencies the power to delay or block settlements with the activist decision, the mma's filing requirement is more likely to serve its intended purpose of preventing anticompetitive agreements from escaping antitrust scrutiny, end of quote. as you probably know, i worked hard to make sure that this notice and filing provision was included in that legislation. we wanted to deter drug companies from entering into anticompetitive pay for delay settlements and also empower the ftc with the knowledge of when these kinds of problematic settlements could be occurring. so, madam chairwoman, would the

statement from your win testimony that i've just quosed, are you saying the notice requirement is not a sufficient enough deterrent to anticompetitive behavior? and before you answer, if so, are there any improvements to this provision that you would suggest? be are you suggesting that we consider giving the ftc commission greater ability to block or delay settlements that are seen to be potentially abusive? >> let me simply clarify that the statement that you quoted from the written testimony merely states that the mma provisions under which pharmaceutical companies are required to file settlements with the antitrust agencies didn't alter the substantive antitrust standards. it's an important provision, and it allows us to actually see what firms are doing when we review these agreements. so it's an absolutely important provision, and our point was merely that now that we have the activist decision, we are going to be in a position to more

effectively combat those settlements that we believe to be anticompetitive. >> so then there doesn't need to be any changes in mma from your point of view? >> not with respect to that that you're quoting, yes, correct. >> okay. given the rate at which pay for delay settlements have increased, what do you think is the best approach the address the problem? how does ftc plan to move forward with respect to the supreme court's decision in that case? and are there any ftc policies that you believe need to be changed in response to the court's ruling? >> i believe that the supreme court itself has sent a very strong message to industry indicating, again, that these settlements are subject to antiscrutiny. we intend to vigorously apply the standard that's been set forth by the supreme court. and as i mentioned, that will

include litigating, and my aim is to prevail in the two pending lawsuits that the ftc has involving paper delay settlements. and be in addition we're going to be reviewing settlements that have been previously filed with as pursuant to the mma under -- reviewing them under light of the activist position, also trying to be as vigilant as possible when it comes to the filing of new agreements. submitting amicus briefs where appropriate in connection with private lawsuits. we have to be very active in this area, and we believe that the combination of our enforcement and other efforts along with the strong message that's been sent by the supreme court, my hope is that will be a deterrent and hopefully putting an end to these types of anticompetitive arrangements. >> you might or might not be aware that i worked closely with the ftc and chairman leibowitz on issues, on this issue. i look forward to working with

you. according to the 2010 federal trade commission report entitled pay for delay: how drug companies payoffs cost consumers billions, these settlements cost consumers approximately $35 billion over ten years. the report recommends that congress pass legislation to protect these anticompetitive agreements. do you plan to make pay for delay settlements a priority at the federal trade commission under your leadership? >> combating paper delay settlements has been a priority for over 15 years at the commission. it continues to be a priority. and we're going to put whatever resources we need to in order to seek to put a stop to these. >> yeah. i'll yield back my time. thank you, madam chairman. >> thank you very much, senator grassley. senator blumenthal. >> thank you, madam chairwoman. again, my thanks to you and to the chairwoman and senator grassley for their bill which i would anticipate joining on.

i'll be interested in hearing from the next panel about the arguments opposed to this measure. but with i think it's a good pro-consumer measure, and i would expect that i'll be joining in support of it as a cosponsor. let me understand a little bit more about the process that will follow the ftc investigation under this bill. as i understand it, the ftc can then initiate action either in federal district court or before an administrative judge if it finds that there is no justification for this pay for delay or compensation for delay. and perhaps you could enlighten us as to how the ftc will choose between those two fora, the district court or the administrative judge. >> it can depend on a number of

factors. we often proceed administratively, but we do have the ability to move forward in federal court. so it depends on the circumstances of a case, may also depend be on the type of releaf that the agent -- relief that the agency would be seeking. >> and how would that determine the outcome? >> for instance, if the agency were to receive monetary relief, we would like to proceed in federal court. >> as state attorney general, i was among the states that frequently dealt with abuses and misuses of patents, so i have seen firsthand the difference that it can make, the very grave harm that it can do to consumers not only in terms of delaying the availability of a drug, but also the affordability. so i feel very strongly that your determination is welcome, and i want to thank you for it. can you give us examples of

circumstances where a pay for delay agreement might be justified through the ftc investigation process? are there such circumstances, if any, when you can anticipate some payment would be presented from the presumption against it? >> sure. and the supreme court spoke to this in the activist decision. so, for instance, if a payment merely reflects anticipated litigation costs that would be avoided, that would be one instance where we would not conclude that the payment was for anticompetitive purposes. >> and if that claim were made, how would you determine whether, in fact, it was factually justified, the magnitude of the payment, the nature of the agreement, what would you look to? >> it would be a fact-specific determination, so we would be looking very closely, comparing, yes, the size of the payment in relation to anticipated future

be litigation expenses. that would certainly be a key factor. but we'd be looking, again, closely at all the relevant facts. >> and aside from litigation costs, can you anticipate or describe other circumstances that might justify these types of payments? >> there may be services that might be provided that are entirely independent of any desire to make a payment to induce abandoning patent challenge in order to delay generic industry. so in that circumstance a payment may be justified. but, again, all of this would depend very much on the specifics of any particular case. so it is an intensive, fact-intensive inquiry. >> would it be lengthy? >> these do take time to evaluate, yes. >> but presumably they could be put on fairly fast track if the presumption indicated that they

should be, in effect, barred or pursued through legal means? >> i can assure you that we're going to be pursuing and evaluating these agreements and pursuing pending investigations as expeditiously as possible. at the same time, we want to be careful only to move forward with regard to anticompetitive agreements that do cause serious harm. >> in your experience, are these pay for delay agreements increasing in -- i know the number's 100 out of 140 did not involve over the recent past pay for delay kind of settlements. but in your experience are they increasing? should we be more and more concerned about them? >> yes. over the course of time that we have been examining these settlement agreements, we have seen a steady increase. inphysial year 2012 -- fiscal year 2012, we saw 40 reverse payment settlements that are potentially anticompetitive.

again, our hope is that now there's a standard that's been set by the supreme court under the rule of reason that that will create a deterrent effect. >> thank you. thank you very much. >> thank you very much, madam chairwoman. we appreciate your testimony. do you have anything more, senator lee? okay. >> just a follow up on where we were a few minutes ago. so suppose as i understand has happened on a couple of occasions you have had a reverse payment settlement in one of these scenarios, and that settlement allows the generic manufacturer to enter the market prior to the operation of the patent -- expiration of the patent term thereby introducing competition. but in a subsequent challenge to the validity of the patent, there was, in fact, a finding that the patent was valid.

in that circumstance it appears that you actually introduced competition earlier, and there appeared to have been some price moderating influences as a result of that earlier entry. wouldn't you have to concede in that circumstance you've got procompetitive effects? >> when a brand name manufacturer has a strong patent, it's likely to prevail in litigation. and that's absolutely fine with us. as you've noted, it's absolutely appropriate for the manufacturer of a pioneer drug to recoup its investment. it has a strong patent that withstands scrutiny and is deemed to be valid, that's an absolute fine result from the antitrust perspective. the concern we have, again, is evaluating agreements from the time they're entered into whether the objective is, in fact, to eliminate the risk of

competition and induce a generic patent challenger to abandon the pat tent challenge when we -- patent challenge when we don't know what the outcome would have been and to agree to a delayed rollout of a generic product. that's what the concern is. >> okay. and, again, is it your position that rule of reason analysis is itself inadequate to the degree that it makes this legislation necessary? >> i don't believe the rule of reason standard is inadequate. my point in backing the proposed legislation is simply to say that that, in my view, because of the significant concerns these types of agreements raised in my view it would be appropriate to have a presumption which can then be rebutted, because it would create greater clarity, and it would create more of a deterrent effect and would help the agency more quickly eliminate

anticompetitive reverse payment set elements. >> okay. thank you. >> thank you very much. and i would just note again for the record when you have a ceo talking about the fact that we were, quote, able to get six more years of patent protection, that's four billion in sales that nobody expected. to me, when you look at the numbers and the change since those circuit court decisions, this is more than just about some patent litigation. this was about a deliberate effort to delay these drugs on to the market to enclose profits on the backs of consumers. and that's why we are trying to do something that's reasonable, that will still not upset the market with innovation which i don't think it will in any way, and we're focused on this very narrow category which i know the ftc has been focused on of these pay for delay deals. narrow as it may be in a litigation standpoint, it's not

narrow for the consumers that have been having to foot the bill. so thank you very much, madam chairwoman. and now we'll bring up our second panel. >> thank you. [inaudible conversations]

