{"database": "openregs", "table": "congressional_record", "rows": [["CREC-2008-12-11-pt1-PgS10909-3", "2008-12-11", 110, 2, null, null, "SILO TAX SHELTER", "SENATE", "SENATE", "ALLOTHER", "S10909", "S10913", "[{\"name\": \"Max Baucus\", \"role\": \"speaking\"}, {\"name\": \"Chuck Grassley\", \"role\": \"speaking\"}, {\"name\": \"Jim Bunning\", \"role\": \"speaking\"}]", null, "154 Cong. Rec. S10909", "Congressional Record, Volume 154 Issue 186 (Thursday, December 11, 2008)\n\n[Congressional Record Volume 154, Number 186 (Thursday, December 11, 2008)]\n[Senate]\n[Pages S10909-S10913]\nFrom the Congressional Record Online through the Government Publishing Office [www.gpo.gov]\n\n                            SILO TAX SHELTER\n\n  Mr. BAUCUS. Madam President, the House bill before us contains a\nprovision that causes me great concern. The provision would make the\nU.S. Government an active participant in an abusive tax shelter\ntransaction.\n  In the past, Congress has voted to shut that tax shelter down. And\nthis week, I sought to offer an amendment to strike the provision from\nthis bill. But I have been prevented from offering that amendment. That\nthis provision will remain in the bill makes this bill a far less\nattractive measure.\n  Section 18 of the bill requires the United States to serve as a\nguarantor of obligations incurred by domestic subway and other\ntransportation systems. These obligations arise from the systems'\nparticipation in leasing arrangements called lease in/lease out, or\nLILOs, and sale in/lease out, or SILOs.\n  LILOs and SILOs are sham transactions. The IRS has designated them as\n``listed'' tax shelters. That means that these tax shelters are among\nthe most egregious abuses of the tax law.\n  LILOs and SILOs are very complicated deals, designed to look like\nlegitimate leasing transactions. But in reality, they are shams.\n  In a SILO, a tax-exempt entity nominally ``sells'' an asset, like a\nsubway system. The other party to the deal is an investor who is\nsubject to taxation and who needs a tax write-off. The investor\nnominally ``buys'' the asset. The investor then nominally ``leases''\nthe asset back to the tax-exempt entity.\n  In truth, the benefits and burdens of ownership never shift. And the\nsale and the lease have no economic reality.\n  These parties purport to make purchase payments and rent payments.\nBut in reality, these payments are just paper entries, facilitated by a\nbank that is in on the deal. The investor pays the tax exempt entity an\nup-front fee in exchange for its willingness to participate in the\ndeal. But other than that, no real money changes hands.\n  There is little, if any, risk to any party to these transactions.\nThat is because the deal is cooked from the beginning. It is planned so\nas to eliminate any risk.\n  But there are significant tax benefits to the investor. The investor\ngets interest and depreciation deductions. And those deductions\ngenerate tax losses. Employing these tax losses, the investor pays less\ntax on income that the investor earns elsewhere.\n  This chart illustrates how a SILO transaction works. You do not have\nto understand all the details to see how complicated the transaction\nis.\n  As Chairman of the Finance Committee, I have had these deals on my\nradar screen for quite some time. In 2003, the Finance Committee held a\nhearing with a confidential informant. The witness risked his\nprofessional reputation to tell us how abusive LILO and SILO\ntransactions are.\n  I pushed for legislation to shut these deals down. The 2004 Jobs Act\neliminated the tax benefits for most of the investors who had entered\ninto these transactions.\n  Since 2005, I have worked to shut down the remaining deals that the\nJobs Act failed to address. Unfortunately, our efforts have met with\nresistance. Some argue that shutting down these transactions would be\napplying law retroactively. But I believe that these transactions\nalways violated the law, as they lack any economic substance.\n  In the Tax Increase Prevention and Reconciliation Act of 2005,\nCongress imposed excise taxes on tax-exempt entities and their managers\nwho entered into tax shelter transactions. That law recognized the role\nthat some tax exempt entities, including transit agencies, played as\n``accommodating parties'' to tax shelter deals.\n  Since 1999, the IRS has devoted considerable resources to shutting\ndown these deals. The IRS has designated both LILOs and SILOs as\n``listed'' tax shelter transactions. The IRS has audited every one of\nthese transactions that it could find. The IRS has litigated four\ncases, and won every time. Recently, the IRS announced a settlement\ninitiative to shut down the remaining cases and reports an 80-percent\nparticipation rate.\n  We have been trying to stop these tax shelters for years. So how does\nthe Government end up guaranteeing this kind of tax shelter? The\ncomplicated structure of LILOs and SILOs plays a part.