(MONEY Magazine) – You might think that after two tax cuts in less than three years, totaling a whopping $1.6 trillion, Congress would be content that it had left its mark on the economy. But you'd be wrong. There are still plenty of money bills pending--everything from a massive one-time tax cut for multinational corporations to the energy bill to the $400 billion prescription-drug deal that some claim is a huge, open-ended entitlement. One person sits at the apex of all these pieces of legislation: Sen. Charles Grassley, the chairman of the Senate Finance Committee. He's shepherding all these items through the upper house, trying desperately to further stimulate the economy with only a year to go before national elections. A salt-of-the-earth Republican soybean farmer from Iowa, Grassley says his goal is growth, and he told me recently how he plans to go about ensuring it.

INSANA: The Chinese have been playing hardball in agricultural trade. They're supposed to be in this game to play fair now that they're in the World Trade Organization. Are you disappointed with their behavior?

GRASSLEY: The answer to your question is absolutely yes, and I'm reminding them of how I fought for most-favored-nation status for China and to get them in the WTO. And then they treat us like this. They're really a big nation, and they want everybody to think that they're a developing nation. They're hiding behind a lot of things that they have no right to hide behind as the 15th to the 20th largest economy in the world and on the way to be the No. 2 economy.

Q. How do you feel about their hiding behind a weak currency?

A. Not very good. I have said, as was quoted in the Wall Street Journal about three weeks ago, that I would oppose legislation of direct retaliation, but I would encourage jawboning by our government, as Secretary Snow has done. And I would encourage any sort of other multinational effort.

Q. That's just one of the kinds of non-tariff barriers that China has. Recently they began to cut back on U.S. shipments of soybeans, claiming that they were infected with a certain kind of fungus, and they did it right at the start of their own harvest season.

A. That's contrary to the sanitary and phytosanitary rules of the WTO. Everything's got to be scientifically based.

Q. So what do we do, knock them out of the WTO? The last time we had this type of problem was with Japan in 1986, and I'm not sure we made much progress there either.

A. It took a decade, but we've at least got beef and citrus going into Japan. So negotiations on trade do work if you've got enough patience.

TAX CUT FOR MULTINATIONALS

Q. Let me bring my questions homeward. Tell me a little more about the tax exemption or tax reduction for multinationals that have been holding some of their profits overseas. Can you explain the mechanics of this proposal and what you hope to accomplish with it?

A. First of all, I need to give Sen. Ensign [R-Nev.] and others credit for this. I support it. About $300 billion can be brought back to the United States. The idea is that if these companies that have deposited some of their income offshore brought it back, it would be taxed at a 5.25% rate as opposed to 35% during a period of a year and a half. The money has got to be brought back in four or six months. The idea is that if money comes back and is invested in the United States, it would create jobs.

People would say, Why reduce taxes for this group of corporations? The reason is that [otherwise] this money may never come back, may not do the economic good that it would. And if it did come back and was invested, the 5% rate could just about be made up over 10 years by it all being brought back and taxed at the higher rate. The job stimulus impact would be great.

EARMARKING PROFITS

Q. Some of your colleagues, like Sen. John Breaux [D-La.], have suggested that Congress officially earmark the funds for job creation or certain types of investment. You oppose that. Why?

A. I think that it's not workable, considering that money's fungible. I think we ought to give maximum freedom to the use of this money when it comes back and not have a political decision interfere with a market decision.

Q. What if they just use the money to buy back stock or raise dividends or in some other way fatten the bottom line as opposed to creating jobs?

A. Well, your question implies that if you improve the value of stock, that doesn't have some economic good connected with it.

Q. No. I'm a business journalist. I don't believe that. I'm just asking.

A. We may have to work something out on that, although I'm going to leave it to Sen. Smith [R-Ore.] and Sen. Ensign whether to condition the rate cut on an increase in the company's payroll and R&D expenses and maybe some other measures of investment.

AN ELECTION-YEAR GIMMICK?

Q. Why not reduce that tax forever? Why just 18 months? Some of the more cynically inclined would suggest it might be an election-year gimmick if it's that short a time horizon.