>> all right. i'd like to introduce the distinguished witnesses on our somewhat large second panel, and we'll start with mr. robert ramaskoe, he is the president of aarp. before becoming president, he served as board secretary and treasurer and chaired the organization's audit and finance committee. he was previously the president and chief executive officer at jcpenney direct marketing services. next we have ms. diane beery, she is a parter if at arnold and porter working with the firm's health care and antitrust practice groups. she's also worked for the pharmaceutical research and manufacturers of america as their executive vice president and general counsel. next we have mr. michael carrier that i believe senator franken

referred to is a professor at the rutgers university school of law and a leading authority in antitrust copyright and patent law. he's a member of the board of advisers at the american antitrust institute and a past chair of the executive committee of the antitrust and economic regulation section of the association of american law. next we have mr. jonathan orszag, i know your brother -- and i was at his wedding -- is a senior -- i assume you were there. >> so was i. >> okay. i was a little nervous to ask that, but i'm glad you were there. that's a good thing. is a senior managing director and member of the executive committee at the economic consulting for compass lexicon, llc. previously he served as economic policy adviser to president clinton's national economic council and also served as the assistant to the u.s. secretary of commerce. additionally, mr. orszag is a senior fellow at the center for american progress and a fellow at the universityover southern

california's law and policy. next, mr. mike russo, u.s. public research group's federal program director from 2010 to 2012 he was u.s. policy analyst for health care and prior to that he served as calpers health care advocate. mr. russo has authored and co-authored numerous reports on health care policy. finally, mr. aduni is senior vice president of economics where he specializes in antitrust, intellectual property and the evaluation of commercial damages. he has analyzed the competitive consequences of mergers in a wide range of industries and addressed the liabilities involving predatory pricing and no knoppization. thanks to all of you for appearing at our subcommittee's hearing to testify today. i ask you to rise so i can administer the oath. do you affirm that the testimony you're ant -- about to give

before the committee will be the truth, the whole truth and nothing but the truth, so help you god? thank you very much. mr. ramaskoe, if you could begin with your opening statement. >> thank you. chairman klobuchar, ranking member lee, on behalf of our more than 37 million members, we thank you for holding this hearing. my name is rob, i'm a member of aarp's all-volunteer board of directors and honored to serve as president. older americans use prescription drugs more than any other segment of the u.s. population. these drugs play a critical role in their health and financial security. two-thirds of people 65 and older report using three or more prescription drugs within the past be month. 40% used five or more. unfortunately, retail prices continue to rise faster than inflation. generic prescription drugs are considerably less expensive.

in fact, retail prices are actually falling. generic drugs have proven to be one of the safest, most effective ways for consumers to lower their prescription drug costs. they have been essential to the recent slowdown in health care spending. aarp believes that eliminating pay for delay agreements will result in additional savings for consumers and taxpayers the agreements provide benefits to drug manufacturers at the expense of consumers. federal trade commission estimates that pay for delay agreements cost consumers and taxpayers $3.5 billion a year. if nothing changes, that's $35 billion over the next ten years. the ftc has found agreements keep generics off the market for an average of nearly 17 months longer than patent settlement agreements without such payments. in the meantime, consumers must pay brand name drug prices, typically 80-85% higher than generics. this substantially raises the cost for consumers, businesses

and taxpayer-funded health programs such as medicare and medicaid. putting an end to these agreements will not only save consumers and taxpayers money, but will also help prevent patients, including older americans, from forgoing needed medications because of the high cost of brand name drugs. researchers have found that the cost is one of the primary reasons why older adults do not fill prescriptions, skip doses or take smaller doses. when people do this, they ultimately use more expensive urgent care and expensive in-patient hospital services later on. this results in extra health care costs estimated to be as much as $290 billion each and every year not to mention the toll on the individual's health and lives. unfortunately, pay for delay agreements are increasing, giving the pharmaceutical industry faces an unprecedented number of patent expirations, in the trend is likely to

accelerate. several of the top ten leading medicines including new york stock exchange yum, celebrex and yes, sir to have are set to lose patent protection over the next few years. a recent report examined events as the popular anticholesterol drug lipitor first faced generic contribution including a reported pay for delay agreement. the report found that the retail price of lipitor increased by 17.5% in 2011. lipitor's raising its price while the alleged pay for delay agreement was in place. the average annual retail price of lipitor increased by roughly $300 between 2010 and 2011. i hear from our members just how punishing brand name drug prices can be. john charles from indiana is one example. a longtime lipitor user, he was paying $70 out of pocket for a three-month supply. now with the generic he only pays $15 for that same three-month supply.

this might sound like much, but to john and for millions of older americans, particularly those on fixed incomes, in this reduction made, in his words, a dramatic difference. aarp has filed a friend of the court brief in the recent supreme court challenge on pay for delay. we supported the ftc's argument that pay for delay agreements are anticompetitive. the supreme court decision represents a major step forward with more antitrust claims against pay for delay likely to go to court and receive the scrutiny they deserve. however, experts generally agree that pay for delay agreements, while now more legally risky, will continue unless congress intervenes. we belief legislative solution is needed to eliminate these agreements and save money for consumers, businesses and taxpayers. we urge congress to take action on senate bill 214 to preserb access to -- preserve access to generic acts. the cpo, as we know, expects this legislation would accelerate the availability of

generic drugs and save $4.7 with over ten years. we're also a strong supporter of another bipartisan bill, senate bill 504, the fair and immediate release of generics act sponsored by senators franken and vitter. the cbo estimate of savings for that is $3.8 billion over ten years. we are committed to working to further lower the cost of prescription drugs through the enactment of responsible changes that improves access and reduces costs for consumer, businesses and medicare and medicaid. we look forward to working with pens of congress from both sides of the aisle to address pay for delay agreements. we seek to insure that each and every american has access to affordable prescription drugs. thank you very much. >> very good. thank you very much. ms. beery. >> [inaudible] there you go. good morning. my name is diane beery, and a i'm a partner if in the law firm

of arnold and porter. members are a leading research-based pharmaceutical and biotech companies. pharm ma and i appreciate the invitation to participate on important issues concerning pharmaceutical patent settlements. during my own more than ten years in private practice, i have counseled pharmaceutical companies on the antitrust implications of the hatch-waxman settlements and represented these companies in antitrust proceedings before the ftc and various courts. and, of course, while i was general counsel i worked on these issues intensely and helped shape the position on this important topic. i'd like to briefly begin by putting the patent set elements we're discussing in context. as ranking member lee noted, it takes on average more than $1 billion and 10-15 years to bring an innovative medicine the market. and the majority of drug candidates fail during the

development process. innovators need strong patent protections simply to justify making the investments required. in contrast, the hatch-waxman act allows generic drug companies to the use a far less expensive and faster pathway to fda approval. one expert has pegged the cost of preparing and filing an abbreviated new drug at about $1 million. based on this and other factors, the hatch-waxman act creates significant incentives for drug companies, generic drug companies, to challenge patents, even where the innovative is highly likely to prevail in litigation. according to a recent analysis basin odd the ftc's own data, to first-filing generic challenger often can justify challenging a patent if it believes it has only a 1.3% chance of success of winning that patent challenge in court. against this backdrop it's not surprising that we have seen a proliferation of hatch-waxman's challenges. it also should not come as a surprise that parties often

prefer to minimize costs, minimize litigation risks and deal with the business of uncertainty by settling hatch-waxman cases. from pressure in spite of these -- in spite of these dynamics, they have criticized certain types as pay for delay, but respectfully, it's a misnomer -- >> you can see this entire hearing online at c-span.org. we're going to leave it now for live coverage of the u.s. senate. senators have returned from their lunch meetings and will work this afternoon on spending for the next budget year for transportation, housing and community development programs. live senate coverage now here on c-span2. that had it not been for the passing of my predecessor, senator frank lautenberg, i would not be here today. so i want to associate myself with the tributes that have already been paid to his memory. madam president, it occurred to me that if i waited any longer before speaking on the senate floor for the first time my

maiden speech and fair well address would be one and the same. mr. chiesa:my service will be brief but for me i know it will be one of the highlights of my life. i want to express my heartfelt appreciation to my family, my wife, and my children for enthusiastically supporting a decision we made as a family to allow me to be here. as everyone in public life knows the support of your family is indispensable to your service. my daughter hannah is here in washington this week supporting her dad. i'm grateful to governor christie for the confidence he has shown in me by naming me to this position. i am deeply humbled by the opportunity to serve the people of my state, the state where i was born and raised and am raising my own family here in the united states senate. some refer to senators who have appointed to unexpired vacancies as caretakers. i reject that label for myself as i imagine others have who

found themselves in similar positions. no one who has the high honor and privilege of serving in this body should be content to serve as a caretaker to merely keep the seat warm. representing the people even for a brief period of time demands one works to make a difference. my senate colleagues show me that every day with their commitment. today i would like to use this great honor to help give voice to a shockingly large and largely unseen group of people who have no voice of their own: the united nations estimates there are upwards of 27 million of them around the globe. there are believed to be at least 100,000 of them here in the united states. they are among the most exploited, abused and neglected people on the face of the earth. they are victims of human trafficking. they are, to be more direct, modern-day slaves. over the course of my career both as an assistant u.s. attorney and more recently as the attorney general of new jersey, i have come face-to-face with the terrible misery of human trafficking.