\n  Under the terms of the agreements, transit agencies are required to\nobtain a guarantee from an insurer. The insurer guarantees that the\nagencies will be able to buy back the subway at the end of the lease\nperiod. The agreements require that the insurer have a very high credit\nrating.\n  The current economic crisis has caused downgrades of insurers' credit\nratings. That has put the tax-exempt entities into technical default on\ntheir agreements. Under the agreements, when the tax-exempt entities\ndefault, the investors have a right to terminate the lease.\n  The investors are taking advantage of this legal opportunity. They\nare trying to cash in. The investors are attempting not just to recoup\nthe nominal purchase price of the assets. They are also demanding that\nthe transit agencies pay over the value of the tax benefits that the\ninvestor will lose as a result of the premature unwinding of\n\n[[Page S10910]]\n\nthe deal. The value of the tax benefits can be many times the putative\npurchase price.\n  This chart that I referred to earlier is an exhibit from a lawsuit,\nHoosier Energy v. John Hancock Life Insurance. In that case, the Monroe\nCounty Circuit Court in Indiana issued a temporary injunction barring\nJohn Hancock from collecting on the technical default.\n  Transit agencies do not have lots of excess money just sitting\naround. So they have come to the Congress asking for a guarantee from\nthe U.S. Government.\n  Now I do not want our Nation's subway systems to be at risk. I am\nopen to considering ways to help keep them financially sound.\n  But I am unwilling to do so at the expense of American taxpayers. The\nbill before us today asks taxpayers to put their tax dollars at risk.\nThe bill asks taxpayers to guarantee transit agencies who knowingly and\nwillfully entered into deals that had no economic substance and were\ndesigned for the sole purpose of avoiding taxes.\n  The Government has come under much criticism for actions it has taken\nto jump-start our economy. But deliberately involving the U.S.\nGovernment in a tax shelter scam would add fuel to that fire.\n  We must not add legitimacy to an abusive transaction that the\nCongress, the courts, the Treasury, and the IRS have spent years trying\nto shut down.\n  We must not undermine the good efforts of the IRS to prosecute these\ncases. We need the IRS to accomplish as much work as it can to\neliminate these and other scams.\n  We must not ask American taxpayers who struggle to pay their taxes to\nunderwrite deals set up to help wealthy investors attempting to shelter\ntheir income.\n  The approach in the bill before us today is not a solution. Stepping\nin to guarantee these deals exposes American taxpayers to ongoing risk.\nSome event could trigger a requirement that the Government pay the\ninvestors. This bill puts taxpayers on the hook for a long time.\n  In addition, I understand that this proposal applies to only 80\npercent of the transit agencies that entered into these tax shelter\ndeals. What about the other 20 percent of the systems who are not\ncovered? What happens to them? We need a fair and balanced approach to\nresolve this issue.\n  We would do better to figure out a way to discourage investors from\nacting on the technical default simply because the insurer's credit\nrating has been downgraded. A downgrade does not mean that the insurer\nis not good for the money. I intend to explore options with this goal\nin mind. We need a solution that protects both the transit agencies and\nthe American taxpayer.\n  Finally, this is an auto bill. We should not forfeit the opportunity\nto bolster our automotive industry by cluttering up the bill with\nunrelated and controversial proposals.\n  There is a proper time and place for everything. This is neither the\ntime nor the place to divert attention from our immediate task, helping\nour automakers.\n  This provision has no business in the auto bill. The Senate should\ntake the provision out. And if the Senate does not take the provision\nout, it will only add to the burdens that are weighing this bill down.\n  The PRESIDING OFFICER. The Senator from Iowa.\n  Mr. GRASSLEY. I ask unanimous consent to speak for 15 minutes.\n  The PRESIDING OFFICER. Without objection, it is so ordered.\n  Mr. GRASSLEY. Madam President, I come to the floor to back up the\nchairman of the committee, Senator Baucus, who has spoken on the very\nsame issue. We have had a close working relationship for 8 years as\neither chairman and ranking member, and those changed from time to\ntime. Part of our effort of working together has been to close down\nabusive tax shelters. So I am here to support what he said and to say,\nin my own words, my reasons for wanting this provision out of the bill.\nThe bottom line of what I am saying is the bottom line of what Senator\nBaucus has already said. This tax provision has no business being in\nthis bill.\n  There is a provision in this auto bailout bill that deals with a\nnumber of transit agencies that assisted corporations in tax shelters.