A. Well, don't forget the economy has been in a funk for a long period of time. And even though it is turning around, growing at 3.4% now and probably at 4% before the end of the year, we still have some doubt. I see this as an opportunity to have one big impact upon the economy. A $300 billion impact would be greater by 50% than the two-year impact of the 2003 tax bill.

You have a very basic question about why not eliminate [the 35% tax] forever, and you're talking about either the reduction or the elimination of the double taxation of corporate dividends. It's one of those things that makes good economic sense, but it comes at a time when we have this big budget deficit, and I think that we're going to have to show the economy growing and bringing in more revenue at a lower level of personal taxation than if we had had the higher level of taxation. Then we'd be able to show that as a first step toward reducing corporate tax rates.

But here's another thing. I believe that there ought to be some parity between high marginal tax rates for self-employed entrepreneurs as opposed to corporations, and that's why I would like to have the level of taxation for individuals reduced before we reduce the corporate tax rate.

Q. We've talked about $200 billion in personal tax cuts. We've talked about $300 billion in corporate tax deductions. I want to raise the ante by another $100 billion and talk about the Medicare bill, which is a $400 billion proposition. Where do we stand on that subject, and what's your role?

A. I'm chairman of the Senate Finance Committee, and we have jurisdiction over all the social programs. The chances of passing [Medicare legislation] are very good because the President has pushed for it since my first meeting with him back in December. I think the stars are lined up to pass it. And the idea is to do two things. One, to bring 1965 Medicare into the practice of medicine of the 21st century, in which prescription drugs are a very major upgrade. The second [goal] is to offer a Medicare program that would be patterned after, but not fully parallel to, the federal employee health benefit program, where the private sector is more involved, and that is more market-oriented, so that as baby boomers go into retirement we don't have bureaucrats micromanaging it.

MEDICARE HMOs

Q. We've gotten concerned about that marketplace decision-making process of late. We've seen some dislocations in areas that have been deregulated over the past couple of years, and we've seen the HMO community not necessarily handle its responsibility all that well. Why should we trust that process as part of this reform?

A. During the Clinton administration, when we set up the HMOs for seniors, you had directors of CMS [Centers for Medicare and Medicaid] that really didn't want it to work. And I think you're seeing Democrats in the Congress not really wanting it to work. It works for the federal employee health benefit plan. I think it can work, and we ought to give our seniors an option. We aren't doing away with fee-for-service Medicare. If a little old lady in Iowa says to me, "Just leave my Medicare alone," I can say, "Well, if you're satisfied with what you've got, you can keep it with or without prescription drugs."

Q. Let me ask you about the cost. The prescription-drug benefit is earmarked at $400 billion. We have a budget deficit that in the next couple of years will probably reach somewhere between $500 billion and $600 billion. We have an $87 billion supplemental request from the President to fund Iraq and Afghanistan. At what point can we no longer afford all of this?

A. In the case of the war in Iraq, you know, we aren't going to fight a 100-year war. We expect the cost of the war to go down. We also expect the wealth of Iraq to fill the void for American taxpayers as [the Iraqi] economy gets turned around. You only go to war to win a war, so you put every resource you can to back our men and women in the battlefield. Then once you win the war, you're going to do what you can to preserve the peace. We learned that in Japan and Germany. It was a worthwhile effort. It'll be a worthwhile effort in Iraq. So you can't consider those things forever competing against prescription drugs. If we don't have prescription drugs, people are going to get into hospitals. Now I don't claim that you're going to have a dollar-for-dollar savings from prescription drugs [cutting hospital costs]. But there'll be some savings.

Q. How about the uninsured?

A. We have to deal with the uninsured. First, I would have tax credits for individual health insurance policies. Second, I would take the limits off of medical savings accounts. And third, I'd fine-tune the Children's Health Insurance Program so that states could work with employers to provide health insurance for uninsured families. We would get more for our money with states partnering with businesses than paying directly from the state.

Q. Outline for us the Senate's agenda going into the election next year with respect to those bills that are most likely to influence the economy.

A. I think that what we are doing right now or have done, with the exception of this repatriation of money, is setting the stage for the next election. I would expect that if unemployment is not below 6% next year, we will extend federal unemployment insurance. Otherwise, I don't expect much dealing with the economy to come up next year.

Ron Insana is co-anchor of CNBC's Business Center and author of Trend-Watching, published by HarperBusiness.