the faces of its victims are haunting. they are often young and more often than not they are female. they come from every corner of the world but especially from those places where poverty and want define day to day existence. they are exploited by human predators that have no respect for the law and no respect for basic decency. often lured by their captors with empty promises of a better life, the victims are instead utterly betrayed. these victims are robbed of their youth, their freedoms, their dignity, their health and sometimes even their lives. they must not be forgotten. they must not be robbed of justice. human traffickers, the purveyors. modern day slave trade do enormous harm to victims. when these victims are used in the promotion of crimes such as prostitution, they are debasing our neighborhoods and families. as they exploit the victims by forcing them to labor for little or no money in a wide variety of

workplaces and appalling circumstances they are also exploiting employers who offer good jobs at fair wages and safe works conditions. as they abuse their victims, they are abusing our commitment as a society to honor the dignity of every human being. my first exposure to fight against human trafficking goes back to my tenure as assistant u.s. attorney in new jersey and as new jersey's attorney general i made this fight a priority issuing a directive on human trafficking to sharpen new jersey's focus in the fight against this terrible crime by channeling more resources and greater attention to the problem. this effort is already producing results. just over a week ago the new jersey attorney general's office arrested six people in lakewood, new jersey, and charged them with various human trafficking and other offenses. accused of running a sophisticated network that brought dozens of women into the united states from mexico to

work in illegal brothels. those arrested in lakewood will now face new, tougher penalties if convicted. and their victims have been saved from the did he go gradation their -- from the degradation their captors were subjecting them to. as satisfying as it is to see justice done to the traffickers, there is a greater sense of accomplishment in restoring freedom to those who were held brutally in bondage. there are efforts underway to find and prosecute human traffickers at home and abroad as well as efforts to identify and aid the innocent victims of human trafficking. the department of state's office to monitor and combat trafficking in persons leads our nation's effort to combat human trafficking around the world. partisan department of homeland security -- the department of homeland security's blue campaign works with groups to provide information, training and outreach. countless law enforcement officers and prosecutors at every level of government are united in the fight to end human

trafficking. and untold numbers of organizations and caring people have committed themselves to aiding the survivors of this terrible assault on human dignity. in this body, the senate caucus to end human trafficking led by my distinguished colleagues, the senior senator from connecticut mr. blumenthal, and the junior senator from ohio mr. portman, helps to combat human trafficking by promoting awareness, removing demand, supporting prosecution efforts and providing appropriate service systems for survivors. i fully support their outstanding efforts and look forward to working with them on this important issue. and there's more we can do. having served reece he be -- rey as attorney general i know the states and specifically the state's attorney general feel hampered in their effort to put an end to this insidious practice of using the internet to sell illegal sexual services especially when they are exploiting victims of human trafficking. i would urge my colleagues to carefully consider any proposals

that may come forward to open loopholes -- propose loopholes in the federal law. there are unfortunately no easy answers. human trafficking can be hard to detect and even harder to prove. it is not unusual for victims to be unaware that they are victims of a crime. their captors are often successful of persuading their victim that what is happening to them is their own fault. because of the incessant and violent intimidation to which victims are subjected they may be afraid to escape. fearing retaliation from their captors or perhaps fearing they will be deported or returned to the situation they sought to escape from in the first place, they are reluctant to seek help. or even to offer help in punishing their captors once they are freed. the challenge faced in fighting human trafficking is compounded because not enough people, even in law enforcement and the justice system, recognize it when they confront it. that is why efforts to promote

greater awareness of the signs of human trafficking are indispensable to the success of this fight. and everyone can take up this cause their own way. one of the more inspiring efforts has been initiated by a group of middle and hugh school students from my -- and high school students from my state. in 2010 under the guidance of dan poppa, a social studies teacher formed a group called projects day goal. they created a web site pieces of art and launched a project to spread awareness of human trafficking. the students and their teacher set ambitious goals for their work. one is to enlist the help of the nfl to raise the awareness of human trafficking. that is a goal i share. the people of new jersey are excited to be hosting this year's super bowl at world class

met life stadium. we look forward to playing the first outdoor cold-weather super bowl in history. but new jersey is also determined to prevent the usual influx of human trafficking who it is widely acknowledged have in the past brought against their will to unlikely events as part an illegal sex trade. i will be informing everyone involved in the super bowl to raise awareness to eliminate this insidious practice. i know mr. poppa and the students involved will enthusiastically join me in that effort. each of us, madam president, has the opportunity to give voice to the voiceless victims of human trafficking. that is why i intend to focus much of the time i do have in this body to advancing the goal of ending human trafficking and aiding the victims of this terrible crime. i look forward to working with all of my colleagues and with all those who share my commitment to this fight.

finally, madam president, as someone who is new here and will not be staying long, permit me to express my appreciation to so many of my colleagues from both sides of the aisle who have been extraordinarily generous with their time, their knowledge, and wisdom in helping me meet the awesome responsibility that i have been entrusted with. senator mcconnell has been especially helpful to me. he is a leader not just by title but by the way he conducts himself every day in this body. i also want to thank my fellow new jersey senator, senator menendez whose collegiality and guidance have been of great assistance to me during my transition. madam president, the senate has long been guided by ancient traditions that have served the institution and the nation well. i trust that in the months and years ahead it will continue to honor the practices that have caused it to be known as the world's greatest deliberative body. i will certainly try to do my part during my time here to honor those traditions and uphold the special and unique place this body holds in our system of governance.

thank you, madam president. i yield the floor. mr. cornyn: madam president? the presiding officer: the republican whip. mr. cornyn: madam president, i want to say briefly to our friend, senator chiesa, how much we appreciate his remarks here today. i'm reminded as the author of ecclestiastes points out, time and chance happen to us all. and while he may not be with us a long time here in the senate, i have every confidence, given his tremendous track record of public service and the confidence that governor christie has had in him to make this appointment, that we'll be hearing more great things about senator chiesa in the future.

the presiding officer: the republican whip. mr. cornyn: madam president, president obama is scheduled to give a major speech on the economy tomorrow. unfortunately, according to press reports, his new ideas for bolstering job creation bare a remarkable resemblance to his old ideas. unfortunately, those ideas which have given us the weakest economic recovery and the longest period of high unemployment since the great depression. now, the president will probably quite effectively talk about -- quote -- "winning the future and helping america's youth compete in the global economy." but speeches are more than just words. they have to be about the policies. and unfortunately on that count not withstanding the fact president obama is a marvelous

speech maker, his policies have resulted, as i said, in a weak economic recovery, and a less prosperous america and more debt and burden for young people looking for a way to -- a way out. so the problem is that president obama -- not his speeches but actual policies, have done tremendous damage to the economic prospects of the same people he purports to be championing. the obama economy has threatened to create a lost generation of younger americans who are drowning in debt and are unable to find good, full-time jobs. first, on the issue of debt, since president obama took office, the federal government has accumulated more than $6.1 trillion in new debt. let me correct that. since president obama took office, the federal government has accumulated more than $6.1 trillion in new debt.

now i doubt anyone within the sound of my voice can actually conceptualize how much money that is. but under the president's latest proposal that debt would grow even higher, by another $8.2 trillion over the next decade. the gross debt is now larger than our entire economy, which is why every american child enters into the world owing $53,000 each. we might as well call them generation debt. unemployment, as i mentioned earlier, remains intractable. the unemployment rate among young adults aged 18 to 29 is 12.7%. for the general population it is 7.6%. but for those 18 to 29 it is 12.7%. that figure rises to 16.1% when we include 1.7 million young adults who have simply given up

finding a job. and of course these are real live human beings, not just statistics. but the statistics are bad enough. and then there's the lack of good full-time jobs. last year the associated press reported half of all recent college graduates are either jobless or unemployed, in positions that don't fully use their skills and knowledge. a study in 2012 found only four out of every ten college graduates are doing a job that requires a four-year degree. it's been estimated that 41% of all underemployed americans are below the age of 31. and because as we've learned because of the obamacare employer mandate, many full-time jobs are being reduced to part-time jobs, especially in the hotel, restaurant, and retail industries.

in a new survey, 74% of small businesses said that they're going to reduce hiring, reduce worker hours or replace full-time employees with part-time employees. in other words, it's not just the slowly growing economy, it is actually the policies of this administration which are making it significantly harder for younger americans to find decent employment. and then, of course, there's the unkept promise of obamacare. the president extravagantly promised if you like what you have, you can keep it. for a family of four, your premiums are going to be reduced by $2,500 on average. well, we've found out that millions of americans if they like the coverage they have, they cannot keep it and will lose it, and that instead of a $2,500 reduction in premiums, an average family of four will see an increase of $2,400. once it's fully implemented, younger people will be

especially burdened. they'll may pay much higher health insurance premiums than they are today. indeed, a recent survey of large health care insurers found that premium costs for young and healthy americans in the individual and small group market will increase by an average of 169%. according to "the wall street journal," healthy consumers could see insurance rates double or even triple when he they look for individual coverage under obamacare. and it's not hard to understand why. under obamacare's provisions, you can wait until you actually get sick before you can buy insurance under a concept known as guaranteed issues which then hardly resembled insurance as any of us think about it. because of the so-called age banding phenomenon where premiums for younger people cannot be any more than -- older people, excuse me, can cannot be any more than three times what they are for younger