\nThis provision in the auto bailout bill has nothing to do with\nautomakers. It would prop up a tax shelter that Senator Baucus and I\nshut down in the year 2004. Shutting down that tax shelter saved\nAmerican taxpayers $26.56 billion, according to the nonpartisan Joint\nCommittee on Taxation. That is real money. So we should be very\nprotective of making sure money that by subterfuge was not going to\ncome into the Federal Treasury comes back to the Federal Treasury and\nis not used in the future. This tax shelter is commonly referred to as\nsale-in, lease-out, or by the acronym SILO, or another program lease-\nin, lease-out that we refer to by the acronym LILO. This tax shelter\nbailout within the automaker bailout bill would have the Federal\nGovernment guarantee obligations that public transit agencies now face\nbecause they entered into shady deals with corporations, including\nforeign corporations, where they sold things such as the transit\nagencies' own train cars and then magically leased them back from these\ncorporations to do what they were doing all the time anyway, hauling\npeople.\n  This was not done to change the way the transit agency operated but,\ninstead, to collect a fee for assisting the tax shelter, where the\ncorporations could take advantage of the tax deduction for depreciation\nof things such as these train cars.\n  As chairman of the Senate Finance Committee in 2004, I worked hard to\nshut down these tax shelters as a matter of tax fairness, and Senator\nBaucus was there working closely with me to do that. The Internal\nRevenue Service has been working to recover money from these deals. If\nthis tax shelter bailout were to pass, it would interfere with the\nworking of the IRS in these efforts to collect money that should never\nhave been deducted in the first place.\n  This tax shelter bailout can change the cost-benefit analysis for\nthose tax shelter corporations that are considering settling their\ndisputes with the IRS over the SILO/LILO tax shelters. It is wrong for\nthe auto bailout bill to bail out transit agencies from participating\nin these shady tax shelters. The Federal Government should not\nguarantee the transit agencies' obligations to corporations, including\nforeign corporations, when doing so allows the tax shelter to continue\nas it did before 2004, and these corporations, including foreign\ncorporations, to continue taking tax shelter deductions for things such\nas transit agencies' train cars.\n  If the Federal Government is called upon to pay the guarantees of the\ntransit agencies' obligations to these tax shelter corporations,\nincluding foreign tax shelter corporations, then the hardworking U.S.\ntaxpayer will be sending money directly to these foreign corporations\nand others. I don't know how many, but we know foreign corporations are\nvery much involved.\n  These tax shelters were, in fact, set up so corporations were able to\ntake large depreciation deductions. However, the tax shelter needed a\nnontaxpaying entity that had large amounts of assets that could be\ndepreciated. So that is where the transit agencies come in. The transit\nagencies were paid millions of dollars to do nothing, simply sign\npapers and go about business as usual of transiting people within\ncities or between cities, as they were doing before this tax shelter\nwas ever thought up. The transit agencies are called accommodation\nparties in tax shelter lingo. They are called this because, in exchange\nfor their fee, they helped make tax shelters work for corporations that\nwere bilking the U.S. taxpayers out of billions of dollars, and those\nbillions of dollars were lost revenue to the Federal Treasury.\n  This auto bailout bill proposes to bail out the transit agencies from\nthe consequences of their bad judgment of entering into tax shelters. I\nsay ``bad judgment'' because they ought to know this doesn't make\nsense. Some lawyer might tell you: We can get by with this because we\nfound this loophole in the tax laws. But, in fact, lawyers can find\nanything. The English language is not so perfect that we write perfect\npieces of legislation that somebody who is wise can't find a way\naround. That is what happened prior to 2004, before Senator Baucus and\nI shut it down.\n  As the transit agencies have found out--and that is why they are\ncoming to the bailout bill for some help--when\n\n[[Page S10911]]\n\nyou lie down with dogs, you get fleas. Now that the transit agencies\nhave fleas due to their participation in this tax shelter scheme, they\nwant the Federal Government to be their flea remover. If this provision\nis enacted and if the Federal Government guarantees the transit\nagencies' tax shelter obligations, it will actually help these shady\ntax shelter deals stay alive longer and, who knows, encourage more of\nthis in the future. We are trying to shut down a business I consider\nillicit, people going through the Tax Code and seeing where they can\nfind a tax loophole and writing a program and go out and sell it. They\ngo out and sell it to somebody else, then flee to the woods, and some\ncorporation or individual has to defend it themselves, and they can't.