people, younger people are going to have to pay higher premiums to subsidize the higher costs of caring for people when they get older. and then there is the triple whammy perhaps of higher education costs, some of which we're trying to address here with bipartisan student loan reform. but under president obama, the average cost of tuition and fees at a four-year public college and university has increased 27%. again, madam president, we've been talking about how do we deal with the interest rates on that debt, but the fact is the principal has gone up 27% just in the last five years. for that matter, it's estimated that four out of every ten americans who graduated from college in 2009, 2010, or 2011 have not been able to pay off any of their student debt. as a longtime silicon valley businessman recently noted, the

millennials are the most educated generation in american history, but they're also the most indebted. is there any wondzer that only one out of every five recent college graduates say their generation will be more successful than the one that came before them? now, my parents were part of the so-called greatest diswrengs that tom -- generation that tom brokaw calls, the world war ii generation, people that risked everything they had and sacrificed everything they had to ensure my brother and my sister and i would have a better life and have more opportunities. but, unfortunately, as a result of the failed policies we've seen over the last five years, recent college graduates believe they're going to have less opportunity and less prosperity than generations that came before. there's no reason why that has to be the case. there's no good reason why the obama economy has to be the new

normal, madam president, in a country as pren entrepreneurial and innovative as the united states. many people have forgotten forgot ten recipe for a strong, sustainable economic growth. i would invite them to visit my state of texas. which has been luring job creators from all across the nation and lo and behold you find when people have opportunity, and jobs, they tend to vote with their feet. which is one reason why after the last census we had four new congressional seats created in texas because people had literally shifted from parts of the country where they couldn't find jobs to places like texas where they could. here's just some interesting comparisons. in 2010, the texas economy grew 71% faster than the national economy, 71%.

in 2011, it grew 125% faster. and last year it grew 92% faster. these numbers reflect more than just happenstance. they reflect the difference between the policies that are embraced here in washington, d.c. and the policies embraced in my state. for example, here in washington over the last four years, president obama has -- his policies have actually made it harder for businesses to create jobs because of taxes, because of regulation, because of things like the costs of obamacare. in texas by comparison, we've worked very hard to make it easier and indeed if you want more of something, seems to me you would make it easier to create, not harder. which is why chief executive magazine has named texas the best state for business eight

years in a row. here in washington president obama's policies have increased taxes by $1.7 trillion and increased our national debt by $6.1 trillion as i mentioned earlier. in texas we have no state income tax and returned a projected deficit into a projected $8.8 billion surplus thanks to the leadership of our governor and the members of the state legislature. here in washington, president obama's presided over the weakest economic recovery and the longest period of my unemployment since the great depression. in texas, the total number of jobs has grown by nearly 3 % since -- 32% since 1995 while the total number of jobs nationwide has grown by 12%. 32% versus 12%. here in washington, president obama's policies have actually hampered one of our greatest natural resources, which happen to be our natural resources.

energy production on federal lands, to be specific. in my state, public policies have consistently encouraged energy development and total statewide oil production has increased by 94% between september, 2008 and september, 2012. i say that, madam president, at the same time where we are the number one producer of electricity from wind energy. we believe in truly an all-of-the-above approach. but texans are unapologetic about our desire to create jobs in the oil and gas sector and produce the energy to power our state and the nation. all you have to do with is look at the phenomenon in the shale in south texas and the permanentian bases -- permian basin. the eagleford shale produced, last year produced more than

352,000 barrels of oil a day. over that same period,, the number of eagleford bringing drilling permits increased from 26 to 4,100. at the time we see the middle east continuing its trend of being a dangerous place, why in the world wouldn't we want to develop more of our natural resources here at home and create jobs at the same time and to relieve our dependency on imported oil and gas from dangerous parts of the world? in the midland area which is part of the permean basin, high school graduates can earn $75,000 driving a truck. many students aspire to all sorts of other jobs and they're trained for it but the point is that energy production, taking advantage of the innovation and the technological changes in oil and gas production can great jobs and opportunities and help wean us from imported energy.

here in washington, unfortunately, the administration is still clinging to the misguided policies that are preventing the united states from reaching its potential, its full domestic energy potential. consider these numbers. between 2007 and 2012, soalt natural gas production increased by 20%. total u.s. oil production went up by 22%. however, oil production on federal lands, that is subject to the control of the federal government, actually went down 4%. on natural gas production on federal lands dropped by 33%. how do you reconcile the disparity? well, the oil and gas and natural gas production occurred on private lands owned by private parties, not the federal government. so the federal government's record is actually quite dismal in comparison. so the message to president obama as he pivots once again to

the economy, the message couldn't be more obvious. that the president really does care about winning the future and henning the millennial generation compete in a globalized world, he should abandon the policies that have saddled younger americans with so much debt and made it so difficult for them to find good jobs. in short, it's time to replace the obama model with the texas model. madam president, this chart makes the comparison i mentioned earlier. economic growth in 2010 after the 2008 fiscal meltdown, we saw the national economy growing only at 2.4%, the texas economy at 4.4%. we need to get the national economy growing closer to 4% in order to create the jobs that are necessary to give young people an opportunity to work and provide for their families and to build for their future. in 2011, we saw actually the national economy slow down at

1.6% growth. and indeed the texas economy slowed down a little more, albeit at 3.6% growth. and then in 2012, last year, we see the national economy bouncing along at the bottom with only 2.5% economic growth in 2012, the texas economy was growing as 4.8%. i know my friends from other parts of the country might discount my remarks here today and say, well, this is just a senator from a state who's proud of the accomplishments of his state and the people who made it possible and they would be right, i am. but this is also about what louis brandeis once called the laboratories of democracy. that's one reason why it's so important to have not just a national government, but a federal government with national responsibilities in those areas the states and the individuals can't otherwise take care of

themselves. and reserving as the 10th amendment to the united states constitution points out, all other power not delegated to the federal government being reserved to the states and to individuals. that's what protects our freedom and that's what creates these laboratories of democracy. so texas, so illinois, so washington state, any other state, wisconsin, can try these policies and see what works and what doesn't. what creates the prosperity and opportunity for their people, and hopefully, just hopefully, we in washington, d.c., those of us who happen to work here as part of our job, we will embrace those policies and those success stories and make them possible for the rest of the country as well. madam president, i yield the floor. mr. durbin: madam president,? the presiding officer: the assistant majority leader. mr. durbin: let me join the texas chamber of commerce and everyone else and thank senator cornyn for this promotional

speech on behalf of the state of texas, he's proud of his state. i would be too if i represented it. i represent a state called illinois and we're pretty happy with what we have in our state. he looks longingly at lake michigan. they wish they had water in texas. we have a lot of it. each of us is produced proud of our states. i'm not going to go through a tick list even if i could of what's wrong with texas. i would like to speak to some of the national issues that the senator from texas raised. what about this obamacare? if you listen to the description by the senator from stx tx it's a the big hand of government raising the government of health insurance for americans. why would they do that? why would congress pass something like that? turns out that's not even part of the story. here's the story: too many americans today don't have health insurance. they still get sick. when they get sick what do they do? they go to the hospital. usually the emergency room.

and they get treated. and if they don't have the money through health insurance to pay for it, how does it get paid for? raise your hand, america. if you own an insurance policy, you're paying for the care of those without health insurance. transferring the cost of their care to the rest of america. is that fair to your family or your business or to you? no. the idea behind obamacare was to extend the reach of health insurance to more americans. we've tried this, you know, the senator from texas talks about the states as laboratories of experiment. we tried this experiment under someone called governor mitt romney of massachusetts. he came up with the original obamacare, romneycare in massachusetts and said everybody in the state will have health insurance and it's working. we're trying to do this on a national basis. so that everyone is engaged in paying for their health care and so that everyone has the peace of mind of being protected with a health insurance policy. what about those policies?

there's another thing not raised by the senator from texas. what good is a insurance policy if it isn't there when you need it? what good is a health insurance policy if it has a limit on how much it will pay and someone you love in your family just got diagnosed with a serious cancer illness and now faces surgeries, chemo, radiation that could run into the tens of thousands of dollars well beyond the coverage of your policy. that's when people face reality. and that's what obamacare was all about. take the lifetime limits off of health insurance. so that if some unwe patrickable accident or illness comes your way, it won't bankrupt your family and you still get good care. those who want to abolish obamacare ought to answer the question, you want to go back to lifetime limits when it comes to health insurance? there's another element, too. you know, we've got some young peerm in the united states senate but some of us have been around, many of us are in a

position where preexisting conditions apply to all of us. if you had to fill out that questionnaire, there was probably something in your back ground if you're in your 50's, 60s, or beyond that would be characterized as a preexisting condition. it might mean in the old days, health insurance companies would say, no thanks, we don't want to run the risk of somebody who had high blood pressure, someone who has predie bea prediabetes cond, something who has mental illness in their families. so they wouldn't sell you health insurance, preexisting conditions. in america, almost every family has one, whether it's a child or someone who's up in years. obamacare says stop discriminating against americans under health insurance policies for preexisting conditions. when you hear the republicans talk about eliminating obamacare, do they want to go back to the day when you couldn't even buy a health insurance policy with a preexisting condition? and what about this issue of insurance through your business