\nThey get stuck with the tax bill from the IRS. We want to shut down the\ntax shelter-writing business.\n  I will not help the transit agencies avoid the consequences of their\nparticipation in these tax shelters. I do not want to put U.S. taxpayer\nmoney on the line to support tax shelters that have been stealing from\nthese same taxpayers.\n  I am aware that as early as February 2000, we had a Federal\ninitiative from the executive branch. In the year 2000, the Federal\nTransit Administration, under the Clinton administration, used to\nadvocate these tax shelter deals to transit agencies as innovative\nfinancing. The Federal Transit Administration's promotion of these tax\nshelters was shameful, and it gave a legitimacy to it. I suppose it\neven encouraged further tax shelter people to write. But in 2004,\nSenator Baucus and I said: Enough is enough. That is why the\nlegislation was passed in 2004, shutting down these and saving the\ntaxpayers that $25 billion the Joint Committee on Taxation said could\nbe saved; in other words, paid into the Federal Treasury, instead of\nsome sharp lawyer finding a way to keep it out of the Federal Treasury.\n  Going back to when these were first being instituted by the Federal\nagency or encouraged by the Federal agency, we did have the IRS\nresponding to that. So you had one agency promoting something. You had\nthe IRS issue a revenue ruling that came out against these tax\nshelters. But between that 1999 March 1 date and the time Senator\nBaucus and I finally concluded this needed to stop in 2004, we still\nhad a bunch of these deals consummated. Even if the transit agencies\nwere not aware of the IRS's position, the transit agencies should have\nrealized that getting money for essentially doing nothing ought to be\ntoo good to be true. If it sounds too good to be true, it probably is\nnot the right thing to do. That is common advocacy to any consumer in\nAmerica met by some snake oil salesman who comes along to sell a\nproduct. If it sounds too good to be true, you ought to raise questions\nabout it.\n  We even have a situation where every court that has considered these\ntransactions has ruled they are abusive tax shelters and has not\nallowed the tax breaks claimed by the corporation that engaged in the\ntax shelters. Three of these court cases are BB&T Corporation, the\nFifth Third Bancorp, and AWG Leasing Trust. In a recent court opinion\ninvolving John Hancock Life Insurance Company, Chief Judge David\nHamilton of the U.S. District Court for the Southern District of\nIndiana wrote that the SILO deal at issue was ``pure, abusive tax\nshelter,'' was ``rotten to the core'' and was ``a sham without economic\nsubstance.''\n  Additionally, in February 2004, Senator Baucus and this Senator sent\nletters to Washington, DC, New York City, and Chicago transit agencies\nasking for their assistance in an investigation of these abusive tax\nshelters.\n  I ask unanimous consent that these three letters be printed in the\nRecord.\n  There being no objection, the material was ordered to be printed in\nthe Record, as follows:\n\n                                                February 12, 2004.\n     Richard A. White,\n     CEO, Washington Metropolitan Area Transit Authority, 600\n         Fifth Street, NW., Washington, DC.\n       Dear Mr. White: We are writing to enlist the assistance of\n     the Washington Metropolitan Area Transit Authority in our\n     ongoing investigation of abusive tax shelters. On October 21,\n     2003, the Committee on Finance held a hearing regarding the\n     continuing proliferation of abusive tax shelters. During that\n     hearing, we learned that shelter promoters are engaging in\n     transactions with U.S. municipalities and other state and\n     local governmental units, which allow major U.S. corporations\n     to depreciate state and local infrastructure assets, such as\n     railways, subways, dams, water lines, and air traffic control\n     systems. Our subsequent investigations have disclosed that\n     federal agencies have endorsed these transactions, even\n     though the Department of the Treasury had classified them as\n     abusive tax shelters.\n       Under this scheme, municipalities are paid an up-front cash\n     fee to enter into a long-term lease of their infrastructure\n     to the tax shelter promoters. The cash received by the\n     municipality, however, pales in comparison to the federal tax\n     benefits received by the corporations, which will be able to\n     depreciate taxpayer-funded bridges, subways, and rail systems\n     as a result of the lease. As part of the same agreement, the\n     promoters will agree to simultaneously lease the assets back\n     to the municipality. The obligations of the promoters and\n     municipalities are prepaid through ``phantom'' debt, and\n     neither the tax promoters nor the municipality assumes any\n     credit or ownership risk. At the end of the lease term, the\n     infrastructure assets revert back to the municipality. In\n     reality, nothing changes regarding the ownership or use of\n     the infrastructure. One municipal manager described these\n     transactions as ``People giving him money which he never had\n     to pay back, for doing something that he was already doing.''