that you work? turns out 96% of the businesses in america today would not be mandated to provide health insurance coverage. they already do or they wouldn't be required under the law. we're talking about a small percentage but an important percentage. the president has said, we'll give us an additional year to make sure we get this right and work with business for the right solution. i think that's reasonable. i've said it before and i'll say it again -- when it comes to writing laws, the only perfect law ever written was written on clay tablets and carried down a mountain by senator moses. ever since then, we've done our best and we can always do better. but here's the problem. the national restaurant association came to chicago about six weeks ago genuinely concerned about obamacare and what it meant to their industry and i listened to them and i said i'm willing to sit down with you, let's find a way to help you and businesses just like you provide health insurance that's affordable for your employees. it's the right thing for them. and i said, i'll tell you what,

i guarantee you, if you're willing to sit down and work out changes in obamacare in a good-faith way, i will bring democratic senators to the tab table. all i ask you is bring republican house members to the table. they can't do it. and you know why? you do, madam president, because you served in the house of representatives. because on 67 separate occasions since we passed obamacare, the republicans in the house and senate have called for votes to abolish obamacare. 67 times. somebody -- dana millbank in "the washington post" made that calculation just last week. 67 times they hav. they have been unwilling to sit down and talk about any changes. no. we want to abolish it and then we'll talk. doesn't work that way. in the real world, we try to solve these problems as we go. i know that this obamacare is important to this country. i think it may be the most important thing i ever voted on. because i've been there. i was a young father, a law student, married with a baby

with a serious medical problem and i had no health insurance. if you've ever felt helpless as an individual, as a father, as a husband, get yourself in that position. there are millions of americans who face that every single da day -- no health insurance and a heartbreaking illness in their family. let's put an end to that. this country's far better than that. let's aspire to something that really provides peace of mind to those across america. there's several other provisions in bill i'll mention before i talk about higher education. under obamacare, we make certain that families with children under the age of 26 can keep their kids under their health insurance policy. the family health insurance policy. why is that important? because young people coming fresh out of college may not have a job or they may have a job without health insurance. these young people can now stay under their parent's policies. over 100,000 of them in my state of illinois.

when i hear the republicans call for abolishing obamacare, i don't hear them calling for abolishing that. that's something families need or want. nor closing the doughnut hole. that's the amount of out-of-pocket expense that seniors have to pay for medicare prescriptions. obamacare close a so the out-of-bock et expenses dminnish andminnishanddiminishor eventua. i don't hear republican senators calling to abolish that and they shouldn't. the senator from texas raised concern about the cost of higher education. and i believe he characterized it as under the obama administration, the cost of college has gone up dramatically. lit is true, that did happen after president obama was elected. but i dent hear the senator from texas say president obama caused it. what's happening across america, states because of their own budget problems are cutting back on aid to higher education.

colleges, main public institutions, are raising the cost of fewition and that raises the debts -- tuition and that raises the debts that students end up with when they go to school that. has nothing to do with president obama. it's a fact, a serious fact, which brings us to the issue that will be on the floor this week -- student loans. currently, the student loan interest rate for subsidized loans -- and that's for families $30,000 in income or less -- is 6.8%. just a few weeks ago, it was 3.4%. now it's 6.8%. and so the question is: are we going to change it? are we going to try to bring down that interest rate? yes, we should. students are deeply in debt, too deeply in debt, and if we can reduce the cost of what they borrow, we should. now, let me add a caveat here. students need to think twice about borrowing. of course they should go to college, but many of them are being lured into schools that are dramatically overpriced. some of them are not worth it. that's a fact.

the for-profit college industry is a good illustration. ask a high school student if they know what a for-profit school is and they'll say, i'm not sure, what is it? well, it's the one that hits you right between the eyes on the internet every time you log on. these are the for-profit schools that are literally companies that make money off of offering education. the largest, university of phoenix, the combined enrollment of the university of phoenix is larger than the combined enrollment of the big ten schools. number two, kaplan, which owns "the washington post." and number three, devry out of chicago. those are the three big ones. what about those schools? there are three numbers to remember about for-profit schools, if you want to know. about 12% of all the kids come out of high school go to for-profit schools. the for-profit schools receive 25% of all the federal aid to education. and the for-profit schools account for 47% of all the

student loan defaults. why? they charge too much. their diplomas are worth too little. the good advice to young people is, start with your community college. if you don't have a clear path on your higher education. affordable, many choices n. most states, those hours are transferable. but students are making high-cost choices and getting high-cost debt. so now we're discussing what to do about it. this morning my friend, the senator from vermont, the independent democrat, bernie sanders, came to the floor and talked about the plight of young people. and he's right. they are too deeply in debt. there are too few jobs available. i boar them, as everyone should. he concluded, though, at the end that we shouldn't vote for the bipartisan student loan reform bill that we're working on here in the senate. and i have to disagree with my colleague on that. here's the reality. the interest rate today for undergraduate students is at least 6.8% on their student loans.

our bipartisan plan reduces that to 3.8%, a 3% savings for each student borrowing, undergrad student, borrowing for the loans that they need to go to school. 3% makes a difference. 6.8% -- 3.8%. makes a big difference. also, we make it clear that thee students are going to be protected in the long run from high interest rates. we put a cap on the interest rates that students will ever have to pay under our plan of 8.25% for undergraduate students. that, to me, is a sensible approach to take. we are trying to find a way to lower this even further. i believe in the premise that the federal government should be more actively involved to reduce the interest rate even more, but this is a good outcome. and for the next four or five years, students at all levels are going to see lower interest payments than if we do nothing. some of my colleagues are upset. they don't like this outcome. they would like to see a much different relationship between

the federal government and the students and their families. i would, too. but i know where the votes are. with the republican house of representatives, with the need for 60 votes in this chamber, that type of reform is not likely to occur. so i urge my colleagues, when the time comes to vote on student loans and the student loan interest rate, don't leave us in a position where we keep the 6.8% interest rate. let us bring it down to 3.8%, a more affordable rate that. is go for these students and their families. then let's join with senator harkin and senator alexander for higher education reform to look at the overall cost of higher education, to work with the president and find ways to reduce the cost of education, and to make sure that we provide the education and training our students need to compete in the 21st century. madam president, i yield the floor. mr. vitter: madam president? the presiding officer: the senator from louisiana. mr. vitter: thank you, madam president.

madam president, i now call up vitter amendment number 1744 to the appropriation bill currently before the senate. the presiding officer: the clerk will report the amendment. the clerk: the senator from louisiana, mr. vitter, proposes an amendment numbered 1744. mr. vitter: madam president, i ask unanimous consent to waive reading of the whole. the presiding officer: without objection. mr. vitter: thank you, madam president. madam president, i hope this is viewed universally as a commonsense, bipartisan amendment and i urge all of my colleagues to support this amendment through the roll call vote which we will have. it's very simple, very basic, i think very appropriate. it says that for the most serious crimes that exist, violent crimes, crimes against women and children, very serious crimes by anyone's definition, that these will be disqualifiers

for federal housing assistance. i bring this amendment, madam president, for two simple reasons. first of all, i -- i think this should go hand-in-hand with committing those extremely serious crimes. and, again, we're not talking about threshold crimes. we're not talking about first-time drug offenses. we're talking about aggravated sexual abuse, murder, sexual exploitation of children, violence against women. those are the four big categories. very, very serious, very violent crimes, usually crimes focused on some of the most vulnerable in our society, like abused women and like children. so i think it's very reasonable and common sense to say these crimes have very serious consequences. and one of those, the most obvious, is a stiff jail

sentence, in some cases life. but one of those consequences is also going to be the federal taxpayer is not going to give you housing or give you help for housing. but, madam president, there's a second i think equally maybe more important reason to support this commonsense disqualifier and it is to protect those other folks who need and use federal housing assistance and help clean up what historically has been areas that actually congregate violent crime and some of our worst social problems in federal housing projects. madam president, i grew up in new orleans. this has been a perennial problem in new orleans, but i'm happy and proud to say it's a problem that's been getting better, being solved bit by bit, particularly post-katrina.