\n       In March 1999, the Department of the Treasury under the\n     Clinton Administration initiated enforcement actions against\n     these transactions, which are called LILOs--an abbreviation\n     of their industry name ``lease-in-lease-out'' transactions.\n     We have further learned that these transactions have\n     continued, albeit in a different form, and that other federal\n     agencies may be approving these transactions. The LILO\n     transactions have now been replicated through service\n     agreement contracts and transactions called SILOs--``sales-\n     in-lease-out.'' Other variations on these transactions have\n     involved qualified technology equipment (QTEs).\n       We are certain that you share my concern that subway\n     systems, water lines, waste treatment plants, and air traffic\n     control systems constructed with taxpayer dollars are being\n     used by big corporations to shelter billions of dollars in\n     taxes through bogus depreciation deductions. In order to\n     assist us in assessing the scope and scale of this problem, I\n     request that the Washington Metropolitan Transit Authority\n     submit to the Committee on Finance copies of all LILOs,\n     SILOS, QTEs, and similar transactions that have been\n     approved, funded, or otherwise reviewed by the Washington\n     Metropolitan Area Transit Authority from the year 1995 to\n     present. If you have any questions regarding this request,\n     please contact Ed McClellan or Matt Genasci of the Senate\n     Finance Committee at (202) 224-4515.\n       We appreciate your cooperation in our ongoing efforts to\n     combat abusive tax shelters, and look forward to receiving\n     these materials as soon as possible.\n           With best personal regards,\n     Charles E. Grassley,\n       Chairman.\n     Max Baucus,\n       Ranking Member.\n                                  ____\n\n                                                February 12, 2004.\n     Lawrence G. Reuter,\n     President, New York City Transit,\n     Jay Street, Brooklyn, NY.\n       Dear Mr. Reuter: We are writing to enlist the assistance of\n     New York City Transit in our ongoing investigation of abusive\n     tax shelters. On October 21, 2003, the Committee on Finance\n     held a hearing regarding the continuing proliferation of\n     abusive tax shelters. During that hearing, we learned that\n     shelter promoters are engaging in transactions with U.S.\n     municipalities and other state and local governmental units,\n     which allow major U.S. corporations to depreciate state and\n     local infrastructure assets, such as railways, subways, dams,\n     water lines, and air traffic control systems. Our subsequent\n     investigations have disclosed that federal agencies have\n     endorsed these transactions, even though the Department of\n     the Treasury had classified them as abusive tax shelters.\n       Under this scheme, municipalities are paid an up-front cash\n     fee to enter into a long-term lease of their infrastructure\n     to the tax shelter promoters. The cash received by the\n     municipality, however, pales in comparison to the federal tax\n     benefits received by the corporations, which will be able to\n     depreciate taxpayer-funded bridges, subways, and rail systems\n     as a result of the lease. As part of the same agreement, the\n     promoters will agree to simultaneously lease the assets back\n     to the municipality. The obligations of the promoters and\n     municipalities are prepaid through ``phantom'' debt, and\n     neither the tax promoters nor the municipality assumes any\n     credit or ownership risk. At the end of the lease term, the\n     infrastructure assets revert back to the municipality. In\n     reality, nothing changes regarding the ownership or use of\n     the infrastructure. One municipal manager described these\n     transactions as ``People giving him money which he never had\n     to pay back, for doing something that he was already doing.''\n       In March 1999, the Department of the Treasury under the\n     Clinton Administration initiated enforcement actions against\n     these transactions, which are called LILOs--an abbreviation\n     of their industry name ``lease-in-lease-out'' transactions.\n     We have further learned that these transactions have\n     continued, albeit in a different form, and that\n\n[[Page S10912]]\n\n     other federal agencies may be approving these transactions.\n     The LILO transactions have now been replicated through\n     service agreement contracts and transactions called SILOs--\n     ``sales-in-lease-out.'' Other variations on these\n     transactions have involved qualified technology equipment\n     (QTEs).