like most major american cities, madam president, in the 50's and 60's, huge housing projects began to be built and began to grow in new orleans, and they were, unfortunately, centers of some of the worst of our social ills, particularly violent crime and drug abuse. and that's because we had policy which actually congregateed -- i hope that wasn't the intent, but actually tended to congregate the worst of those problems in these housing projects. and, of course, that fed on itself and made many of these problems even worse, and certainly subjected to -- subjected innocent folks trapped in those housing projects to some of the worst problems of our big cities. in new orleans, since katrina,

we have taken significant steps to get away from that, and so we have instituted new policy. they are less dense, these housing projects. they are more mixed income. about 100% of the folks in these projects are subsidized. it's usually a mixed approach so that you have some market base, some partially subsidized, some heavily subsidized, less dense environments. and so we have taken specific steps trying to learn from the horrible mistakes we made in federal housing projects, particularly in the 1960's, early 1970's. this commonsense test fits in exactly with that approach, and it says we're not going to subject people in these centers of subsidized housing to the worst violence and the worst social problems that we have. we're not going to congregate violent criminals, drug abusers, others in these housing

projects. and so the second compelling reason to support this vitter amendment is with innocent folks in those housing projects and to get some subsidized housing help in mind. they deserve better, and they do not deserve to be subjected to these worst of the worst, these horrible social problems that in the past we have actually congregated in public housing projects. so again, mr. president, i hope this is viewed as it should be, as a commonsense amendment, as one that deserves wide bipartisan support. i would also note it is extremely similar to an amendment that passed on the recent farm bill without controversy, the same basic rule with regard to the food stamp program. and so i urge all of my colleagues, democrats and republicans, to support this

straightforward, reasonable amendment on the roll call vote that we will have hopefully soon. thank you, mr. president. with that, i yield back the floor. ms. collins: mr. president? the presiding officer: the senator from maine. ms. collins: thank you, mr. president. first, let me commend the senator from louisiana for his amendment. it would restrict criminals who have been convicted of certain violent or sex crimes from receiving housing assistance through h.u.d.'s public housing choice neighborhood and tenant and project-based section 8 programs. now, public housing authorities and private property owners who provide assistance under these programs are already required

under federal law to deny admission or assistance to individuals who are subject to lifetime registration on a sex offender industry under a state program. however, when you move to the next stage, strangely enough, it's discretionary. under current law, prior violent criminal activity may be grounds for the denial of assistance for public housing and the section 8 programs, but it's not required to be grounds to deny that kind of assistance, and that is exactly the point that senator vitter is trying to make. so his amendment would tighten the current law to make it very clear that under certain

categories, aggravated sexual abuse, murder and murder in the second degree, sexual exploitation and other abuse of children and violence against women, that individuals convicted of those crimes would not qualify for public housing assistance under the programs that i have mentioned. as senator vitter said, this is a commonsense amendment. it will help to make the housing safer for the law-abiding citizens who are residing in them. he has targeted serious crimes, and i think his amendment should be adopted. so, mr. president, i am going to support the amendment, and i will be urging its adoption.

thank you, mr. president. mr. president, i would suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

ms. collins: mr. president? the presiding officer: the senator from maine. ms. collins: mr. president, i ask unanimous consent that proceedings under the call be dispensed with. the presiding officer: without objection. ms. collins: mr. president, one of the issues and questions that have been raised by many of my colleagues about this bill is

that at first glance, it appears to be higher than the president's budget request for these two departments, transportation and h.u.d., and the related agencies, and i want to explain why that is. it's a very legitimate question, but it has a very good answer. the answer is that the president's budget for the agencies and departments under our jurisdiction is artificially low because it relies on gimmicks and it relies on scoring differences between c.b.o. and o.m.b. so let me explain just a couple of areas where it will become evident to my colleagues why the difference exists and why the president's budget submission

actually is not less than the bill that is on the floor now if true budgeting principles and accounting were used. first of all, the president's budget proposes to shift $2 billion in existing discretionary programs to mandatory in order to appear to achieve savings, including $1.5 billion from amtrak's operating capital and debt service grants, and $450 million by removing large hub airports from the airport imimprovements program. in addition, the president's budget request assumes an increase in the passenger facility charge at airports from from $4.50 to $8.

well, mr. president, we've seen this movie before. when the f.a.a. authorization was being considered just last year, congress rejected this fee increase. there is no reason to believe that it's going to be accepted now, and yet that is built into the president's budget assumptions. we've seen them do that on a host of tax issues, too, so this is not unknown for this administration. there's another area which i think is highly significant. the president's request for section 8 project-based rental assistance is insufficient to fully fund existing 12-month renewal contracts with the

private property owners who participate in this program. in fact, mr. president, it's about 10% short of the amount that the administration knows is going to be needed to renew these contracts for the full 12 months of the fiscal year. that's about $1.2 billion that it is short. and that is about half of the difference that we're talking about between the budget's budget request and our bill, but surely it's not responsible to assume that somehow we're not going to pay these private property owners who are participating in the project-based section 8 program for the full year of rental assistance. it's not going to stop after ten

months. they're not going to be evicting their tenants who are receiving the subsidy. so true and accurate budgeting would have required the president to put $1.2 billion into his budget request for this program. finally, c.b.o. scored f.h.a. receipts -- and by that i mean the fees, the mortgage insurance premiums -- at $1.8 billion below o.m.b.'s score, which increased the cost of maintaining the existing level of services in our bill. now, we know there are disputes between c.b.o. and o.m.b. all the time. in this case, i'm not suggesting that it's a gimmick, as in the other two examples that i've

given you. i'm suggesting there's an honest difnhon --honest difference of . whether we like it or not, at times we're bound by c.b.o.'s score. and c.b.o.'s estimate of those f.h.a. receipts -- those fees, those mortgage insurance premiums -- is $1.8 billion below o.m.b.'s score. that's quite a difference. so if you add up those gimmicks with the amtrak program, moving from discretionary to mandatory, the assumption that congress is all of a sudden just months later going to change its mind on the passenger fee -- the passenger facility charge, nearly double them after just rejecting that idea just months

ago; the failure to fully fund the project section-8 rental assistance and the difference between c.b.o. and o.m.b., the genuine dispute on f.h.a. receipts, if you add that all up, it's just not accurate to say that our bill is $2.4 billion above the president's request. what we employed were c.b.o.'s estimate, go got rid of the gimmicks and we used honest budgeting. and that accounts for the difference. so i hope my colleagues will not be misled into thinking that somehow this bill is above the president's budget request. when you all apply honest budget accounting principles and take

into the difn difference betweee scoring of c.b.o. and o.m.b., it's obviously not different. in fact i would argue we are under the president's budget request. thank you, mr. president. mr. rubio: mr. president? officethe presiding officer: the senator from florida. mr. rubio: i ask to be recognizerecognized in morning s for up to ten minutes. the presiding officer: without objection. mr. rubio: thank you, mr. president. and this morning there was news that the president was going to engage -- the president of the united states is going to engage in series of speeches around the country to discuss the american middle class and the economy. i think that's a positive thing to start to focus on that a little bit. the american middle complas is the essence of america's greatness. i have said this often before because i have a product of that middle class, that working class, of how critically different that makes us from the rest of the world. every country has rich people.

and unfortunately every country has poor people. but one of the things that distinguishes america from the rest of the world is that we have this vibrant middle class. i have thraifd in my own live. my parents wer parents were wors people, came to this country without many connections. but they were able to provide for us a home, were able to do vacations and even provide us everything we needed -- not always everything we wanted, of course. that really distinguishes the country from the rest of the world, that vibrant middle class is the h the essence of our ecoc exceptionalism. i am glad the president has focused on the middle class. i hope we will as well. it's why i come to the ploor to speak to you about the middle class for a moment because i am very concerned about the impact that the health care law, obamacare, is having on the middle class. i know that republicans have been opposed to obamacare from the very beginning. and i understand a lot of people out there see obamacare as a bill that's going to give you access to health insurance that you may not have right now.

but what i want hopefully peep to understand, from a nonpartisan basis -- republicans, democrats, independents, no matter who you voted for in the last election -- that obamacare is not working out the way it was advertised. and in fact when i want to point to today is how obamacare is hurting that vibrant american middle class that the president is traig to focus on in his speeches and that i hope we will be focused on in our policies. so last week on friday i traveled to central florida. i actually went to a place called gatorland, an old florida tourist attraction where kids have gone to see live gators and the shows they put on. i had a chance to sit down and talk with them about their concerns regarding obamacare and importantly what it means not just for their business -- these are middle-class businesses, by the way. we're not talking about billionaires here. but, more importantly for me, the impact it was going to have

on their employees, the people that work for them, working-class, middle-class americans who happen to live in florida and work at these places. now, first i heard from the owner of gatorland who pointed out that he has a little over 100 full-time employees who work for him. you can mo imagine what i am talking bsm the people that take your tickets. some of them are young people who just got married. he gives them insurance. he pays a portion of their premiums and they pay the rest and they seem to be pretty happy with that insurance coverage. it's not perfect. they have to pay pour it out of pocket. but it is part of it. but it's coverage that they are happy with and through that coverage, by the way, they have a relationship with the doctor. a young couple, for example, the wife is a few months pregnant. they have been going to the same ob-gyn. you get comfortable with the doctor. you are happy going to this doctor. maybe it is the same doctor that helped you with your previous pregnancies or your kid's

pediatrician that knows your kid's history. sworn a happy with and your insurance and also a doctor that you're happy with. but there's a problem. health care costs and premiums are going up for this business. as they're sitting here looking into next year and beyond, their companies are already telling them, our premiums are going to go up. we can't tell you by how much, but it is going to be at least this much. the amount of money they put aside each year in gatorland's budget is going to go up big-time. so this business has to find the money from somewhere. one is they could just raise the price of admission. but they really cans do that. people can't afford it and they have some pretty significant competition nearby. their options are as follows: number one, they can take the insurance they're providing now their employees and get rid of it. replace it with another insurance that's cheaper and covers less. by the way, now it is a new

insurance, so these middle-class employees, they're happy with the doctor they're going to. that doctor may or may not be on the new plan. so now you destroy that relationship as well. it will be a cheaper insurance for the imleer an employer and e employee, but it meets the mandate and obviously gatorland can continue to operate. the second option they have is to reduce a group of people to under 40 hours. they don't want to go that, as proven by the fact that they're offering the coverage now. but they may have to do that. thetheir third option is to just pay the fine, pay a fine, and let these people go out and find their own insurance in the exchanges. the problem with that, number one, the exchanges haven't been created yet, even though you're supposed to be enrolled october 1. they don't exist yet. and, number two, again, the same problem, it is a new insurance company, which means you mi or may not -- you may or may not have the same doctor. a fundamental promise of this

law when it was passed is if you are happy why your doctor, you won't have to lose that doctor. if you are happy with your insurance, you won't have to lose it. obviously, that is not true. a young woman, the owner of something called f.c.s. building services, the company that provides janitors at night to come up and clean up your office. this is the epitome of the working class. you know what i'm talking about ... the people that come in after 6:00 and vacuum the carpets ands. these are your employees. she also offers them health insurance. but her health insurance premiums are going up next year big-time. she is going to have to go through the exact same choices as gatorland. in central florida there are janitors working more than 40 hours a week, have health insurance that they're happy with have doctors they have relationships with, and they are on the verge of losing all of that because of this law and because of its impact. i went -- met with another owner

of a place called funspot, one of these old florida attraction places. they actually have working five years at fun spot, they pay all your insurance, you don't pay a penny. but their costs are gimmick up bigger than anybody -- but their confidents are going up bigger than anybody else. they are going to have to find a newer and cheape cheaper insura. which means that people are going to lose their insurance. in florida, these are ticket takers and ride operators and people that clean up. these are middle-class, working-class americans. they will lose their coverage. i can tell you, they are not going to pay 100% of anyone's coverage moving forward because even if they wanted to, and they do want to, they can't. they can't afford t the premiums are going up because of obamacare. or they could come up with one of these newer plans that is cheaper and costs list money. but the same problem we're talking b you may say, maybe

this is a florida problem. it is not. the u.s. chamber of commerce did a survey and found that 75% of small businesses in america are going to have to do something like this. and in their survey that he found that 27% are going to have to cut hours to avoid the health insurance mandate because they can't afford it. 24% are going to hire less people, which is one of the problems at funspot. they want to grow fun spot. they want to grow more rides, more a tractions, more working-class jobs. that's not going to happen now. 24% of companies are going to hire less because of it. 23% plan to replace full-time with part-time employees. the congressional budget office has found that 7 million people in america, at least million people, are going -- at least 7 million people, are going to lose health insurance coverage that they have now. at least 7 million people have a promise that was made to them that is going to be broken.

if you're happy with your insurance, you are a geeing to lose your insurance because of obamacare. 5 million people will have to pay for more expensive plans because of obamacare because they make too much, according to the law, they won't qualify for a subsidy to help pay for it. it's not just businesses, by the way. brevard county -- i have the article right here. this is from florida today. some part-time brevard county workers in florida are getting their hours cut so that the county would not be forced by federal law to pay n.r.a for thr health insurance. the brother services department said 37 of his department employees have had their hours cut because of the health care issue. middle-class jobs. this is the middle class. they're going to lose hours. i don't care if you are a republican, a democrat, an independent, who you voted for in the last election. this is disaster for all of us. and rather than digging in and

saying, i'm going to fight until the death on this law because it has my name on it, because it was my signature achievement in my first term, i wish the president and the white house was more open-minded about saying, you know what? this is not work without the way we thawvment this is going to hurt bayh way too many peesm let's put the brakes on this. let's get rid of this and start over. but they don't seem to be focused on that. they claim to be focused on the middle class and yet we know millions of middle-class americans and a few hundred that i know personally in florida are going to be dramatically hurt by this law and yet it's full speed ahead. that's outrageous. we have one last chance i think to stop this, if the white house won't cooperate. and that's through our budgeting process. we are probably going to have to pass in september here a short-term budget to move forward into the next year. and a lot of my colleagues love to say that they're against obamacare. but if you vote for a budget that pays for obamacare, that pays for these things i've just described, you have voted for obamacare.

some will say, well, that's crazy. you are going to shout down the government over obamacare? no, this is only the tip of the iceberg. i could be here six hours describing all the problems with obamacare. moving forward on that is what's crazy. what's craze dpi is arguing that the only way we can move forward with a budget is i if it includs obamacare. what's craze did i is shutting down the government because the budget goes pay to implement this outrageous system. we need to wake up and realize what's happening. this is hurtin hurting the amern middle class. if we lose the american middle class, we lose what makes our economy different and special and unique. and so, mr. president, as you travel around the country this week, as you come to jackso jacksonville, florida, on thursday, i hope you will also explain to the american people how it is that you can justify cutting hours, cutting benefits, and taking away health insurance, and taking away existing health insurance and existing doctor-patient

relationships, away from millions of working-class and middle-class americans who are going to be hurt by this law because of your refusal and the refusal of many of your allies to consider suspending this or permanently repealing it and replacing it with something better. thank you, mr. president. i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

mr. reed: mr. president? the presiding officer: the senator from rhode island. mr. reed: mr. president, i would ask that the quorum call be suspended. dispensed with. the presiding officer: without objection. mr. reed: thank you, mr. president. mr. president, as you well know, since you've worked awfully and very effectively with respect to the issue of student loans, we're about to rush into a complete restructuring about the way we price student loans. i believe this is not the appropriate approach. i think there are fundamental issues with the student loan program that requires a comprehensive approach. i've tried with my colleagues to extend the 3.4% for a year so that we can do this

systematically and thoughtfully, do it in terms of not just interest rate structures but in terms and incentives to keep college costs down and also to deal with the increasingly difficult issue of the existing burdens that students have so that they can refinance not just in the future but families and students that are struggling today with a huge amount of student debt. student debt has exceeded $1 trillion, is past credit card debt as the second-largest household debt that we hold in the united states. and in this context, i think we have to go forward and look at this comprehensively. the bipartisan student loan act is a product of great effort and sincere effort to try to deal with this problem, but i do not think it will lead to a long-term stable solution that will benefit students. and what i think it will do is

shift the cost of these programs increasingly to students, and this is not the way it used to be. the idea that the government would generate revenue from student loan programs is a fairly recent one. from the first loan programs that we established in the 1950's, the programs have been designed as investments, something we pay for -- the government -- and we benefited from through increased productivity, through increased education of our citizens, increased ability to compete worldwide. it was not designed to generate profits. it was not designed to break even. it was designed to invest in the future of the country through its young men and women. and we invested in education because we understood that educational opportunity was directly connected to our prosperity and our security. indeed, it was the engine that was going to pull individuals up the ranks into the middle class

and beyond. and it was going to pull the country forward with increasing prosperity and increasing national benefits. in response to put nick back in the 19 -- sputnik in the 1950's we created the national education loan, what we know as the perkins loan to expand the number of college graduates especially in the fields of math, science, engineering and education. those are the fields today we're saying we need more math, science, engineering, education people. today we call it stem, a fancy term. back then it was just math, science, skwraourg and education. these -- engineering and education. these were low cost loans. no interest accrued on these loans while teachers were in -- students were in school and teachers got loans forgiven.

one of the authors was senator clay pell. the pell grant, work study and grants were the three pillars. we have low-cost loans, very low-cost loans relative to prevailing rates in the country. then we had a work study program. providing more educational opportunity then was seen as a necessity, not a luxury, not something that would be nice to do. and we've all benefited from it. the productivity of this country today is the direct result of those investments made in the 1950's and 1960's. in fact, i would suggest individually and with very rare exceptions every person in this body benefited. i know i did. after west point, which was funded by the government but required at least five years of service afterwards, i went to law school. i had to get a loan to help me

get through there, and i did. in fact, i will also dare say that nobody in this chamber today, with very few exceptions, without the access to and benefit to very generous student lending that persisted, that was part of -- it was a fixture of the 1950's, 1960's, 1970's and 1980's. now this notion that we need to educate our young people is even more compelling today than it was in the 1960's and the 1970's. now, this is a chart: jobs requiring at least some college education by 2018. 1973, less than 30% of the jobs required a college education. you could leave high school if you had good work habits and good skills, and you could start, and you could manage to make a living, buy a home, rise up through the ranks of managing production on the floor.

go get into the management if you are talented, ambitious, et cetera. less than 30%. now you see by 2018, you're looking at over 60% of the jobs, nearly two-thirds will require some college. here we were heavily subsidizing college education. now we're proposing to say no. students have to absorb the costs. families have to absorb the costs. this can't be a cost to the united states government in terms of our budget. that logic just doesn't seem compelling to me at all. now, the other thing we know too is not only that college is becoming more important in the sense of the jobs that need to be filled, but here's the other reality. this is the lifetime earnings, and you can see there is a huge increase in lifetime earnings with education. so when we make it more

difficult to go to higher education, we are basically telling people you're not going to earn as much as you could. and when we're wondering today about why there's so much inequality in this country, why wages aren't going up, it comes back in large part to the fact that we need higher-skilled workers, better educated citizens. and as we impose more costs on students and families to go and get this master's degree or professionallal degree or doctors degree, fewer people will do it. we're essentially telling those people you're locked in wherever you are. you're not going to be the one that moves from had -- that hume abode to a middle class home and beyond. that i think, frankly, is one of the most disturbing aspects that

people are facing across this country today. the realization and the fear that their children will not do better than they did. our parents, all of them i think could say with great confidence i'm working hard, i'm struggling, but i know my children will do better. and one of the reasons why our constituents skraos -- across this country are saying you're not getting it right is this growing perception, feeling, that no, their children won't do better. and by the way, this speaks volumes about our commitment to making sure that the next generation of americans does better. just look at the numbers. this is how you get well compensated in the united states. our country is based upon the notion that education is the engine that will pull you forward. that's what -- that's the way we're going to deal with this notion of inequality of income. that's the american solution.