\n       We are certain that you share my concern that subway\n     systems, water lines, waste treatment plants, and air traffic\n     control systems constructed with taxpayer dollars are being\n     used by big corporations to shelter billions of dollars in\n     taxes through bogus depreciation deductions. In order to\n     assist us in assessing the scope and scale of this problem, I\n     request that New York City Transit submit to the Committee on\n     Finance copies of all LILOs, SILOs, QTEs, and similar\n     transactions that have been approved, funded, or otherwise\n     reviewed by New York City Transit from the year 1995 to\n     present. If you have any questions regarding this request,\n     please contact Ed McClellan or Matt Genasci of the Senate\n     Finance Committee at (202) 224-4515.\n       We appreciate your cooperation in our ongoing efforts to\n     combat abusive tax shelters, and look forward to receiving\n     these materials as soon as possible.\n           With best personal regards,\n     Charles E. Grassley,\n       Chairman,\n     Max Baucus,\n       Ranking Member.\n                                  ____\n\n                                                February 12, 2004.\n     Frank Kruesi,\n     President, Chicago Transit Authority, Merchandise Mart Plaza,\n         Post Office Box 3555, Chicago, IL.\n       Dear Mr. Kruesi: We are writing to enlist the assistance of\n     the Chicago Transit Authority in our ongoing investigation of\n     abusive tax shelters. On October 21, 2003, the Committee on\n     Finance held a hearing regarding the continuing proliferation\n     of abusive tax shelters. During that hearing, we learned that\n     shelter promoters are engaging in transactions with U.S.\n     municipalities and other state and local governmental units,\n     which allow major U.S. corporations to depreciate state and\n     local infrastructure assets, such as railways, subways, dams,\n     water lines, and air traffic control systems. Our subsequent\n     investigations have disclosed that federal agencies have\n     endorsed these transactions, even though the Department of\n     the Treasury had classified them as abusive tax shelters.\n       Under this scheme, municipalities are paid an up-front cash\n     fee to enter into a long-term lease of their infrastructure\n     to the tax shelter promoters. The cash received by the\n     municipality, however, pales in comparison to the federal tax\n     benefits received by the corporations, which will be able to\n     depreciate taxpayer-funded bridges, subways, and rail systems\n     as a result of the lease. As part of the same agreement, the\n     promoters will agree to simultaneously lease the assets back\n     to the municipality. The obligations of the promoters and\n     municipalities are prepaid through ``phantom'' debt, and\n     neither the tax promoters nor the municipality assumes any\n     credit or ownership risk. At the end of the lease term, the\n     infrastructure assets revert back to the municipality. In\n     reality, nothing changes regarding the ownership or use of\n     the infrastructure. One municipal manager described these\n     transactions as ``People giving him money which he never had\n     to pay back, for doing something that he was already doing.''\n       In March 1999, the Department of the Treasury under the\n     Clinton Administration initiated enforcement actions against\n     these transactions, which are called LILOs--an abbreviation\n     of their industry name ``lease-in-lease-out'' transactions.\n     We have further learned that these transactions have\n     continued, albeit in a different form, and that other federal\n     agencies may be approving these transactions. The LILO\n     transactions have now been replicated through service\n     agreement contracts and transactions called SILOs--``sales-\n     in-lease-out.'' Other variations on these transactions have\n     involved qualified technology equipment (QTEs).\n       We are certain that you share my concern that water lines,\n     waste treatment plants, and air traffic control systems\n     constructed with taxpayer dollars are being used by big\n     corporations to shelter billions of dollars in taxes through\n     bogus depreciation deductions. In order to assist us in\n     assessing the scope and scale of this problem, I request that\n     the Chicago Transit Authority submit to the Committee on\n     Finance copies of all LILOs, SILOs, QTEs, and similar\n     transactions that have been approved, funded, or otherwise\n     reviewed by the Chicago Transit Authority from the year 1995\n     to present. If you have any questions regarding this request,\n     please contact Ed McClellan or Matt Genasci of the Senate\n     Finance Committee at (202) 224-4515.\n       We appreciate your cooperation in our ongoing efforts to\n     combat abusive tax shelters, and look forward to receiving\n     these materials as soon as possible.\n           With best personal regards,\n     Charles E. Grassley,\n       Chairman.\n     Max Baucus,\n       Ranking Member.\n\n  Mr. GRASSLEY. I have been fighting against SILO/LILO tax shelters for\na long time, as has Senator Baucus. In October 2003, the Finance\nCommittee held hearings on the status of abusive tax shelter\nactivities. During that hearing, we received anonymous testimony from a\nleasing industry executive that used the name Mr. Janet. He described\nhow U.S. corporations were able to take tax deductions for such things\nas the Paris, France, sewer lines and the New York subway system. Major\ncorporations were claiming tax deductions on taxpayer-funded\ninfrastructure located in the United States and overseas.\n  Imagine our surprise when we learned that U.S. taxpayers were\nsubsidizing the cost of electric transmission lines in the Australian\noutback. I find it hard to believe that a corporation was actually\ntaking a tax deduction for the New York City transit car pictured here.\nHowever, that is exactly what greedy corporations were doing. Just like\nthe greedy tax shelter promoters who were handing out U.S. taxpayer\nmoney to greedy corporations by selling these shady tax shelters to\nthem, the House voted last night to put U.S. taxpayer dollars on the\nline to bail out tax shelter participants and perpetuate these abusive\ntax shelters.\n  If we look at all the key congressional players on this deal, we will\nfind that, perhaps not by coincidence, nearly all of them represent\nareas where these transit shelter deals were done. These tend to be the\nbiggest cities. They tend to be the areas where the shops that hired\nthe sharpies that manufacture these tax shelters do business. Most of\nthese key congressional players for years, especially when Republicans\nwere in the majority, railed against tax shelters. Now we find that for\nthese key congressional players, the imperatives of the transit lobby\ndecisively outweigh the importance of cracking down on a tax shelter\nthat a Federal judge rightly described as ``rotten to the core.''\n  This reminds me of the Joker from the 1989 version of ``Batman,'' who\nsays: ``I'm giving out free money.'' You know the Joker, as shown on\nthis chart. You have seen him. ``I'm giving out free money.'' As we all\nknow, money is not free. Unfortunately, the joke here has been--and\nwill again be if we do not do something about it--on the American\ntaxpayer. Literally, the guarantee continues the cruel tax shelter joke\non the American taxpayers' dime.\n  I urge my colleagues in the Senate to not allow this cruel joke to be\nplayed on the American taxpayers. I have fought against these tax\nshelters in the past, and I will continue to fight against them in the\nfuture. This provision puts taxpayers' dollars on the line and\nperpetuates an abusive tax shelter. In fact, it puts the U.S.\nGovernment in the position of guaranteeing tax benefits that\ncorporations, including foreign corporations--again, I want to\nemphasize--hope to reap from engaging in these tax shelters. So as\nSenator Baucus has just done--and I thank him for his leadership--I\nurge my colleagues to vote against this bill which contains a bailout\nfor tax shelter participants.\n  I yield the floor.\n  The PRESIDING OFFICER (Mr. Whitehouse). The Senator from Kentucky.\n  Mr. BUNNING. Mr. President, are we as in morning business?\n  The PRESIDING OFFICER. We are in morning business, Senator.\n  Mr. BUNNING. Thank you.\n  Mr. President, I rise to speak on the auto bailout proposal before\nthe Senate. But before talking about any legislation, I wish to say\nthat I am very concerned, as everybody in the United States is, about\nthe state of the auto industry, not only in Detroit but other States\nthat have a great deal of auto workers and related industries.\n  As I said at the first Banking Committee hearing on this issue, I am\nnot concerned about any sense of American pride or because of the great\nhistory of the American auto industry. What concerns me is the\nworkers--the men and women who assemble our cars and trucks, who sell\nand service the vehicles, and those who work for the suppliers who keep\nthe industry running.\n  Auto manufacturing is the largest manufacturing sector in my\nCommonwealth. That is the Commonwealth of Kentucky. I know Detroit's\npain is felt in many towns and cities in Kentucky. In many counties,\njobs supplying parts to GM, Ford, or Toyota are some of the best jobs\nanywhere in Kentucky. Those jobs are in danger, and I am concerned for\nthe workers and their families.\n  The question facing Congress is what, if anything, we can and should\ndo about the industry's current problems.\n\n[[Page S10913]]\n\nAs I understand it, one of the two bills that is going to come before\nthe Senate--as soon as this afternoon--one is the bill passed by the\nHouse, and the other is a similar Senate proposal. Unfortunately, much\nlike the other bailouts we have passed, those bills rely on hopes and\npromises of future actions and do not require serious concessions.\nThose bills do not address the immediate problems facing the industry,\nwhich is a lack of funding for car loans and dealer floor plans, and\nmany other related issues.\n  While the Detroit manufacturers were forced by the economic crisis to\ncome to Congress for aid at this time, their problems are not just the\nresult of problems in our current financial markets. The companies are\nsimply uncompetitive in today's marketplace because of decades of bad\nbusiness decisions by both the corporate management and the labor\nunions. What is needed is a serious restructuring of the companies that\nbrings their costs in line with the costs of cars made by manufacturers\nsuch as Honda and Toyota and their capacity in line with the true\ndemand for new cars, not the artificially inflated demand of the last\nfew years.\n  Neither the House bill nor the Senate bill forces these companies and\ntheir stakeholders to make the changes necessary to force\nrestructuring. The so-called car czar has no real power to make the\ncompanies and stakeholders reach an agreement accomplishing the cost\nand capacity changes that must be made. Because the companies would not\nsurvive in the long term without those changes, they would be back\nbefore Congress next year asking for more money to get them through the\nnext few months, and back again and again. That is an irresponsible use\nof taxpayer dollars and would ultimately lead to the death of the\ncompanies and many thousands and thousands of jobs permanently being\nlost. Because I care too much about the workers, I cannot support\neither of these bills as they are currently written.\n  I have previously said I would support Federal assistance for\ncompanies if they undertake a chapter 11 bankruptcy restructuring.\nFederal financing and warranty guarantees would enable the companies to\nemerge from that restructuring successfully and more quickly than they\nwould otherwise. Senator Shelby and Senator Ensign have an amendment to\ndo just that, and I will be supporting their amendment if they are\nallowed to have a vote on it on the floor of the Senate.\n  However, chapter 11 bankruptcy is not the ideal solution, and I know\njust the word ``bankruptcy'' causes many people whose jobs, retirement,\nand health care depend on the companies to shudder. A similar\nrestructuring that accomplishes significant changes outside of\nbankruptcy would work as well. Senator Corker has an amendment that\nwould require those significant changes as a condition of Federal\nassistance provided in the majority's bill. If the majority allows a\nvote on Senator Corker's amendment, I will support it. If the amendment\nis adopted to the Senate version of the bill, I will support passage.\nIf the majority blocks any minority amendments, as they have done for\nnearly the entire Congress, I will oppose the bill and any cloture\nmotions.\n  I will go ahead and state for the record that if the Corker amendment\npasses and the bill becomes law, I will oppose any and all attempts to\nweaken its requirements. Now, I say that knowing full well that I am\nvery concerned that come January 20, the majority might try to rewrite\nthe requirements so that the companies are not forced to make painful\nchanges that are necessary for them to survive in the long term. I hope\nthat will not be the case.\n  For these companies to survive and thrive, there must be painful\nchanges made, and we all know some jobs will be lost. However, with a\nsuccessful restructuring, the Corker amendment being included, more\njobs will be preserved for the long term than if we just prop up the\ncompanies with taxpayers' dollars for a few short months and hope for\nthe best.\n  Mr. President, I yield the floor.\n  Mr. President, since no one else is in the Chamber, I suggest the\nabsence of a quorum.\n  The PRESIDING OFFICER. The clerk will call the roll.\n  The assistant legislative clerk proceeded to call the roll.\n  Mr. GRASSLEY. Mr. President, I ask unanimous consent that the order\nfor the quorum call be rescinded.\n  The PRESIDING OFFICER. Without objection, it is so ordered.\n  Mr. GRASSLEY. Mr. President, I would like to speak for less than 10\nminutes as in morning business.\n  The PRESIDING OFFICER. Without objection, it is so ordered.\n  Mr. GRASSLEY. I thank the Chair.\n\n                          ____________________"]], "columns": ["granule_id", "date", "congress", "session", "volume", "issue", "title", "chamber", "granule_class", "sub_granule_class", "page_start", "page_end", "speakers", "bills", "citation", "full_text"], "primary_keys": ["granule_id"], "primary_key_values": ["CREC-2008-12-11-pt1-PgS10909-3"], "units": {}, "query_ms": 1.4637860003858805, "source": "Federal Register API & Regulations.gov API", "source_url": "https://www.federalregister.gov/developers/api/v1", "license": "Public Domain (U.S. Government data)", "license_url": "https://www.regulations.gov/faq"}