and, again, i think as we depart from this tradition, we are going to find ourselves in an increasingly difficult situation. we are asking essentially in the proposal that's before us to, for low- and middle tph*bg -- income students to assume more of the cost than their parents. some can but they'll have less to invest in other things. some can't. even though in constant dollars the maximum pell grant -- we're still providing grants -- is, it is paying for a much lower percentage of course of higher education. i think that's an important point to note because this is not just about the level of federal support. that's why i urged to stop and look at a comprehensive approach. what's happening -- and these

are the pell grants just indicating how they went up dramatically in the 1970's and then they tapered off and finally based upon president obama's initiative, i believe, in 2009, they went up again based upon our changing from a bank-based lending program to a direct lending program, we shifted resources to the pell grants. the pell grants have been going up. but what has also been going up is tuition. and so when we're talking about the road to opportunity, when we're talking about dealing with this program kpraoe hen civil, just -- comprehensively, simply restructuring rates is not going to get it because this is what we're looking at. average tuition fees at public and private universities. the green line is the four-year private. that is shooting up out of sight. but we also know, and this might be anecdotal, is those are the schools, the elite schools, if you will, that in many cases provide even a more -- an

expressed way to opportunity and success for so many people. that's why they're so competitive to get into. those costs are rocketing out of sight. but just the four-year public colleges which used to be the backbone of our whole country -- you could go and get, with a modest fee, get a great education -- they're going up. and we know from testimony that's been reported here, a lot it is because as we're pulling back from supporting students and their families, guess what? states are doing the same thing. in my state it was years and years of reduced budgets to our university system, reversed only in the last two years by the present governor. we're pulling back. and what happens? tuition goes up. and so when you look back to the mid 1970's, if you 0 got a pell grant down here, you could cover almost the whole cost of a four-year education at a state school. you can't do that today.

what does that mean? you have to borrow. you have to borrow even if you're a relatively low-income, of modest means. so they are borrowing, and the consequences, we have seen a -- an explosion in borrowing. this is the total ffel -- that's the old name for the lending program, and d.l., the direct lending program today, the stafford loans. these are the amendments in 1966. back here it's very, very small. it's off the chart. and through the 1970's it was rather constant and then it started spiking up and here's the curve. a little bit of a downward spike here but that might be because, frankly, people are just dropping out. they can't afford to borrow. i'm hearing stories, you're hearing stories, of people leaving school because what's in it for me? i can't afford to graduate from

college with $25,000, $50,000 worth of debt and get a job, or maybe not get a job that's paying $35,000 a year. i'll never get out of that hole. but this has been an extraordinary explosion of lending. and as lending has grown, there is more of a need to take steps to curtail the lending or to help students deal with this lending. over $1 billion in outstanding federal student loan debt, a billion dollars that young people are going to some mao have to amortize, pay off through their lifetime and we've already 4 had studies from the federal reserve, had studies from leading authorities saying this will delay home acquisitions, it will delay all the things that we thought would happen almost automatically or routinely in this country. you go to college, and then by

your late 20's you've done enough to buy if home, start the family and become a pillar of the middle class. that hope and dream is receding. and there's other aspect to this. this gets into the whole accounting issues that we have to deal with. and that as c.b.o. looks at, you know, these issues and they score them, they've also indicated that the loans that we're having outstanding today between 2013 and 2013, the next ten years, will generate about $184 billion of if you will profit for the federal government. the difference between what the students are paying us back and what we are using to borrow, essential -- essentially our the difference between our costs and the repayments to us. this is a remarkable sort of

shift from investing in students throughout all of these decades post-world war ii to now essentially being able to generate income from students. since 2007, we have been seeing a positive return to the federal government on student loans, even from loans made under the old bank-based system because of the way the interest rates have run, because of our borrowing costs and because of the costs students have to pay. now, i think given the fact that we're able to generate $184 billion over ten years, we should be able to find our way through for a 3.4% rate for at least another year, but that, again, has proven elusive in terms of votes here on the floor. but i think more than just that, again, all of this suggests strongly we have a major challenge to reconfigure our student lending system, our --

our grant system, our work study system. we have a major challenge in lowering the cost of college educations rather than taking off like a rocket, it should be coming down. we can't do that in a matter of two or three days. it's going to take some comprehensive and coherent work over many, many weeks or months. and the problem we face in terms of looking forward and making changes is that under our budget rules, we've locked in 6.8%. so everything we do has to rotate around 6.8%. the proposals before us by my colleagues would lower interest rates in the first few years, but just to make up for the 6.8% assumption in the budget, it would have to raise interest rates in the out years. so for the first several years,

we're going to provide an increasingly expensive but relatively -- relatively, i'll family size -- inexpensive approach to student borrowing, but that has to be made up arit metically by higher costs for succeeding generations. so in little mundane example, if you're a senior in high school today, you will do reasonably well, not sells 3.4% but reasonably well. if you're a younger sibling who is a ninth or eighth grader, he or she will be paying for you. because those rates just to make up this gap will be much higher. we know they'll be higher. i must commend the authors of the legislation who have put in at least a cap for the various lending programs. originally as this proposal was wending its way through the house and senate, there were no caps so rates could soar up to

astronomical heights. still even with these caps the succeeding generations of students -- and this is a long-term proposal, an proposal that has a finite period of time -- this long-term, those rates will go up and up and up. now, the key aspect i think here that is driving all of this is the presumption, the assumption that we should not be investing in higher education as we have for decades. that we have to have a neutral, a budget-neutral solution. rather than saying we can go ahead and do things like close tax loopholes, move that money into higher education, which i would argue would be beneficial for everyone in the short run and the long run. so weave locked into this budget -- we have been locked into this budget neutral

approach and there is a 7 hoosmedz surplus actually but it's as close to zero in terms of budget neutrality as we could get. but i go back to the point which revenue neutral means that given the present law of fixed rates at 6.8% for undergraduate loans, 7.9% for other reasons loans -- other loans, we're going to enjoy it now and pay later. that's the essence of the proposal before us. and we could pay -- student could pay much, much more later. i think also the idea that we're going to fix this two years or three years hence is not reasonable because the cost of fixing it goes up with each year. and if our principle, our presumption is this has to be revenue neutral, there might be some good ideas about fixing it

but where's the money because that's what's going to have to be included to fix it. now, i think we can do better. i will be offering an amendment with senator warren that will cap this proposal at 6.8% for student loans and 7.9% for the plus family loans, the parent loans. that will be comparable to what the fixed loans rates are today. so we can at least tell all of our constituents no student will be worse off over the next not just three or four years but over the next ten years or the next 20 years, however long this legislation endures. and i think that's something that would be a useful improvement. we're paying it for it by a surcharge for people who are making over a million dollars, a very small surcharge.

and i think, again, we should be able to say no, we can find resources to invest in the future of the country, to support, to subsidize students so that they can improve their skills, move into the middle class, move the country forward. we've always done it. we can do it today. so i would urge my colleagues to favorably consider the amendment when it's proposed. again, there has been extraordinary efforts on the part of main, principled, thoughtful, to try to deal with this issue. i would go back to my initial point, if we really want to deal with it, we have to have time and, frankly, we have to have resources. and the way this is evolving we don't have time and we're unwilling, at least it appears at this juncture, to commit significant resources to solve this problem in a

comprehensive, coherent way that will benefit students and families and in the long run will benefit this country. with that, mr. president, i would yield the floor and i would note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

quorum call:

mrs. murray: mr. president, i ask that the quorum call be lifted. the presiding officer: without objection. mrs. murray: mr. president, i ask unanimous consent that the time until 4:45 p.m. being divided between senators vitter or murray or debate on the vitter amendment 1744. that at 4:45 p.m., the senate proceed to vote in relation to the vitter amendment, further that no second-degree amendment be in order to the vitter amendment prior to the vote. the presiding officer: is there objection to the request? without objection. mrs. murray: mr. president -- mr. president? the presiding officer: the senator from washington. mrs. murray: i ask that the time be equally divided and that we go thew a quorum call. -- go into a quorum call.

the presiding officer: without objection. the clerk will call the roll. quorum call:

quorum call:

quorum call: mrs. murray: mr. president, i ask that the quorum call be lifted. the presiding officer: without objection. under the previous order the question occurs on amendment number 1744 offered by the senator from louisiana, mr. vitter. mrs. murray: mr. president, i ask for the yeas and nays. the presiding officer: is there a sufficient second? there appears to be. the clerk will call the roll. vote:

vote: