[Congressional Record Volume 141, Number 32 (Tuesday, February 21, 1995)]
[House]
[Pages H1912-H1953]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  PERMANENT EXTENSION OF THE HEALTH INSURANCE DEDUCTION FOR THE SELF-
                                EMPLOYED

  Mr. QUILLEN. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 88 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                               H. Res. 88

       Resolved, That at any time after the adoption of this 
     resolution the Speaker may, pursuant to clause 1(b) of rule 
     XXIII, declare the House resolved into the Committee of the 
     Whole House on the state of the Union for consideration of 
     the bill (H.R. 831) to amend the Internal Revenue Code of 
     1986 to permanently extend the deduction for health insurance 
     costs of self-employed individuals, to repeal the provision 
     permitting nonrecognition of gain on sales and exchanges 
     effectuating policies of the Federal Communications 
     Commission, and for other purposes. The first reading of the 
     bill shall be dispensed with. All points of order against 
     consideration of the bill are waived. General debate shall be 
     confined to the bill and the amendment made in order by this 
     resolution and shall not exceed one hour equally divided and 
     controlled by the chairman and ranking minority member of the 
     Committee on Ways and Means. After general debate the bill 
     shall be considered for amendment under the five-minute rule. 
     The amendment recommended by the Committee on Ways and Means 
     now printed in the bill shall be considered as adopted in the 
     House and in the Committee of the Whole. The bill, as 
     amended, shall be considered as read. No further amendment 
     shall be in order except the amendment in the nature of a 
     substitute printed in the report of the Committee on Rules 
     accompanying this resolution, which may be offered only by 
     Representative Gibbons of Florida or his designee, shall be 
     considered as read, shall be debatable for one hour equally 
     divided and controlled by the proponent and an opponent, and 
     shall not be subject to amendment. All points of order 
     against that amendment are waived. At the conclusion of 
     consideration of the bill for amendment the Committee shall 
     rise and report the bill to the House with such further 
     amendment as may have been adopted. The previous question 
     shall be considered as ordered on the bill and any amendment 
     thereto to final passage without intervening motion except 
     one motion to recommit with or without instructions.

  The SPEAKER pro tempore. The gentleman from Tennessee [Mr. Quillen] 
is recognized for 1 hour.
  Mr. QUILLEN. Mr. Speaker, for purposes of debate only, I yield the 
customary 30 minutes to the gentleman from Massachusetts [Mr. Moakley], 
pending which I yield myself such time as I may consume.
  During consideration of this resolution, all time yielded is for the 
purpose of debate only.
  (Mr. QUILLEN asked and was given permission to revise and extend his 
remarks.)
  Mr. QUILLEN. Mr. Speaker, House Resolution 88 is a modified closed 
rule providing for the consideration of H.R. 831, which makes permanent 
the 25-percent deduction for health insurance costs of self-employed 
individuals. The rule waives all points of order against consideration 
of the bill and provides for 1 hour of debate, equally divided and 
controlled by the chairman and ranking minority member of the Committee 
on Ways and Means.
  The amendment recommended by the Committee on Ways and Means now 
printed in the bill shall be considered as adopted in the House and in 
the Committee of the Whole, and all debate shall be confined to the 
bill and the amendment made in order by this resolution.
  No amendment shall be in order except the amendment in the nature of 
a substitute printed in the report of the Committee on Rules 
accompanying this resolution, which may be offered only by 
Representative Gibbons of 
[[Page H1913]] Florida or his designee. Such amendment shall be 
debatable for 1 hour equally divided and controlled by a proponent and 
an opponent of the amendment, and shall not be subject to amendment. 
All points of order against that amendment are waived.
  Finally, the rule provides for one motion to recommit, with or 
without instructions.
  Mr. Speaker, normally I would be opposed to this type of restrictive 
rule. However, it has been customary in the House to consider tax 
measures under partially or even completely closed rules. And this 
practice has been acceptable by both sides of the aisle. Chairman 
Archer and ranking member Gibbons both requested a restrictive rule 
from the Rules Committee, and this is one of the rare instances when I 
agree that a restrictive rule is necessary.
  Additionally, although the rule provides a blanket waiver, it is my 
understanding that only two technical budget act waivers are needed for 
this bill. Section 303(a) of the budget act prohibits revenue changes 
starting in a year other than the year of the current budget
 resolution. Because the changes in this bill to the earned income tax 
credit are effective in fiscal year 1996, a waiver of section 303(a) is 
required. Also, section 311(a) requires that revenues not fall below 
the levels in the current budget resolution. The bill is paid for over 
the 5-year period, but it is estimated to run a deficit in the first 
year. So it is necessary to waive this section also.

  Mr. Speaker, H.R. 831 will help more than 3.2 million self-employed 
Americans by restoring the 25-percent deduction for health insurance 
costs of the self-employed. Currently, larger businesses can deduct the 
entire cost of health insurance for their employees as this is a 
legitimate business expense. There is no equivalent provision for the 
self-employed. This bill retroactively and permanently restores the 25-
percent deduction, which expired at the end of 1993. By passing this 
legislation, we are making it economically possible for many self-
employed to obtain health insurance coverage, thus reducing the number 
of uninsured Americans.
  I am particularly pleased that this measure makes the deduction 
permanent so that our farmers, doctors, hairdressers, and so many 
others do not have to worry from year to year whether or not they can 
afford to keep their health insurance coverage.
  Although there is wide bipartisan support for this effort, this bill 
is unfortunately not without controversy. To offset the loss of tax 
revenue, the bill terminates a program that allows the Federal 
Communications Commission to give tax breaks to corporations that sell 
their broadcast facilities to minority purchasers. Additionally, the 
bill phases out eligibility for the earned income tax credit to anyone 
who has more than $2,500 per year in interest and dividend income.
  We will hear strong arguments against changing the FCC provisions, 
but the substitute amendment allowed under the rule, along with the 
motion to recommit with instructions, provides opportunities to address 
this issue. Mr. Speaker, I urge adoption of this rule, and I reserve 
the balance of my time.
  Mr. MOAKLEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, although no one expects an open rule on a tax bill, at 
the very least I had hoped Republicans would allow us to offer the 
three or four other major amendments debated at the Rules Committee.
  In committee, Democrats offered a number of constructive amendments 
to improve the health care deduction and to change the financing 
provisions--to find some way besides a retroactive tax increase to pay 
for this.
  At the Rules Committee, Democrats consolidated their proposals into 
four amendments:
  First, the amendment by Mr. Rangel funds the health deduction by 
preventing Americans who renounce their citizenship from avoiding their 
taxes;
  Second, the amendment by Mr. Cardin increases from 25 to 80 percent 
the portion of the cost of health care insurance that a self-employed 
individual could deduct from his or her taxes;
  Third, the amendment by Mr. Stark extends protections under existing 
law to make health insurance portable. People leaving a job would still 
be able to purchase their insurance at the same cost plus 2 percent; 
and
  Fourth, the amendment by Mr. Mfume allows the self-employed to deduct 
100 percent of their health insurance costs. It is paid for by 
modifying estate and gift taxes.
  At Rules, three amendments were defeated on straight party line 
votes.
  Mr. Speaker, one of the biggest problems with this bill is that it 
includes a retroactive tax increase. Companies acting on good faith are 
about to have their tax deductions yanked out from under them simply 
because we cannot find the money to pay for the health insurance tax 
deduction.
  Even though this is technically not a rate increase it is a 
retroactive tax increase and it will still cause tremendous financial 
shock to a great number of business people who trusted their Government 
not to go back on its word.
  This retroactivity is completely contrary to the promises made on 
opening day. But Mr. Speaker, this should not surprise us. So what is 
new.
  On January 5, the Republicans said committees could not meet when the 
House was considering amendments under the 5-minute rule; they said the 
contract would be considered under open rules; they said rules would 
only contain specific waivers, and they said there could be no 
retroactive tax rate increases.
  But these days, committees meet all the time while the House is in 
session under the 5-minute rule.
  There have been a whole lot of closed rules.
  This rule waives all points of order.
  And, this bill, the very first tax bill out of the gate, includes a 
retroactive tax increase.
  I want to emphasize that I am very supportive of the major goal of 
this legislation, which is to restore the deductibility for the cost of 
health insurance premiums paid by self-employed individuals.
  It is absolutely critical that this deduction be available to ease 
the financial burden that the self-employed must bear because of the 
high cost of health care coverage.
  One of the reasons I was very disappointed we failed to enact a 
comprehensive health care bill last year was because of the 
difficulties the self-employed face trying to find affordable health 
insurance.
  But I oppose this closed rule, and I urge defeat of this rule.
  Mr. Speaker, I submit the following items:
  First, a statement of the administration's policy supporting the tax 
deduction but opposing the outright repeal of the FCC tax break, and
  Second, a description of rules granted to date.
                   Statement of Administration Policy

       H.R. 831--Permanently Extend the Tax Deductibility for 
     Health Insurance Costs for Self-Employed Individuals (Archer 
     (R) TX and 3 others):
       As stated previously, the Administration supports the 
     primary purpose of H.R. 831--to extend permanently the 25 
     percent tax deduction for health insurance premiums for self-
     employed individuals.
       The Administration opposes one of the bill's offsets--i.e., 
     the outright repeal of the current tax treatment for the sale 
     of radio and television broadcast facilities and cable 
     television systems to minority-owned businesses. The 
     Administration has expressed its willingness to work with 
     Congress to review what actions are necessary to ensure 
     proper use of the provision but continues to oppose its 
     outright repeal.
       The Administration will work with the Congress to identify 
     appropriate offsets to extend this important health insurance 
     tax deduction.
       Scoring for Purposes of Pay-As-You-Go:
       H.R. 831 would affect receipts; therefore, it is subject to 
     the pay-as-you-go requirement of the Omnibus Budget 
     Reconciliation Act (OBRA) of 1990.
       The Administration's preliminary scoring estimates of this 
     bill are presented in the table below. Final scoring of this 
     legislation may deviate from these estimates. If H.R. 831 
     were enacted, final OMB scoring estimates would be published 
     within five days of enactment, as required by OBRA. The 
     cumulative effects of all enacted legislation on direct 
     spending and receipts will be reported to Congress at the end 
     of the congressional session, as required by OBRA.

[[Page H1914]]
                                             PAY-AS-YOU-GO ESTIMATES                                            
                                             [Receipts in millions]                                             
----------------------------------------------------------------------------------------------------------------
                                             1995      1996      1997      1998      1999      2000    1995-2000
----------------------------------------------------------------------------------------------------------------
SE Tax...................................      -493      -437      -474      -516      -563      -613    -3,096 
FCC......................................      +399      +449      +213      +220      +226      +233    +1,740 
EITC.....................................  ........       +14      +277      +295      +309      +332    +1,227 
Other....................................       +12       +31       +34       +37       +40       +43      +197 
                                          ----------------------------------------------------------------------
      Totals.............................       -82       +57       +50       +36       +12        -5       +68 
                                                                                                                
----------------------------------------------------------------------------------------------------------------
 Note:                                                                                                          
SE Tax=25 percent tax deduction for self-employed persons.                                                      
FCC=Repeal of current tax treatment on sale of broadcast facilities to minority-owned businesses.               
EITC=Modification of the Earned Income Tax Credit.                                                              
Other=Change in Section 1033 of the Internal Revenue Code.                                                      


                                      FLOOR PROCEDURE IN THE 104TH CONGRESS                                     
----------------------------------------------------------------------------------------------------------------
                                                            Resolution      Process used for floor    Amendments
          Bill No.                       Title                  No.             consideration          in order 
----------------------------------------------------------------------------------------------------------------
H.R. 1......................  Compliance.................  H. Res. 6     Closed.....................  None.     
H. Res. 6...................  Opening Day Rules Package..  H. Res. 5     Closed; contained a closed   None.     
                                                                          rule on H.R. 1 within the             
                                                                          closed rule.                          
H.R. 5......................  Unfunded Mandates..........  H. Res. 38    Restrictive; Motion adopted  N/A.      
                                                                          over Democratic objection             
                                                                          in the Committee of the               
                                                                          Whole to limit debate on              
                                                                          section 4; Pre-printing               
                                                                          gets preference.                      
H.J. Res. 2.................  Balanced Budget............  H. Res. 44    Restrictive; only certain    2R; 4D.   
                                                                          substitutes.                          
H. Res. 43..................  Committee Hearings           H. Res. 43    Restrictive; considered in   N/A.      
                               Scheduling.                  (OJ)          House no amendments.                  
H.R. 2......................  Line Item Veto.............  H. Res. 55    Open; Pre-printing gets      N/A.      
                                                                          preference.                           
H.R. 665....................  Victim Restitution Act of    H. Res. 61    Open; Pre-printing gets      N/A.      
                               1995.                                      preference.                           
H.R. 666....................  Exclusionary Rule Reform     H. Res. 60    Open; Pre-printing gets      N/A.      
                               Act of 1995.                               perference.                           
H.R. 667....................  Violent Criminal             H. Res. 63    Restrictive; 10hr. Time Cap  N/A.      
                               Incarceration Act of 1995.                 on amendments.                        
H.R. 668....................  The Criminal Alien           H. Res. 69    Open; Pre-printing gets      N/A.      
                               Deportation Improvement                    preference; Contains self-            
                               Act.                                       executing provision.                  
H.R. 728....................  Local Government Law         H. Res. 79    Restrictive; 10 hr. Time     N/A.      
                               Enforcement Block Grants.                  Cap on amendments; Pre-               
                                                                          printing gets preference.             
H.R. 7......................  National Security            H. Res. 83    Restrictive; 10 hr. Time     N/A.      
                               Revitalization Act.                        Cap on amendments; Pre-               
                                                                          printing gets preference.             
H.R. 729....................  Death Penalty/Habeas.......  N/A           Restrictive; brought up      N/A.      
                                                                          under UC with a 6 hr. time            
                                                                          cap on amendments.                    
S. 2........................  Senate Compliance..........  N/A           Closed; Put on suspension    None.     
                                                                          calendar over Democratic              
                                                                          objection.                            
H.R. 831....................  To Permanently Extend the    H. Res. 88    Restrictive; makes in order  1D.       
                               Health Insurance Deduction                 only the Gibbons                      
                               for the Self-Employed.                     amendment; waives all                 
                                                                          points of order.                      
----------------------------------------------------------------------------------------------------------------
73% restrictive; 27% open. These figures use Republican scoring methods from the 103rd Congress. Not included in
  this chart are three bills which should have been placed on the Suspension Calendar: H.R. 101, H.R. 400, H.R. 
  440.                                                                                                          

Mr. QUILLEN. Mr. Speaker, I yield 3 minutes to the distinguished 
gentleman from Florida [Mr. Goss], a very valuable member of the 
Committee on Rules.
  Mr. GOSS. Mr. Speaker, I thank the distinguished chairman emeritus of 
the Committee on Rules, the gentleman from Tennessee [Mr. Quillen], for 
yielding time to me, and let me first, at the request of the 
leadership, make a unanimous consent request.


permission for certain committees and their subcommittees to sit today 
                        during the 5-minute rule

  Mr. GOSS. Mr. Speaker, I ask unanimous consent that the following 
committees and their subcommittees be permitted to sit today while the 
House is meeting in the Committee of the Whole House on the State of 
the Union under the 5-minute rule:
  The Committee on Commerce;
  The Committee on Government Reform and Oversight;
  The Committee on Science; and
  The Committee on Transportation and Infrastructure.
  Mr. Speaker, it is my understanding that the minority has been 
consulted, and that there is no objection to these questions.
  The SPEAKER pro tempore (Mr. Hefley). Is there objection to the 
request of the gentleman from Florida?
  There was no objection.
  Mr. GOSS. Mr. Speaker, the House is moving expeditiously in meeting 
the pledges it made with the American people under the Contract With 
America. We continue to progress on issues of major importance to a 
clear majority of our constituents. Today we will act on legislation of 
great concern to many Americans--and one that has some sense of urgency 
with tax season upon us--the permanent extension of a 25-percent health 
insurance deduction for self-employed individuals. While this is a 
modified closed rule, all Members of this House seem to agree that 
certain types of highly complex bills--especially those involving the 
Tax Code--must be considered under carefully structured debate. I am 
pleased that we are able to
 provide for one amendment in the nature of a substitute to be offered 
by Mr. Gibbons or his designee, which will allow those Members who came 
to the Rules Committee seeking changes in H.R. 831, a chance to have 
their views debated and voted upon.

  I am delighted that H.R. 831 achieves a goal supported overwhelmingly 
by Members on both sides of the aisle. The deduction for the self-
employed was unfortunately allowed to expire at the end of 1993, 
leaving many individuals and small businesses in limbo and at a 
distinct disadvantage under the Tax Code.
  H.R. 831 takes an important step in providing some certainty to these 
folks, by making the extension of the deduction permanent. The goal is 
to establish the right mix of carrots and sticks so more people can 
secure health insurance. It was clear judging from the debate in the 
Rules Committee meeting last Thursday, that Members are eager to rejoin 
the larger issue of health care reform--of which H.R. 831 is only one 
small piece. I share that eagerness and look forward to a substantive 
debate on the whole picture of health reform in the coming months. In 
the meantime, I know there are some tangential issues raised by H.R. 
831 that will prompt lively discussion on this floor--especially the 
side issue of minority preferences and the FCC--but I hope that the 
purpose of H.R. 831, providing a degree of fairness and reliability to 
the Tax Code for the self employed, will not be lost.
  Mr. Speaker, I urge our colleagues to support this rule and to 
participate in this debate. I think it is going to be a good debate, 
with a good result.
  Mr. MOAKLEY. Mr. Speaker, let me say that I am sure if I had the 
number of Members on this side that the gentleman has on his side, I 
would be sure it would be a good result also.
  Mr. Speaker, I yield 7 minutes to the gentleman from Florida [Mr. 
Gibbons].
  Mr. GIBBONS. Mr. Speaker, I thank our colleague, the former chairman 
of the Rules Committee and presently ranking minority member, the 
gentleman from Massachusetts [Mr. Moakley].
  Mr. Speaker, I guess we ought to call this bill the clean-up of the 
messes of World War II.
  I think the biggest accident that occurred in World War II--and I am 
talking now about political accidents or economic accidents--happened 
around this area of health insurance. As we may recall, early in 1942 
the Congress decided that since wages and prices were going up so fast 
because of the number of people entering the military and because of 
the number of people who had to go into the new jobs that 
[[Page H1915]] were being created to fill the war effort, there was a 
great push on wages and prices, so wage-and-price controls were 
instituted in the United States. But American business people being the 
ingenious people they are found a way around all that by granting 
fringe benefits.
  There fringe benefits had largely been nonexistent prior to World War 
II, but with the increases in taxes, and the impact of wage-and-price 
controls, and the shortage of labor, fringe benefits became very 
popular. They became the popular way of enticing people to work in a 
particular industry. So out of all of those fringe benefits, at the top 
of the fringe benefits came health care coverage. Health care insurance 
sprung out of all that wage-and-price control push in the early 1940's.
  Let me explain this to those who are not fully familiar with how 
these benefits work. They work essentially like this: If you are the 
beneficiary of a policy, the person who provides it to you, your 
employer, usually a corporation, gets a tax deduction for that policy. 
There are some abuses in that tax deduction. Some people get very, very 
generous benefits with these insurance policies, something bordering on 
vacations, and there are others who get practically nothing. There is 
no requirement that the low-paid employees get the same amount as the 
bosses or the members of the board of directors.

                              {time}  1720

  So we need to straighten all that up, and we should have done it long 
before this time, and we need to do it as rapidly as possible.
  That is one deduction. Then there is an exclusion from income. 
Remember, we were trying to find a way around wage-price controls, and 
these were not wages, they were not income to the employee, so they 
gave the employee an exclusion from income of this big benefit, which 
was just the same as wages, but the Congress did not catch it in time 
and they got excluded from income of the employee.
  So there are two huge tax benefits. The largest tax benefits you will 
find in the Internal Revenue Code revolve around this insurance 
arrangement I have just described here. So that is one of the things we 
are going to take a small step in straightening out today.
  The gentleman from Washington [Mr. McDermott] will have a provision 
in there that extends the deduction and exclusion to those people in 
the country who are self-employed, in other words, a secretary or 
helper of a self-employed, or someone whose corporation or business 
does not give them a
 health insurance policy. He will allow those people who have been 
discriminated against horribly in our tax system and horribly in our 
health care system, if the substitute amendment passes, and I think it 
ought to pass, to get a tax deduction. It will have to be phased in, 
because we are talking about a lot of money, but it is the right and 
just thing to do for the self-employed who are covered by this bill, 
and the employees of the self-employed and by those employees who work 
for businesses who do not furnish health insurance. They ought to get 
the same kind of treatment of their income that employees do who work 
for a company who provides health insurance. If they buy the health 
insurance themselves, these employees will get an exclusion and a 
deduction. That is a good measure. It ought to be approved. It is in 
the amendment.

  The other part of World War II that we are straightening out here has 
to do with a tax benefit that was granted because the Government had to 
seize certain radio channels for wartime purposes. Since the person 
that had their channel seized had no chance to reinvest their money 
right away in a new radio station, they got a rollover. Somewhere along 
the line, this rollover got turned into a benefit for minorities. That 
will be amply discussed in the debate to come.
  A substitute will be available, and Mr. McDermott sitting right back 
here will handle the substitute. I have designated him to handle the 
substitute for the Democratic members of the Committee on Ways and 
Means, and he can adequately explain his substitute. I think it is a 
good substitute and I urge you all to vote for that.
  I would urge Members in the process here to vote for the motion to 
recommit, because it really does right by people who have been hurt and 
hurt badly and unfairly, and to vote also for the McDermott substitute, 
because it does a fine job in making the necessary corrective efforts 
in the other tax benefit.
  Mr. Speaker, I yield back the balance of my time.
  Mr. QUILLEN. Mr. Speaker, I yield 8 minutes to the gentleman from 
Texas [Mr. Archer], the distinguished chairman of the Committee on Ways 
and Means.
  (Mr. ARCHER asked and was given permission to revise and extend his 
remarks.)
  Mr. ARCHER. Mr. Speaker, I thank my friend for yielding and for 
bringing this rule before the floor. I think it is a fair rule. It 
gives the minority an opportunity to have an hour debate on their 
substitute and also gives them another opportunity to make a motion to 
recommit with instructions. I believe that this issue can be fully 
developed under that framework.
  As the gentleman from Florida [Mr. Gibbons] just completed saying, 
until December 31, 1993, the self-employed were permitted to deduct for 
tax purposes 25 percent of their health insurance costs. At that time, 
it was permitted to expire, and was not extended last year.
  H.R. 831 not only restores the self-employed's 25-percent deduction 
for 1994, but also makes the deduction permanent, so it does not 
continue to go down this roller coaster road of being on again, off 
again without the certainty that the self-employed should have.
  It is vital so that millions of self-employed individuals can avoid 
the expense of having to file an amended tax return for 1994. Hopefully 
we will get this bill out of the House today, pass it to the
 Senate, and hopefully it will be passed rapidly over there.

  The $2.9 billion revenue cost of permanently extending the self-
employed health insurance deduction is fully funded in this bill by 
several provisions that will greatly improve our Nation's tax laws. 
Because it is fully funded, it will not in any way increase the 
deficit.
  First, H.R. 831 repeals the Internal Revenue Code section 1071, under 
which the Federal Communications Commission can grant, at its 
discretion, tax certificates deferring tax on the sale or exchange of 
broadcast facilities.
  Section 1071 was enacted in 1943 to address problems arising from new 
Federal regulations forcing the sale of radio stations. Under general 
tax principles, gain on dispositions of property that is involuntarily 
converted, that is, property that is destroyed or taken by the 
government in a condemnation proceeding, is excluded from taxable 
income if the proceeds are reinvested in similar replacement property.
  However, the involuntary conversion rules in effect at the time in 
1943 did not apply to the sales of radio stations because of the 
scarcity of stations and there was no opportunity for reinvestment.
  Congress believed, therefore, it was appropriate to liberalize the 
rules for the FCC-ordered sales and code section 1071 was enacted. The 
time has come to repeal section 1071 because the FCC has expanded the 
purposes for which it issues tax certificates far beyond Congress' 
original intent of addressing problems relating to involuntary sales of 
broadcast facilities.
  More important, I believe it is wrong for the Congress to give 
authority to any agency to administer what is in essence an open-ended 
entitlement program with no constraints on the extent to which the 
agency can hand out tax benefits.
  Clearly, this leaves a large tax loophole in the code. H.R. 831 would 
repeal this loophole and not, as my friend from Massachusetts said, 
retroactively, but rather to January 17, at which time notice was given 
by public press release that whatever action we took would begin on 
that date. It is prospective beginning January 17, and I would say to 
my friend from Massachusetts that if he supports the Democrat 
substitute, it has the same effective date of January 17. So we should 
disabuse ourselves of any charges of retroactivity that might occur in 
what we do today.
  The bill's other offset for the cost of making the 25-percent 
deduction permanent is a tax change proposed by the Clinton 
administration to deny the earned income tax credit to persons 
[[Page H1916]] with more than $2,500 of taxable interest and dividend 
income. The administration stated in its proposal that under current 
law a taxpayer may have low earned income and therefore be eligible for 
the EITC, even though he or she has significant interest or dividend 
income. The EITC should be targeted to families with the greatest need.
  The Committee on Ways and Means agrees with the administration. 
However, rather than deny the entire EITC when interest and dividend 
income reaches $2,500 as the administration proposed, H.R. 831 would 
phase out the credit as interest and dividend income increases from 
$2,500 to $3,150.
  Thus, not only does H.R. 831 reinstate the self-employed's 25-percent 
deduction for health insurance costs, it also makes several other 
needed changes in our Tax Code. I urge my colleagues to support this 
rule.
  Mr. MOAKLEY. Mr. Speaker, it gives me great pleasure to yield 7 
minutes to the gentleman from New York [Mr. Rangel].
  (Mr. RANGEL asked and was given permission to revise and extend his 
remarks.)
  Mr. RANGEL. My colleagues, I hope we take a good look at what is 
going on here today and see whether or not we want to project this type 
of conduct in the future.
  First of all, the health benefits that we are talking about expired 
in December, and there should be very few, if any, Members in this 
House that would not want to continue to make certain that we give a 
deduction and we encourage the self-employed to have health insurance.
  Now, the committee had notice that we were going to take care of this 
from last year, but then comes the question of how we are going to pay 
for this. And would Members believe the committee had no notice of how 
we were going to pay for this until a day or two before the actual 
meeting to markup.
  Now, we have had the subcommittee of the Committee on Ways and Means 
study the question of Viacom and to report back to the full committee. 
Well, we have not had any report on this Viacom deal and how all of a 
sudden this was selected to pay for the extension of the health 
benefits.
  Now, Members will tell you that Viacom received $400 million, $500 
million as a result of selecting a minority, that a contract was signed 
and that this was not the intention of the legislation because 
originally it had something to do with radio and television people 
getting rid of their property because of the law.
  But we also know that this law was amended. And the person that was 
the beneficiary of getting the minority station was working for the FCC 
under President Carter. And he has subsequently gotten four pieces of 
TV and/or radio stations as a result of the law.
  And this one he was about to do except someone said it did not pass 
the smell test. No one said it was illegal. No one said it was immoral. 
No one said that it violated any regulations. And I assumed it would be 
just out of taste to say that because this guy was black and was 
enjoying the benefits of the law that was written by this Congress, 
that we have now said we are going to stop the deal.
  Now, if we have been doing this type of thing all along with every 
S&L contract that did not pass the smell test, I would join in and say, 
anything that Congress does not like, let us get involved and stop it. 
It does not sound too Republican to me, keep the Government out of 
business. Let the free marketplace work its will. But I just wonder if 
we can issue a press release and put people on warning, is that the 
type of reliance that we want on our Tax Code?
  My good friend, the gentleman from Texas, Chairman Archer, says we 
should not have the FCC making these determinations, that it should be 
with the Treasury or should be with the IRS. I do not have any problem 
with that. I never said it should be the FCC. But if we want to knock 
out preferences that minorities get so that they, too, would be able to 
be proud to see their images on the airwaves, that they would not have 
to look at themselves as being clowns and walking slowly and telling 
jokes and being demeaned as criminals or people on welfare, if we want 
Hispanics to be able to say that they can look with pride at their own 
programs, if we want the world to say that the United States is not 
sterile, it is not white, it is not male, it is a beautiful combination 
of a whole lot of cultures and the whole world is made up of these 
people and we should make certain that we are not talking about 
affirmative action and preferential treatment, we should have our board 
rooms and our airwaves reflect what America really is, people of all 
colors.
  And if we are going to knock out the minority provision, we should at 
least have hearings on it and do it in the open rather than look at 
this one deal, knock this out retroactively and then say that, hey, by 
the way, we have got to knock out the whole section because we do not 
like the FCC involved in making the decision.
  We could reform this. If we in our hearts wanted to make certain that 
everyone had an equal chance, maybe this law was bad. Maybe we should 
substitute it with something else. Maybe we could have hearings and 
come up with something. But, no, they say that they want to make 
certain that this does not happen again and they wipe it out 
completely.
  Now, I want Members to think with me, because I am not an economist, 
but what we are saying here now is that somehow this Viacom was going 
to make something from $400 million to $500 million in tax benefits and 
deferred payments of their capital gains tax.
  All I want to know is, if this deal was going to cause us to lose 
$400 million in revenue, how does canceling the deal, where there is no 
transaction, raise the money to pay for the health bill? We cannot
 have it both ways. If the Viacom deal was based on taxes, and it was, 
and we shattered the Viacom deal to Washington, where in the heck is 
the money being raised? There is no transaction here.

  I submit to my colleagues, if we have to do health, do health. If we 
want to knock out set-asides, knock out set-asides. If we want to set 
aside the hopes and the dreams of minorities that had this, well, go 
ahead and do it. We have the votes to do it. But I am suggesting that 
we do not have to do it in the middle of the night. This is the 
beginning of a folly. It started in the campaign.
  We now find some gentlemen who are running for President in the other 
body suggesting that if elected they will strike out all preferences, 
that 62 percent of angry white males voted for the Republican party. 
Well, I tell my colleagues this: close to 50 percent of the American 
people did not vote for anybody. I think America has gone a long way in 
getting rid of the vestiges of racism. We have a long way to go. But if 
we have differences in how to get along as brothers and sisters, if we 
have differences in how all of us should make certain that we are 
treated with equality, I say, do not do it in the middle of the night. 
Come up. If we differ, let us fight about it. But this is no place to 
be wiping out a minority tax preference and color it under the cloud 
that we are trying to improve the quality of health for the self-
employed.
  Mr. QUILLEN. Mr. Speaker, I yield 3 minutes to the distinguished 
gentleman from Wisconsin [Mr. Roth].
  Mr. ROTH. Mr. Speaker, I thank the gentleman for yielding time to me.
  Mr. Speaker, I hope that this body today passes the rule and the 
bill. This is real working people's legislation. We always talk about 
helping middle-class America; this will truly help middle-class 
America.
  Mr. Speaker, if Mobil Corp. can deduct 100 percent in health 
insurance costs, then why cannot Ann Kirchner, a farmer in Shiocton, 
WI, deduct just 25 percent of her health insurance?
  The answer is that Congress allowed the 25 percent health insurance 
deduction for small business to expire last year.
  Under the current Tax Code, big businesses may deduct the cost of 
health insurance from their taxes. The self-employed farmer, 
shopkeeper, entrepreneur, or small business owner, however, cannot 
deduct a penny of their insurance costs.
  Congress can right this wrong by passing this bill, H.R. 831, to 
allow 25 percent deduction for the 1994 tax year and to make it 
permanent thereafter.
  [[Page H1917]] Since 1986, we have always had this annual renewal. 
Let us make it permanent, and we are going to do that with this 
legislation.
  H.R. 831 will take us one step closer to the goal of leveling the 
playing field between big business and the ordinary self-employed 
American.
  I would like to add that today's legislation should be just a 
starting point in making our health care system fairer for the average 
American. Congress must expand on today's work by making health 
insurance 100 percent tax deductible for all Americans.
  I hope that my fears are not well-founded, that we are going to go 
with the 25 percent and then forget it. If 100 percent is good enough 
for Mobil Corp., the big corporation in America, why is not 100 percent 
good enough for the farmer, the shopkeepers and others?
  Mr. VOLKMER. Mr. Speaker, will the gentleman yield?
  Mr. ROTH. I yield to the gentleman from Missouri.
                              {time}  1740

  Mr. VOLKMER. Mr. Speaker, I agree with the gentleman that 100 percent 
is only the fair way to do it.
  Would the gentleman, if given the opportunity, support an amendment 
to make it 100 percent?
  Mr. ROTH. Mr. Speaker, I would say to the gentleman, I would be happy 
to do that. That is exactly the goal I am shooting for. I want to make 
it 100 percent deductible for all Americans, from the farmer from rural 
Wisconsin to the boardrooms of urban America.
  There are 3.2 million people affected by this, and this is going to 
be the first step in the Republican plan to restructure health care in 
America so we have a fair Tax Code, and I hope we pass this legislation 
to give the people a 25-percent deduction.
  Then let us not forget that we want to make it as fair for the 
average American as we have made it for corporate America, and go ahead 
and have 100 percent deductibility for health care costs.
  I thank the gentleman from Tennessee for yielding time to me.
  Mr. VOLKMER. The gentleman can do it today, Mr. Speaker.
  Mr. MOAKLEY. Mr. Speaker, I yield myself such time as I may consume.
  Because of the plea of the gentleman at the mike, Mr. Speaker, I 
think we will have a vote on the previous question, so the gentleman 
can vote against the previous question, and then put the amendment the 
gentleman wants in the bill.
  Mr. Speaker, I yield 3 minutes to the gentleman from Maryland [Mr. 
Cardin].
  Mr. CARDIN. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  This is a good follow-up to the last comment, Mr. Speaker. I went to 
the Committee on Rules on H.R. 831, to put in order an amendment that 
would increase the deduction for self-employeds to 80 percent, starting 
in the second year.
  First, I want to congratulate the gentleman from Texas [Mr. Archer] 
and the gentleman from Florida [Mr. Gibbons] for bringing this bill 
forward. This is a very important bill for self-employed individuals. 
They are filing their tax returns now. We do not want them to have to 
file amended returns, so it is important that we act promptly on this 
legislation.
  Mr. Speaker, I support the bill. I supported the bill in the 
committee, and I will support the bill on the floor, but I was 
disappointed that the Committee on Rules did not make in order an 
amendment that would have allowed us to increase the 25 percent for the 
self-employed deductions to 80 percent. It could have been made in 
order. It was not.
  Mr. Speaker, the tradition has been to protect many of the tax bills 
that come out of the Committee on Ways and Means, but there are only 
three other individuals was came forward to the Committee on Rules and 
asked for amendments to be made in order.
  It would not have made it disorderly for those amendments to be 
placed in order by this rule, and I hope that we will not approve the 
rule in its current form. This bill is different than the bill filed by 
the gentleman from California [Mr. Thomas] to extend the 25 percent for 
1944 only. Many of us thought that would be the bill we would be acting 
on promptly. This bill extends it permanently, but at 25 percent.
  My concern, Mr. Speaker, is if we extend it permanently at 25 
percent, we are never going to get it up to the level of 80 percent, 
which I think is the right level.
  Why 80 percent? Because the average business in this country pays 80 
percent of the insurance premiums of its workers and it is entitled to 
deduct that entire 80 percent. To provide parity for self-employed 
people, if we allow them to deduct 80 percent of their premiums, we 
will have parity between the self-employed and the people who work for 
companies.
  Mr. Speaker, is it important? Yes, it is. In 1986 we adopted a 25 
percent deduction for the self-employed. It is estimated that 400,000 
more people are insured as a result of that tax provision. However, 
there are still 3.1 million self-employed individuals who have no 
health insurance.
  They are one and a half times more likely to have no health insurance 
than a company that can use the deduction of 80 percent, or what they 
can deduct on their insurance premiums. If the Committee on Rules would 
have made in order an amendment to increase this to 80 percent, we 
could have gotten more people insured.
  I do not understand the logic for why that was not made in order. It 
was paid for in the amendment, it was in compliance with the rules, and 
in a sense of fairness, where the House can decide whether it should be 
25 percent or 80 percent, why not let that amendment come before the 
House and be voted on by the House?
  That is what my amendment and the amendment of the gentleman from 
Massachusetts [Mr. Neal] provided for, and I would urge my colleagues 
to defeat the rule or the previous question so we can make that 
amendment in order, giving us the opportunity to vote for a higher 
percentage than 25 percent.
  The SPEAKER pro tempore. The gentleman from Tennessee [Mr. Quillen] 
has the right to close.
  The Chair recognizes the gentleman from Massachusetts [Mr. Moakley].
  Mr. MOAKLEY. Mr. Speaker, I yield 4 minutes to my dear friend, the 
gentleman from Massachusetts [Mr. Neal].
  Mr. NEAL. Mr. Speaker, I thank the gentleman from Massachusetts for 
yielding time to me.
  Mr. Speaker, I rise in opposition to the rule for H.R. 831. This 
legislation would restore and make permanent the 25 percent tax 
deduction for health insurance premiums for the self-employed. The 
deduction is paid for by a very controversial tax change.
  This rule makes in order one and only one substitute. The markup 
originally scheduled on this Committee on Ways and Means was to restore 
the 25 percent deduction for 1994. It was my understanding at that time 
that the committee wanted to act on this legislation quickly in order 
to prevent individuals from filing amended returns. We are fast 
approaching the tax filing deadline for 1994, and in fact for farmers 
the tax filing deadline is on March 1.
  It is also my belief that at a later date the committee was to 
address the issue of making the deduction permanent and increasing the 
amount of the deduction. However, the day before the markup we received 
notice that the markup was to make the deduction permanent, and it 
would be paid for with two tax provisions.
  One of the revenue provisions, the repeal of Code section 1071, gives 
the Federal Communications Commission the authority to grant tax 
certificates deferring capital gains taxes on the sale or exchange of 
broadcast facilities to minority individuals or minority-controlled 
entities.
  I am pleased the committee took action on restoring the 25 percent 
deduction for 1994. However, I am very concerned that the 25 percent 
deduction should be made permanent, but we should move on this very 
quickly with additional changes that the gentleman from Maryland [Mr. 
Cardin] and I have proposed. The deduction should be increased.
  During the committee markup, the gentleman from Maryland [Mr. Cardin] 
and I offered a specific amendment to restore the deduction for 1994 
and to increase the deduction to 80 percent for 1995 and 1996. This 
proposal would be financed by the same revenue offsets. 
[[Page H1918]] The amendment unfortunately failed on a party-line vote.
  Mr. Speaker, we have testified in front of the Committee on Rules 
about our amendment. The Committee on Rules did not make our amendment 
in order, although they gave us a very courteous hearing, and there 
seemed to be general sympathy in the committee on both sides for our 
proposal.
  This legislation is very straightforward. The amendments presented to 
the Committee on Rules by Committee on Ways and Means members were 
germane and substantially related to 831. This was not a situation 
where there were complicated issues in the legislation, or the 
amendment contained new revenue offsets.
  The 25-percent deduction is extremely important as an issue for the 
self-employed. One quarter of self-employed Americans, 3.1 million 
farmers, and craftsmen, professionals, and small business proprietors 
have no health insurance. The self-employed are one and a half times 
more likely to lack essential health care coverage.
  Mr. Speaker, the Tax Code should encourage the self-employed to 
pursue health insurance. The deduction would allow businesses to spend 
more on health care. There are approximately 41 medically uninsured.
  We need initiatives to encourage working people to provide for health 
care coverage. An individuals's employment should not determine the tax 
treatment of their health insurance. Most importantly, on this 
occasion, this full House is fully capable of debating this issue 
tonight.
  This is important to self-employed Americans across this Nation, and 
we should not have been denied the opportunity to offer the amendment 
proposed by the gentleman from Maryland and I.
  Mr. Speaker, I firmly oppose this rule, and I urge those on both 
sides to proceed with a full debate and vote against this rule this 
evening.
  The SPEAKER pro tempore. The Chair would ask the gentleman from 
Tennessee [Mr. Quillen] if he has additional request for time.
  Mr. QUILLEN. Mr. Speaker, I have one additional speaker.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from New York [Mr. Solomon], the distinguished chairman of the 
Committee on Rules.
  Mr. SOLOMON. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, there may be a lot more acrimony, if we hear any more of 
this rhetoric about closed rules around here.
  Mr. Speaker, I just want to tell the Members in the minority, they 
never had it so good. No other minority in the history of this Congress 
was ever treated as good as they have been treated.
  Mr. Speaker, let me tell the Members something else. We Republicans 
said to the minority, we said to my very good friend, the gentleman 
from Florida [Mr. Gibbons], the ranking member of the Committee on Ways 
and Means, whatever he wants we will make in order. We want to be fair.
  We made in order a rule that says the gentleman from Florida [Mr. 
Gibbons] or his designee can offer any amendment that he wants. What is 
more fair than that? Then I hear all this talk, Mr. Speaker, about how 
some few Members are going to try to offer another amendment to shorten 
this exemption for the self-employed that we are making permanent here 
today.

                              {time}  1750

  Let me tell you something. We Republicans are not going to foul up 
the American people anymore. We are going to make this exemption 
permanent forever. And no other amendments are going to be offered on 
this floor that change that.
  There is nothing more aggravating to a small businessman or to a 
farmer than to have Congress continue to micromanage their life. And 
that includes procrastinating and letting this exemption run out.
  We should have done this bill last year, but, no, this Congress was 
too busy fooling around trying to get reelected. It is about time we 
got down to business. That is what this bill does.
  I hear all this talk that some few Members are going to try to change 
the funding provision in this bill so as to wipe out the estate tax 
exemption. Nobody more than me, with 5 children and 4 grandchildren, 
resents that more.
  Members are not going to reduce the inheritance tax exemption that 
citizens now have. We ought to be raising it to $1.2 million, not 
cutting it down to $200,000, which is what some few Members want to do.
  Let me tell you something. Let's get this rules debate over. Let's 
get this bill out on the floor, and let's get up and vote for it one 
way or the other. We know what we are voting for. We don't need all 
this rhetoric.
  Mr. NEAL. Mr. Speaker, will the gentleman yield?
  Mr. SOLOMON. I yield to my good friend the gentleman from 
Springfield, MA, whom I have a lot of respect for.
  Mr. NEAL of Massachusetts. I thank the gentleman for yielding. By the 
way, you were up for reelection last year, were you not, Mr. Chairman?
  Mr. SOLOMON. I don't even remember it has been so long ago.
  Mr. NEAL of Massachusetts. You are so confident, you do not have to 
worry about reelection. Those of us on our side, we have to worry about 
it.
  Mr. SOLOMON. Let me tell the gentleman something. I represent a 
district that is 45 percent Republican, and I get 75 percent of the 
vote. That is how confident I am, because I represent the people. I 
don't come down here and talk out of both sides of my mouth.
  Mr. NEAL of Massachusetts. Let me ask the gentleman a specific 
question if I might. I just want to say that in 7 years here I have 
never received a more courteous hearing from anybody on my proposals, 
when members on both sides of that committee agreed entirely with the 
proposal, at least verbally, that the gentleman from Maryland [Mr. 
Cardin] and I offered, and then, despite the fact that everybody said, 
``Yes, this is the correct posture, this is the right position, you're 
demonstrating the right attitude,'' and then we were told we could not 
offer our alternative.
  Everybody there in that room that day agreed with us, I say to the 
gentleman from New York [Mr. Solomon]. Then they said, ``No, but you 
can't offer it.'' But I do thank the gentleman for receiving me in a 
courteous manner.
  Mr. SOLOMON. If I had been in your shoes, I would have gone to my 
minority leader, and I would have said, ``This is what I want in that 
substitute.'' And I would have got it.
  Mr. MOAKLEY. Mr. Speaker, I think the gentleman from New York [Mr. 
Solomon] will have to apologize to a lot of Members that he could not 
get their amendments through when he was the minority leader on the 
committee.
  Mr. Speaker, I yield 2 minutes to the gentleman from Missouri [Mr. 
Volkmer].
  Mr. VOLKMER. I thank the gentleman from Massachusetts for yielding me 
this 2 minutes.
  Here we go again, folks, another gag rule, just like we have been 
having right along. I can well remember the day after we were sworn in, 
the gentleman from New York said we were going to do open rules, at 
least 70 percent open rules.
  Let us look at this week. We have got a gag rule tonight, tomorrow we 
get another gag rule, Thursday and Friday we get another gag rule. That 
does not sound like very much openness. How about a good amendment? The 
best amendment I have heard. ``You can't offer it.''
  Some way, folks, you should realize that this House should be able to 
determine whether or not our small-business people, my farmers, who are 
paying $7,000, $8,000, $9,000 a year on health insurance but cannot 
deduct a penny, they ought to be able to do like big business. Big 
business controls down here. Big business gets a 100-percent deduction. 
But they do not allow my small-business people and my farmers to do 
that.
  How can we do it? We can do it by defeating the previous question, 
and once the previous question has been defeated, that amendment will 
be in order. So a vote on the previous question is a vote whether or 
not you want 100-percent deductibility for your farmers, for your 
small-business people or if you do not want it. That is what it amounts 
to, I say to the gentleman from New York, very clearly. It is very 
clear for everybody. Nobody can deny the fact that if we defeat the 
previous 
[[Page H1919]] question, that amendment will be made in order.
  So if you want to vote on it, now is the time, when we get right to 
the previous question, vote down the previous question, get the 
amendment in order, let the House decide this matter, and don't let it 
be stymied by the Committee on Rules.
  Mr. THOMAS. Mr. Speaker, will the gentleman yield briefly?
  Mr. VOLKMER. I yield to the gentleman from California.
  Mr. THOMAS. I would ask the gentleman from Missouri that if the 
amendment to fund self-employed at 100 percent is offered, what will be 
the revenue source to cover the cost?
  Mr. VOLKMER. The gentleman from Maryland and others who have 
developed the amendment have it. I do not know exactly, but they do 
have it developed.
  Mr. THOMAS. I see.
  Mr. QUILLEN. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from California [Mr. Dreier], a very valuable member of the 
Committee on Rules.
  (Mr. DREIER asked and was given permission to revise and extend his 
remarks.)
  Mr. DREIER. Mr. Speaker, I thank the distinguished chairman emeritus 
for yielding me this time.
  Mr. Speaker, I rise in strong support of this rule. It is a fair and 
balanced approach to a very important issue, trying to make permanent 
this very important deduction which farmers and small business men and 
women need if they are going to survive in this economy.
  We have by addressing this apparently opened up the issue of health 
care reform. Mr. Speaker, we plan, when we get beyond the first 100 
days, to move meaningful market-oriented health care reform 
legislation. But this is not the place to do that.
  The measure here is very specific, it is being done under a fair and 
balanced process. Everyone has acknowledged that we should not be 
opening up the Tax Code for all kinds of amendments which could create 
many serious problems. This is the way that it should be done. I hope 
very much that my colleagues will join in supporting this balanced 
rule.
  Mr. MOAKLEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Pennsylvania [Mr. Fattah].
  Mr. FATTAH. Mr. Speaker, I thank the ranking member of the Committee 
on Rules for yielding me the time.
  It was once suggested that what would it really mean if you won the 
world and lost your soul. It seems as though the great debate in the 
majority party's camp has been won by the David Duke faction. Because 
tonight under the guise of trying to help self-employed individuals, 
they want to snatch the rug out from up under a program that has been 
very meaningful for the tens of millions of African-Americans and 
Hispanic Americans throughout this country.
  Today in America, there are over 18,655 broadcast licenses for radio, 
TV, and cable. Out of these 18,000 licenses, 332 are owned by 
minorities. When this program was put in place in 1978, 0.5 percent of 
these licenses were owned by minority group members. It is now 3 
percent, a sixfold increase. Three percent of the 18,000 licenses, some 
300 of them, because we encouraged through the Tax Code a process in 
which some of the sales of radio and TV stations could move from the 
old boys' network to a circumstance in which other people in this 
country could participate.
  So we have this sneak attack this evening on the floor of the U.S. 
Congress. I guess even David Duke would not be proud because he was 
making it very plain about what his position was.
  I guess now the majority, as the chairman, as the gentleman from New 
York suggests, is why don't they just be more open about what it is 
they attempt to do. Their Presidential candidates have suggested that 
this is going to be a critical issue and they want to win votes by 
dividing our country.
  It is an unfortunate hour for this Congress and for our country.
  Mr. MOAKLEY. Mr. Speaker, I urge a ``no'' vote on the previous 
question to make in order the Rangel amendment, the Cardin amendment, 
the Stark amendment, and the Mfume amendment.
  Mr. Speaker, I yield back the balance of my time.
  Mr. QUILLEN. Mr. Speaker, to close the debate on this side, I yield 2 
minutes to the gentleman from Illinois [Mr. Weller].

                              {time}  1800

  Mr. WELLER. Mr. Speaker, I wish to thank the gentleman from Tennessee 
for the courtesy of yielding me 2 minutes of his time.
  Mr. Speaker, I rise today to express my strong support for this rule 
and for H.R. 831 which will bring tax fairness to the little guy and 
especially millions of middle-class working Americans. This bill will 
restore the 25 percent health care deduction insurance for the self-
employed. This sorely needed tax deduction was held hostage, as many 
will remember, by the Clinton government-run health care plan that was 
eventually rejected by the voters this past fall.
  As a result 3.2 million families, including my own parents, self-
employed farmers, will now be unable to deduct even 25 percent of the 
cost of health insurance for themselves and their families, unless we 
enact this legislation.
  Major corporations are able to write off 100 percent of the costs of 
their health insurance. Yet, self-employed individuals, like my parents 
who run a fifth generation hog farm, may have to forgo insuring their 
family because they cannot afford the added cost. This situation will 
undoubtedly lead to thousands of Americans being added to the millions 
of those already uninsured.
  H.R. 831 will restore at least part of the tax break that is 
currently available to corporations which the self-employed have come 
to rely on. This bill not only restores the deduction for last year, 
but also makes it permanent so that the self-employed do not have to 
travel down this road again, year in and year out.
  Mr. Speaker, finally we have a Congress which is committed to 
bringing tax fairness to all Americans. Restoring the 25 percent health 
care deduction for the self-employed will help make health care more 
affordable. H.R. 831 is an important first step that must not be 
delayed.
  Let us make the right vote and vote aye for the rule and H.R. 831.
  Mr. QUILLEN. Mr. Speaker, I urge adoption of the rule. It is time 
that we get down to full debate on this measure and consider the 
substitute and go on with our business.
  Mr. Speaker, I yield back the balance of my time, and I move the 
previous question on the resolution.
                         parliamentary inquiry

  Mr. RANGEL. Mr. Speaker, I have a parliamentary inquiry.
  The SPEAKER pro tempore (Mr. Hefley). The gentleman will state his 
parliamentary inquiry.
  Mr. RANGEL. Mr. Speaker, it is my understanding that all points of 
order have been waived by the Committee on Rules, and my parliamentary 
inquiry is that if in fact there is no funding mechanism for the 
provision of extending health care for the self-employed, does the 
waiver of the point of order prevent anyone from going into the funding 
mechanism as it relates to the Budget Act?
  The SPEAKER pro tempore. The rule does indeed waive all points of 
order against consideration of the bill.
  Mr. RANGEL. I knew that.
  But I am asking the Chair, when we have a violation of the Budget 
Act, and this is something that is very sacred to Republicans and 
Democrats, that the only thing that we have to do when we do not 
provide the funding for a particular piece of legislation is go to the 
Committee on Rules and ask them to waive any violation that we have as 
relates to the Budget Act? I mean is that the Chair's ruling?
  Mr. SOLOMON. Mr. Speaker, I do not believe that is a parliamentary 
inquiry.
  The SPEAKER pro tempore. The Chair will respond that the waiving of 
all points of order includes waiving of points of order when it 
concerns rules under the Budget Act.
  Mr. RANGEL. So my last parliamentary inquiry is if we want a bill 
funded and we do not have the money for it, all we have to do is go to 
the Committee on Rules and tell them to waive it, and then we do not 
even have to fund it, is that correct? Is that correct, Mr. Speaker?
  [[Page H1920]] The SPEAKER pro tempore. The Committee on Rules does 
have the authority to waive all necessary points of order.
  Mr. RANGEL. My point, Mr. Speaker, is that you can bust the budget.
  The SPEAKER pro tempore. Does the gentleman have a further inquiry? 
The gentleman should not restate the inquiry over and over again. If 
the gentleman has another inquiry let him state it.
  Mr. RANGEL. Then the Budget Act is not relevant when the point of 
order is being waived by the Committee on Rules?
  Mr. SOLOMON. Mr. Speaker, that is not a parliamentary inquiry.
  The SPEAKER pro tempore. The question is on ordering the previous 
question.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. VOLKMER. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  Pursuant to the provision of clause 5 of rule XV, the Chair announces 
that he will reduce to a minimum of 5 minutes the period of time within 
which a vote by electronic device, if ordered, will be taken on the 
question of agreeing to the resolution.
  The Sergeant at Arms will notify absent Members.
  The vote was taken by electronic device, and there were--yeas 230, 
nays 191, not voting 13, as follows:

                             [Roll No. 146]

                               YEAS--230

     Allard
     Archer
     Armey
     Bachus
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bono
     Boucher
     Brownback
     Bryant (TN)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clinger
     Coble
     Coburn
     Collins (GA)
     Combest
     Cox
     Crane
     Cremeans
     Cubin
     Cunningham
     Davis
     Deal
     DeLay
     Diaz-Balart
     Dickey
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Forbes
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Ganske
     Gekas
     Gilchrest
     Gillmor
     Gilman
     Goodlatte
     Goodling
     Goss
     Graham
     Greenwood
     Gunderson
     Gutknecht
     Hancock
     Hansen
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson (SD)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King
     Kingston
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Linder
     Livingston
     LoBiondo
     Longley
     Lucas
     Manzullo
     Martinez
     Martini
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Meyers
     Mica
     Miller (FL)
     Molinari
     Moorhead
     Morella
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oxley
     Packard
     Paxon
     Petri
     Pombo
     Porter
     Portman
     Pryce
     Quillen
     Quinn
     Ramstad
     Regula
     Riggs
     Roberts
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stearns
     Stockman
     Stump
     Talent
     Tate
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Torricelli
     Upton
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                               NAYS--191

     Abercrombie
     Ackerman
     Andrews
     Baesler
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Bonior
     Brewster
     Browder
     Brown (CA)
     Brown (OH)
     Bryant (TX)
     Cardin
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Danner
     DeFazio
     DeLauro
     Dellums
     Deutsch
     Dicks
     Dixon
     Doggett
     Dooley
     Doyle
     Durbin
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Fazio
     Fields (LA)
     Filner
     Flake
     Foglietta
     Ford
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Geren
     Gibbons
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hamilton
     Harman
     Hastings (FL)
     Hefner
     Hilliard
     Hinchey
     Holden
     Hoyer
     Jackson-Lee
     Jacobs
     Jefferson
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kleczka
     Klink
     LaFalce
     Lantos
     Laughlin
     Levin
     Lewis (GA)
     Lincoln
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Mascara
     Matsui
     McCarthy
     McDermott
     McHale
     McKinney
     McNulty
     Meehan
     Menendez
     Mfume
     Miller (CA)
     Mineta
     Minge
     Mink
     Moakley
     Mollohan
     Montgomery
     Moran
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Owens
     Pallone
     Parker
     Pastor
     Payne (NJ)
     Payne (VA)
     Pelosi
     Peterson (FL)
     Peterson (MN)
     Pickett
     Pomeroy
     Poshard
     Rahall
     Rangel
     Reed
     Reynolds
     Richardson
     Rivers
     Roemer
     Rose
     Roybal-Allard
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Sisisky
     Skaggs
     Skelton
     Slaughter
     Spratt
     Stark
     Stenholm
     Stokes
     Studds
     Stupak
     Tanner
     Tauzin
     Taylor (MS)
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Towns
     Traficant
     Tucker
     Velazquez
     Vento
     Visclosky
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Wilson
     Wise
     Woolsey
     Wyden
     Wynn
     Yates

                             NOT VOTING--13

     Borski
     Brown (FL)
     Cooley
     Crapo
     de la Garza
     Dingell
     Ehlers
     Gallegly
     Gonzalez
     Meek
     Radanovich
     Rush
     Williams

                              {time}  1823

  Ms. DANNER, and Messrs. OWENS, SPRATT, and FAZIO changed their vote 
from ``yea'' to ``nay.''
  Mr. FLANAGAN and Mr. CHRYSLER changed their vote from ``nay'' to 
``yea.''
  So the previous question was ordered.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. Hefley). The question is on the 
resolution.
  The question was taken, and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. LINDER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The vote was taken by electronic device, and there were--yeas 229, 
nays 188, not voting 17, as follow:

                             [Roll No. 147]

                               YEAS--229

     Allard
     Archer
     Armey
     Bachus
     Baker (CA)
     Baker (LA)
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bono
     Boucher
     Brownback
     Bryant (TN)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clinger
     Coble
     Coburn
     Collins (GA)
     Combest
     Cooley
     Cox
     Crane
     Cremeans
     Cubin
     Cunningham
     Davis
     DeLay
     Diaz-Balart
     Dickey
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Forbes
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Ganske
     Gekas
     Gilchrest
     Gillmor
     Gilman
     Goodlatte
     Goss
     Graham
     Greenwood
     Gunderson
     Gutierrez
     Gutknecht
     Hancock
     Hansen
     Hastert
     Hastings (WA)
     Hayworth
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King
     Kingston
     Kleczka
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Linder
     Livingston
     LoBiondo
     Longley
     Lucas
     Manzullo
     Martini
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Menendez
     Metcalf
     Meyers
     Mica
     Miller (FL)
     Molinari
     Montgomery
     Moorhead
     Morella
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oxley
     Packard
     Parker
     Pastor
     Paxon
     Petri
     Pombo
     [[Page H1921]] Porter
     Portman
     Pryce
     Quillen
     Quinn
     Ramstad
     Regula
     Riggs
     Roberts
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Stearns
     Stockman
     Stump
     Tate
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Upton
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                               NAYS--188

     Abercrombie
     Ackerman
     Andrews
     Baesler
     Baldacci
     Barrett (WI)
     Becerra
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Bonior
     Brewster
     Browder
     Brown (CA)
     Brown (OH)
     Bryant (TX)
     Cardin
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Danner
     Deal
     DeFazio
     DeLauro
     Dellums
     Deutsch
     Dicks
     Dixon
     Doggett
     Dooley
     Doyle
     Durbin
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Fazio
     Fields (LA)
     Filner
     Flake
     Foglietta
     Ford
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Geren
     Gibbons
     Gordon
     Green
     Hall (OH)
     Hall (TX)
     Hamilton
     Harman
     Hastings (FL)
     Hayes
     Hefley
     Hefner
     Hilliard
     Hinchey
     Holden
     Hoyer
     Jackson-Lee
     Jefferson
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Klink
     LaFalce
     Lantos
     Laughlin
     Levin
     Lewis (GA)
     Lincoln
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy
     McDermott
     McHale
     McKinney
     McNulty
     Meehan
     Mfume
     Miller (CA)
     Mineta
     Minge
     Mink
     Moakley
     Mollohan
     Moran
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Owens
     Pallone
     Payne (NJ)
     Payne (VA)
     Pelosi
     Peterson (FL)
     Peterson (MN)
     Pomeroy
     Poshard
     Rahall
     Rangel
     Reed
     Reynolds
     Richardson
     Rivers
     Roemer
     Rose
     Roybal-Allard
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Sisisky
     Skaggs
     Skelton
     Slaughter
     Spratt
     Stark
     Stenholm
     Stokes
     Studds
     Stupak
     Tanner
     Tauzin
     Taylor (MS)
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Torricelli
     Towns
     Traficant
     Tucker
     Velazquez
     Vento
     Visclosky
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Wilson
     Wise
     Woolsey
     Wyden
     Wynn
     Yates

                             NOT VOTING--17

     Borski
     Brown (FL)
     Crapo
     de la Garza
     Dingell
     Ehlers
     Gallegly
     Gonzalez
     Goodling
     Jacobs
     Meek
     Pickett
     Radanovich
     Rush
     Spence
     Talent
     Williams

                              {time}  1831

  So the resolution was agreed to.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  The SPEAKER pro tempore (Mr. Hefley). Pursuant to House Resolution 88 
and rule XXIII, the Chair declares the House in the Committee of the 
Whole House on the State of the Union for the consideration of the 
bill, H.R. 831.

                              {time}  1834


                     in the committee of the whole

  Accordingly the House resolved itself into the Committee of the Whole 
House on the State of the Union for the consideration of the bill (H.R. 
831) to amend the Internal Revenue Code of 1986 to permanently extend 
the deduction for the health insurance costs of self-employed 
individuals, to repeal the provision permitting nonrecognition of gain 
on sales and exchanges effectuating policies of the Federal 
Communications Commission, and for other purposes, with Mr. McInnis in 
the chair.
  The Clerk read the title of the bill.
  The CHAIRMAN. Pursuant to the rule, the bill is considered as having 
been read the first time.
  Under the rule, the gentleman from Texas [Mr. Archer] will be 
recognized for 30 minutes, and the gentleman from Florida [Mr. Gibbons] 
will be recognized for 30 minutes.
  The Chair recognizes the gentleman from Texas [Mr. Archer].
  Mr. ARCHER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I am proud that the first bill out of the Committee on 
Ways and Means in this Congress is one that is so important to our 
Nation's small business community. H.R. 831 will finally make the self-
employed's 25-percent deduction for health insurance costs permanent, 
ending the uncertainty that is accompanied in this provision since its 
enactment in 1986. H.R. 831 enjoys strong bipartisan support and strong 
support from the Nation's small business community. In fact, the 
National Federation of Independent Businesses has strongly endorsed 
H.R. 831 and opposes the McDermott substitute, and the NFIB will 
consider a vote on this bill as a key vote for the 104th Congress.
  Mr. Chairman, I reserve the balance of my time.
  Mr. GIBBONS. Mr. Chairman, I yield 3\1/2\ minutes to the gentleman 
from New York [Mr. Rangel].
  (Mr. RANGEL asked and was given permission to revise and extend his 
remarks.)
  Mr. RANGEL. Mr. Chairman, my colleagues, some time ago some remarks 
were attributed to me indicating that I was calling my colleagues 
Hitler or suggesting that they were Nazis, and I want to publicly 
apologize to anyone that was offended or thought that the inference, as 
related to Hitler or to Nazis, had anything at all to do with the 
people I work with every day.
  The point that I was trying to make and I make today, and perhaps not 
as well as I wish I could, is that during the time of the Holocaust, 
when the Jews were the targets of the failure of the German Government 
to provide a decent economy, he decided that he was going to scapegoat 
the Jews, but so many people that were also on his list, they never 
heard about what was going on. They did not believe that they were 
involved. The Christians were not involved. The Pope did not know what 
happened. Even Franklin Roosevelt never knew what happened. And today 
there are some people who say it did not happen at all.
  An analogy that I was making, as bad as it may have been, is that 
there is an assault today on the poorest of the poor in the United 
States, an assault on Medicaid, an assault on our aged. There is an 
assault now even for minorities who are trying so desperately hard to 
be on an even playing field.

                              {time}  1840

  It is not that I am talking about affirmative action. Heck. White 
folks have had affirmative action all their lives and their daddy's 
lives and granddaddy's lives. The only time blacks get affirmative 
action really is when it is time to go to combat and you see who is in 
the infantry and see who is flying the planes.
  All we are saying is those airwaves belong to us just like they 
belong to you. And we are not asking for you to give us the money to 
buy them. This is some scheme that was created that allowed the seller 
to look for minorities, so that they would be able to be the 
beneficiary of what they do in the old boys club.
  Now, I am saying if you do not like the scheme, let us come up with a 
better one. But do not use health care as a reason to knock out a 
preference that we have to allow Hispanics and Asians and native 
Americans just to be able to look at television and see on it something 
that we like to see for your wives an our families.
  How dare anyone say that it is fair to tie up a good bill to extend 
health care to the self-employed with this vicious act without a 
hearing, without a report, just because someone says that this black 
guy got too big a deal.
  I am telling you, if you do not like this deal and you feel that 
retroactively you can put out a press release or pass a law and knock 
out the deals, I wish I had known this when we had the savings and loan 
thing coming across, because we had some deals there that never passed 
the smell test. But this is what we are doing for the future.
  Let me tell you this: You are firing the first shot across the bow 
regarding knocking out affirmative action and preferential treatment. 
We can use that tax code for other things too.
  Mr. ARCHER. Mr. Chairman, I yield myself such time as I may consume, 
simply to reply to the gentleman that 
[[Page H1922]] there was a full and open hearing in the oversight 
subcommittee of the Committee on Ways and Means on January 27 where all 
witnesses who were interested in the subject were invited to come and 
present their views.
  Mr. Chairman, I yield 2 minutes to my friend, the gentleman from 
Texas, Mr. Sam Johnson, who has fought for the interests of all 
Americans, who nearly gave his life, and who holds the record for the 
longest period of time in solitary confinement of any military person 
in the history of this country, who sacrificed not just for one type of 
American, but for all types of Americans.
  Mr. SAM JOHNSON of Texas. Mr. Chairman, I want to clear the air. This 
bill is not about race or about a Republican plan to dismantle 
affirmative action. This is about providing a permanent 25-percent 
deduction for health insurance to the 3.2 million hard-working self-
employed Americans.
  In order to provide funding for this deduction the Ways and Means 
Committee repealed section 1071 which is simply an FCC tax give away.
  Section 1071 was created in 1943 by the FCC to give tax certificates 
to radio station owners that were forced to sell one station. Under FCC 
regulations, at that time, an owner could not have two stations in one 
market.
  Since 1943, the FCC has ballooned section 1071 into a voluntary, 
loosely defined, unsupervised, open-ended tax giveaway entitlement 
program.
  They have kept sparse records of the tax loss to the taxpayers, and 
how if at all, the program has enriched minority ownership. It is a 
program that has outlived its usefulness. Not to mention the fact that 
an independent agency should never be in the position of implementing 
tax policy, this has and will invite disaster. Tax policy is only made 
by Congress and should be carried out by the IRS.
  Mr. Chairman, it is time to focus on the real issue at hand, giving 
the self-employed a richly deserved deduction to help cover their 
health costs for themselves and their families. Americans want, need 
and deserve relief. We say support the self-employed, support the 
passage of this bill.
  Mr. GIBBONS. Mr. Chairman, I yield 3 minutes to the gentleman from 
California [Mr. Stark].
  (Mr. STARK asked and was given permission to revise and extend his 
remarks.)
  Mr. STARK. Mr. Chairman, I thank the gentleman for yielding.
  Mr. Chairman, we will be offering a motion to recommit, and I would 
like to talk with you a little bit about what this will do and what it 
will not do.
  It will provide some peace of mind to 3.5 million Americans who, as 
we debate tonight, are counting the months until they lose their health 
insurance. If nothing else, Mr. Chairman, this changes nothing in the 
bill except to extend their coverage as we granted them in 1985 by a 
unanimous vote of the Committee on Ways and Means.
  These people will lose their extended coverage because it expires 
between 18 and 36 months from the time they had a change in family 
status or lost their jobs for other reasons, and thereby would have 
lost their employee health insurance. No one will have to subsidize 
anyone. This is merely allowing those people to pay the full cost of 
their insurance, at no cost to the employer, no cost to the taxpayer.
  How can we deny these people, 16 million families have taken 
advantage of this since 1985. There are each year 3 or 4 million people 
who because of divorce, disability, the plant closes, would not have 
insurance, voluntary private sector insurance. How can we deny those 
people the opportunity to extend their insurance, protect their 
families in the best American way?
  Mr. Chairman, I urge you to consider this amendment. It has had 
bipartisan support. It is humane. It will not deter us from giving the 
deductibility to the self-employed.
  So I ask my friends on both sides of the aisle to consider tonight a 
motion to recommit which will not deter us from what many of us 
support, and that is the deductibility of insurance cost for the self-
employed. But let us take the fear out of the hearts of 3.5 million 
Americans tonight who will know that they may extend this coverage for 
their families, themselves, their disabled children, whomever, at no 
cost. No cost to the budget, no cost to the employer, no cost to anyone 
except those people who will have to work hard to pay the premiums to 
the private insurance company under which they are covered.
  I urge Members to think hard and long about bipartisan support for 
the motion to recommit.
  Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the respected 
gentlewoman from Connecticut, [Mrs. Johnson], the chairman of the 
Subcommittee on Oversight of the Committee on Ways and Means, who so 
ably conducted the hearings that brought this bill before the House 
today.
  Mrs. JOHNSON of Connecticut. Mr. Chairman, I rise in strong support 
of H.R. 831, a bill that permanently extends the 25-percent deduction 
for health insurance costs to the self-employed.
  Mr. Chairman, for too long, millions of self-employed workers have 
lived with the uncertainty of not knowing whether they could deduct 
some portion of their health insurance costs from year to year. Enacted 
on a temporary basis in 1986, the deduction was extended several times, 
expired at the end of 1993 and was not renewed throughout 1994. Today, 
we finally have an opportunity to provide the certainty of a permanent 
deduction to the millions of small business men and women who form the 
backbone of our economy, driving its inventiveness and job growth.
  I also want to emphasize that the cost of making the 25-percent 
deduction permanent is fully funded by tax changes that make our Tax 
Code fairer and simpler.
  The major change is repeal of code section 1071, which allows the 
Federal Communications Commission to grant tax benefits with respect to 
sales of radio, television, and other properties. Enacted in 1943 to 
address problems with respect to the involuntary sales of radio 
stations arising from wartime restrictions on the availability of new 
radio property, this provision has been significantly expanded by FCC 
action to cover television stations, cable TV systems, personal 
communications services, and in 1978 to promote minority ownership of 
broadcast facilities by offering tax certificates to those who 
voluntarily sell stations to minority individuals or minority-
controlled entities.
  Not only has the FCC changed the purpose of tax certificates, but 
also increased the size of the transactions they are allowed to cover.
  The size of transactions receiving tax benefits under section 1071 
has also expanded. The total Federal and State tax benefits for one 
transaction, Viacom's sale of its cable TV systems recently in the 
news, may be in excess of half a billion dollars.
  The Subcommittee on Oversight, which I chair, found in hearings that 
section 1071 gives the FCC unfettered authority to hand out tax breaks 
to promote whatever policies it deems appropriate. No other Federal 
agency has such authority and no Federal agency should have such 
authority.
  In fact, when the FCC sought to review the worthiness of its tax 
certificate program, Congress stepped in and literally forbade the FCC 
from any oversight work at all. In sum, 1071 provides big bucks for a 
few with no demonstrative effect on minority ownership or program 
diversity.
  The other major financing provision in this bill is a variation on a 
proposal in President Clinton's fiscal year 1996 budget to deny the 
EITC to individuals who have more than $2,500 in taxable interest and 
dividend income. The Ways and Means Committee believed it was more 
appropriate to phase out the credit, rather than have it end abruptly 
when dividend and interest income hits $2,500. H.R. 831 phases out the 
credit for taxpayers who receive between $2,500 and $3,150 of dividend 
and interest income.
  To achieve this level of dividend and interest income, a taxpayer 
would need to have over $50,000 in savings assets. The administration 
believes--and I strongly agree--that the benefits of the EITC should go 
to low-income workers. It should not go to taxpayers with significant 
assets who otherwise have low earned income.
  Mr. Chairman, making the 25-percent deduction permanent is extremely 
important. In addition, the funding provisions in H.R. 831 are changes 
that will 
[[Page H1923]] improve the fairness or administration of our tax laws. 
H.R. 832 deserves your strong support.

                              {time}  1850

  Mr. GIBBONS. Mr. Chairman, I yield 3 minutes to the gentleman from 
Maryland [Mr. Cardin].
  Mr. CARDIN. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  This is important legislation that we need to pass. The 25-percent 
deduction for self-employed individuals is an important tool for self-
employed to have health insurance. And we need to pass it. I regret 
that the Committee on Rules and the rule that we passed does not allow 
me to offer an amendment, a bill that I have filed that would have 
increased the 25 percent to provide parity for the self-employed 
individual to what a business can deduct on the insurance premiums that 
they have for their employees.
  We still have 3.1 million people who are self-employed who do not 
have health insurance. The 25 percent provision is important, but we 
should have had the opportunity to increase that to a fairer level so 
that self-employed people could have the same type of a tax advantage 
as those people who run businesses.
  But we will have two other opportunities during this debate to expand 
access to health insurance to allow the private sector to provide more 
health insurance for their employees. The first will be on the Gibbons-
McDermott substitute, which incorporates an amendment offered by the 
gentleman from California [Mr. Stark] that will allow the employees of 
the self-employed companies to be able to deduct their insurance 
premiums if their employer does not provide it up to the 25 percent.
  This gives the employees the same parity as the company self-employed 
person has, and I would urge my colleagues to support the substitute 
for that reason to expand access to health care.
  The second opportunity will be on the motion to recommit that will be 
offered by the gentleman from California [Mr. Stark]. That will extend 
COBRA beyond the 18-month period current law. This is at no cost to the 
employer. An employee who no longer is employed of a company, who wants 
to continue that health insurance in that group at 100 percent, 
actually it is 102 percent, by the cost of the employee would be able 
to continue that health insurance protection.
  When we are seeing more and more people without health insurance 
today, why should not Congress, why should not this House provide 
greater opportunities for an individual to be able to get health 
insurance at no cost to the employer or government? So I would urge my 
colleagues to support the Gibbons-McDermott substitute. Support the 
motion to recommit that will be offered by the gentleman from 
California [Mr. Stark] so that we can expand health access with health 
insurance.
  This bill is an important bill. We need to take care of this current 
tax year for the self-employed. But we also have the opportunity to go 
further, and I urge my colleagues to do that.
  Mr. ARCHER. Mr. Chairman, will the gentleman yield?
  Mr. CARDIN. I yield to the gentleman from Texas.
  Mr. ARCHER. I thank the gentleman for his interest in raising the 
percentage of deductibility for the self-employed. I can assure the 
gentleman, as we move on into this year and we get into health care 
overall, it is intention of the chairman to try to move that percentage 
up.
  Mr. CARDIN. I thank the gentleman very much. I know he is interested 
in that issue.
  Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from 
Illinois [Mr. Crane], a member of the Committee on Ways and Means.
  (Mr. CRANE asked and was given permission to revise and extend his 
remarks.)
  Mr. CRANE. Mr. Chairman, first I would like to salute my 
distinguished chairman for his efforts here to restore and make 
permanent the 25-percent health insurance deduction for the self-
employed, something that should have occurred a long time ago, and he 
has finally adroitly addressed it.
  Second, another reform in it is repeal of section 1071 of the tax 
code which has permitted an unconstitutional usurpation of the 
exclusive jurisdiction on the part of Congress and more specifically 
the House to originate tax policy. Tax policy has degenerated over a 
period of years and the lack of appropriate oversight into something 
that has been taken over in part in this instance by a Federal agency.
  Finally, it ends the discriminatory provision that falls under the 
definition of affirmative action, because if affirmative action is 
dealing with minority rights, then what are the rights of minorities 
who are of Polish descent, of Irish descent, of Italian descent, German 
descent, Hungarian descent? It is long since overdue. I salute my 
distinguished chairman for having done it.
  Mr. Chairman, I am proud to say that the first bill that has been 
reported to the House floor by the Ways and Means Committee this year, 
H.R. 831, sets us on a good course for tax policy in the 104th 
Congress.
  The primary purpose of this bill is to permanently extend for the 
self-employed the 25-percent tax deduction for health insurance 
expenses. I would put emphasis on the word ``permanently'' because it 
raises a point that is worth noting in terms of tax policy. There are a 
number of deductions/credits in the tax code that are temporary in 
nature. Rather frequently, the Ways and Means Committee must decide 
whether to extend various expiring provisions. Consequently, every year 
hundreds of proponents flock to the Hill to lobby in support of the 
various provisions. This process is not only time consuming, costly, 
and unnecessary, but the temporary nature of these provisions is 
frankly unfair to the taxpayer. Taxpayers and businesses often never 
know from year to year whether they can count on a particular deduction 
or credit. In this case, the self-employed deduction expired December 
31, 1993, meaning that those filing their returns for the 1994 taxable 
year with the April 15, 1995, deadline, still do not know whether they 
can take the deduction. This legislation will ensure that these hard-
working individuals will not have to go through this kind of 
uncertainty again.
  In my view, either these temporary deductions/credits are worthwhile 
or they aren't. If they are, let's make them permanent, and if they are 
not, let's eliminate them from the code altogether. I believe it is the 
intention of the Ways and Means Committee under the leadership of our 
fine new chairman, Bill Archer, to move in that direction. I will 
certainly do all I can to encourage the membership of the committee and 
the House to proceed accordingly. Moreover, I will look forward to the 
opportunity at a later date to consider raising the 25-percent 
deduction to a higher percentage. In the meantime, having the certainty 
that the deduction is going to be there is critical. As a member of the 
Ways and Means Committee who has dealt with this issue for many years, 
I can say with confidence that this credit helps literally thousands of 
individuals by encouraging health insurance coverage without the heavy 
hand of Federal bureaucrats.
  Having touched on the principal purpose of this legislation, another 
aspect of the bill must be discussed. There are two items in H.R. 831 
that have been incorporated into the bill to pay for the extension of 
the self-employed deduction. One of these items, specifically that 
portion of the bill which repeals section 1071 of the Internal Revenue 
Code, deserves further comment.
  The history of this section is fully recited in the Ways and Means 
Committee Report 104-32. In a nutshell, current law attempts to promote 
minority ownership of broadcast facilities ``by offering an FCC 
[Federal Communications Commission] tax certificate to those who 
voluntarily sell such facilities to minority individuals or minority-
controlled entities.'' This tax certificate results in substantial tax 
savings for the sellers in the transaction and that fact alone should 
be enough for those little imagination to realize how such a provision 
might be utilized.
  Basically, as section 1071 has evolved, it is designed to work as an 
affirmative action program to encourage minority ownership of broadcast 
facilities. To be blunt, I view affirmative action programs as reverse 
discrimination and believe that in the long run they are detrimental to 
the efforts of minorities to break down some of the discrimination 
barriers that still exist because of the resentment such policies 
generate in the various classes of people not given the benefit. 
However, even if one supports the concept of affirmative action, it is 
not all clear that this program has actually resulted in long-term 
minority ownership of broadcast facilities as was intended. Rather, 
from the information that is available on the FCC program, it would 
appear that many of the deals are accomplished purely to take advantage 
of the certificate because we find the minority interest evaporating in 
a short period of time after the transaction has been triggered. Put 
another way, many of the deals 
[[Page H1924]] that take advantage of section 1071 are consummated with 
little or no interest in ensuring long-term minority ownership. 
Finally, I would contend that the FCC should not be making these type 
of decisions anyway--I do not believe it is wise to give the FCC the 
authority to carry out Federal tax policy. In short, it is my strong 
opinion that section 1071 of the code is ill-advised and must be 
eliminated.
  Mr. Chairman, I urge my colleagues to vote in favor of this important 
legislation because it embodies sound tax policy.
  Mr. GIBBONS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Massachusetts [Mr. Neal].
  Mr. NEAL of Massachusetts. Mr. Chairman, I thank the gentleman for 
yielding time to me.
  I rise in support of the Gibbons-McDermott substitute to H.R. 831. 
This substitute provides an appropriate alternative to H.R. 831.
  H.R. 831 extends the deduction for the health insurance costs of 
self-employed individuals. However, this provision is paid for with a 
controversial provision. This legislation would repeal Code section 
1071, a provision giving the Federal Communication Commission [FCC] 
authority to grant tax certificates deferring capital gain taxes on the 
sale or exchange of broadcast facilities. The FCC has offered tax 
certificates to those who voluntarily sell facilities to minority 
individuals or minority-controlled entities.
  We can successfully argue that there are some problems with Code 
section 1071. It has been estimated that a recent proposed sale of 
cable systems could result in deferred gain of $1.1 billion to $1.6 
billion. Code section 1071 does need improvement, but it does not need 
to be eliminated.
  I do not believe the original intention of this proposal was to give 
billion dollar tax breaks to the wealthy. The gentleman from Florida 
[Mr. Gibbons] and the gentleman from Washington [Mr. McDermott] have 
developed an alternative which provides a much better solution. The 
Gibbons-McDermott substitute gives the section 1071 tax certificate 
program a smaller scope by limiting the amount of gain on the tax 
certificate to $50 million. This proposal would transfer administration 
of the program to the IRS.
  The proposal adds several important safeguards to the certificate 
program. These changes are appropriate. We should try to fix section 
1071 before we enact an outright repeal. The Gibbons-McDermott 
substitute preserves the purpose of the program and will eliminate the 
abuses.
  We can all agree the 25-percent deduction for health insurance is 
important. This proposal also creates a 25-percent deduction for the 
purchase of health insurance by employees who do not receive employer-
sponsored health insurance. I urge you to support the Gibbons-McDermott 
substitute. This substitute is a responsible vote. The self-employed 
will receive the deduction they deserve and the FCC certificate program 
will not be repealed without the proper consideration.
  Mr. ARCHER. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Michigan [Mr. Camp], a valued member of the committee.
  (Mr. CAMP asked and was given permission to revise and extend his 
remarks.)
  Mr. CAMP. Mr. Chairman, I thank the distinguished gentleman for 
yielding time to me, and I rise in support of H.R. 831.
  Mr. Chairman, I rise in support of H.R. 831. This measure is a 
critical first step in eliminating a severe injustice to the self-
employed in this country.
  By allowing small business people, farmers, and entrepreneurs to 
deduct 25 percent of health care costs for them and their families, we 
are taking a first step to encourage people to provide health care for 
themselves and their families.
  It is time that this Government realize that self-reliance is 
something to be encouraged, not discouraged.
  This legislation will help provide a good environment for self-
employed people, particularly in my district where many farm families 
are self-employed and desperately need this provision so they can 
afford adequate health care.
  I also contend that we must view this as a beginning. I hope my 
colleagues will not only support this measure to permanently extend 
this deduction but also join me in pursuing legislation that will allow 
a 100-percent deduction for these vital members of our community.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to another valued member 
of the committee, the gentleman from Ohio [Mr. Portman].
  Mr. PORTMAN. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  As a former member of the small business committee who worked hard to 
get to this point last year, I can just say it is my great privilege to 
stand here tonight in support of the bill of the gentleman from Texas, 
Chairman Archer.
  I am very pleased that we are here. In talking to people in my 
district, the two things I hear about the most is the need for fairness 
and consistency in our tax laws.
  I think this bill goes a long way to ensure both. It is fair because 
here finally we are helping those people who have taken the risk, 
pursued the American dream and been out working for themselves and in 
turn have provided jobs for others.
  These are the hairdressers, barbers, farmers, small business owners, 
shopkeepers, the self-employed. If corporations can duck their health 
care insurance costs, it is only fair that these people can as well, so 
this bill is about fairness.
  It is also about certainty and consistency, certainty because it 
permanently reinstates the deductibility, which is extremely important, 
as the gentlewoman from Connecticut [Mrs. Johnson has noted previously.
  At a time when we are trying to figure out how to get as many people 
as possible covered by health insurance, this is exactly the sort of 
thing we should be doing. This gives an incentive to the 3.2 million 
people out there who are self-employed who would like to get into 
health care insurance. It gives them an incentive to do so, and takes 
away the current disincentive.
  Rather than just proposing a Government takeover of health care, we 
are actually trying to give the American people what I think they want, 
which is the ability to help themselves.
  In Ohio alone this bill will make health insurance more affordable to 
more than 50,000 farm families, not to mention, again, the self-
employed plumbers, mechanics, mom and pop grocery store owners, and so 
on.
  The bottom line is that by beginning to level the playing field 
between individuals and businesses, we will allow many of the self-
employed to purchase health insurance who would not do so otherwise.
  This is not just theory. I have had plenty of farmers come up to me 
in my district and say it is worth taking the risk of not going with 
coverage because their families are relatively healthy, without the 
deduction.
  With the deduction, doing their own cost-benefit analysis, which they 
do, they would in fact buy health insurance. Therefore, it is going to 
help, and it is exactly what we should be encouraging in health care. I 
am particularly pleased to see we are moving quickly to put this before 
the 1994 returns.
  Again, I congratulate the gentleman for bringing this bill to the 
floor.
  Mr. GIBBONS. Mr. Chairman, I yield 2 minutes to the gentleman from 
New Jersey [Mr. Payne].
  (Mr. PAYNE of New Jersey asked and was given permission to revise and 
extend his remarks.)
  Mr. PAYNE of New Jersey. Mr. Chairman, I rise in opposition to H.R. 
831; more specifically, the section of the legislation that deals with 
the repeal of section 1071 of the Internal Revenue Code, tax assistance 
for minority broadcasters. The bill represents the beginning of a war 
waged by the Republican Party against any program that even suggests a 
hint of minority assistance.
  Mr. Chairman, I am simply amazed by the level of hypocrisy exhibited 
by the majority leadership with regard to this particular issue. The 
Republican leadership claims that the repeal of section 1071 is 
necessary to offset the expenses created by the 25 percent tax 
deduction of health insurance costs for self-employed individuals, 
which is also proposed in H.R. 831.
  This is totally false. The repeal of 1071 will not raise tax 
revenues. Most communications transactions, such as AT&T-Lin 
Broadcasting, Time-Warner, Viacom, and at least a dozen other enormous 
television transactions have been accomplished on a tax deferred 
basis. 
  [[Page H1925]] Eliminating the minority tax certificate program will 
not result in additional tax revenue. Rather, sellers of communications 
properties will simply employ other tax deferred techniques, such as 
mergers, stock swaps, and public offerings.
  If the tax certificate program is killed, minority sales will not 
occur. They will be restructured and accomplished by only large 
corporations.
  Mr. Chairman, I heard someone mention, what about the Hungarians, 
what about the Romanians, what about the other people? There are 11,303 
licenses so far. 300 of these are in the hands of minorities. When the 
question is asked, where are all these other people, they are in the 
11,000 licenses which are held by the majority of people.
  As we look at this proposed agreement between Viacom and Mr. Frank 
Washington, it was an opportunity for a minority entrepreneur to become 
321 out of the numbers.
  Mr. Chairman, I urge defeat of H.R. 831.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
Kansas [Mrs. Meyers].
  Mrs. MEYERS of Kansas. Mr. Chairman, I rise in support of this very 
important legislation which will permanently extend the 25 percent 
health care deduction for the self-employed, and retroactively 
implement the deduction so that our small business people can use this 
deduction in preparing their 1994 tax returns.
  This legislation is very similar to a bill I introduced last year, 
and again in January, and I commend the chairman of the Ways and Means 
Committee for his expeditious handling of this important and much-
needed legislation.
  Our Small Business Committee held a hearing on this issue on January 
20, and witnesses testified that approximately 400,000 people are able 
to purchase health insurance because of this deduction.
  As important as it is to make this deduction available to our small 
business people for 1994, just as important is the provision to make 
the deduction permanent. In the past, Congress has dangled the 
deduction over the self-employed every year, temporarily extending the 
deduction since 1986. In passing this bill, we will be assuring small 
owners that they will be able to deduct 25 percent of their health 
premiums in the future. They can plan
 on it. We have heard from Small Business that because of lower cash-
flows, the ability to plan is imperative if they are going to offer 
health insurance. Making this bill permanent and retroactive is 
probably the number one business issue that we have heard about this 
year.

  But it is important to remember that even with a permanent 25-percent 
deduction, small owners are not given the same benefits which the 
Federal Government provides to corporations: The ability to deduct 100 
percent of their health care premiums.
  Later this week, I will be introducing legislation which will 
incrementally increase the 25-percent deduction for self-employed to 
100 percent. Incentives to provide health insurance should be 
equitable, and my bill will increase the 25-percent deduction to 50 
percent in 1997 and 1998, to 75 percent in 1999 and 2000, and 100 
percent of premiums would be deductible beginning in 2001 and 
thereafter. Our small entrepreneurs deserve the same breaks we provide 
for large corporations. Please join me as a cosponsor of this bill. It 
is another real step toward a goal we all support--providing health 
care coverage for everyone.
  Mr. GIBBONS. Mr. Chairman, I yield 1\1/2\ minutes to the gentlewoman 
from Florida, Ms. Ileana Ros-Lehtinen.
  (Ms. ROS-LEHTINEN asked and was given permission to revise and extend 
her remarks.)
  Ms. ROS-LEHTINEN. Mr. Chairman, I support the Gibbons-McDermott 
substitute protecting section 1071, which has helped to open up 
broadcast licenses to minorities. It will also tighten the provisions 
of this tax incentive to prevent potential abuse and insure that it 
will truly benefit minority owners.
  If we fail to adopt this substitute, Mr. Chairman, we will be sending 
a message that we do not wish to continue this effort to encourage 
greater ownership by African-Americans, Hispanic-Americans, and other 
minorities in broadcasting. This provision was aimed at strengthening 
the FCC's efforts to make scarce broadcast air waves available to all 
Americans.
  Minority participation in the ownership of radio and television 
stations has increased dramatically under this policy. Before 1978, 
minorities owned less than one-half of 1 percent of broadcast licenses. 
Today, 3 percent of all radio and television stations are owned and 
controlled by over 300 minority owners.
  Many minority owners have testified that without this tax program, it 
would be difficult, if not impossible, for them to secure broadcast 
facilities. Section 1071 has made it possible for many to experience 
the American dream. By better serving the needs of the marketplace, it 
is truly a successful way of allowing our free enterprise to work for 
the benefit of all Americans.
  Mr. Chairman, let us not participate in a rush to judgment to destroy 
this program, which has helped to open up access to the Nation's air 
waves for all of us.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Oregon [Mr. Bunn].
  Mr. BUNN of Oregon. Mr. Chairman, I rise to offer my support to H.R. 
831, the bill to restore the 25-percent tax deduction for health care 
premiums of the self-employed.
  Mr. Chairman, as we know, President Clinton and the Democrat Congress 
got together in 1993 and passed the largest tax increase in our 
history. Their claim was that it only raised taxes on the richest 1 
percent.
  Yes, it did raise taxes on the rich, along with many others. It also 
raised taxes on some senior citizens who collect Social Security. It 
also raised taxes on self-employed individuals who pay for their own 
health insurance.
  Last year, Mr. Chairman, Congress took away, with the President's 
approval, the 25-percent tax deduction for the health care premiums of 
the self-employed. It somehow conveyed the message that we care about 
the cost of corporations providing health care, we care about the 
employees of the corporations, but we do not care about the self-
employed.
  Mr. Chairman, it was a bad idea to remove the 25-percent deduction, 
and what we are doing today rights that wrong. I am pleased with our 
action.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentlewoman from 
Connecticut [Mrs. Kennelly].
  Mrs. KENNELLY. Mr. Chairman, I rise in support of permanently 
extending the health care deduction for individuals, those that are 
self-employed, and I particularly salute the committee for making this 
change in the Tax Code permanent. There should be no doubt about that 
deduction and the existence of that deduction.
  I also salute the committee for perfecting the Earned Income Tax 
Credit tax preference so it is much better written, so those who 
really, truly are in need will get what they have to have in order to 
be able to work and continue to take care of their family.
  However, Mr. Chairman, I do disagree with the third part of this 
piece of legislation before us. We will have a substitute later in the 
evening that strengthens this program to assure that minorities have a 
real stake in the ownership that they want so desperately. It transfers 
this program from the FCC to the Internal Revenue Code, where it 
belongs, and it makes it possible for us to have fairness in our 
communications.

                              {time}  1910

  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Maryland [Mr. Bartlett], who has spent so much time and effort in 
seeing that the self-employed would continue to get this 25-percent tax 
deductibility on their insurance premiums.
  Mr. BARTLETT of Maryland. Mr. Chairman, I rise in strong support of 
this legislation. It addresses a matter of fairness. For years now 
corporations have been able to deduct the full cost of health care 
premiums for their employees. The self-employed have been able to 
deduct only 25 percent. In the future we need to address this inequity. 
But tonight we address even a worse inequity. That is, that even this 
25 percent is not now available. This is because this was a casualty of 
the failed health care debate in the last Congress.
   [[Page H1926]] When we look at who this affects and recognize that 
companies that had from zero to 4 employees produced more than 90 
percent of all of the new jobs during the past recovery, we see that 
this is a group that can ill-afford this kind of discrimination.
  For this reason I submitted H.R. 696 and am delighted that this bill 
to reinstate this for 1994 is incorporated in the present legislation. 
Now self-employed people all across the country can file their tax 
returns and take the 25-percent deduction for their health care 
premiums.
  Again I would like to thank the chairman of the committee. We have 
now interrupted our 100-day contract legislation to enact this 
legislation. This sends a message how important we think this is for 
the American people.
  Mr. GIBBONS. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from North Dakota [Mr. Pomeroy].
  Mr. POMEROY. Mr. Chairman, I rise in strong support of taking 
immediate action to restore the 25-percent deduction on health 
insurance. This deduction has long been available, should never have 
been allowed to expire last year, and prompt action tonight can 
retroactively reinstate this important deduction for self-employed 
people. Swift action will allow them to take the deduction without 
having to go through the expense and hassle of amending their returns.
  We must recognize, however, Mr. Chairman, that this action is but 
step 1 of the road to parity in treatment of health insurance. 
Businesses, corporations have a 100-percent deduction. Individuals 
should be allowed no less. That is the concept implicit in H.R. 52, 
legislation I drafted on the first day of the 104th Congress which now 
enjoys the cosponsorship of 74 additional Members of this Chamber, both 
Republican and Democrat in roughly equal measure.
  The reasons are clear. It will first of all restore tax fairness and 
tax equality, corporation to individual. Second, it promotes the 
affordability of health insurance coverage so that in this time when 
too many people cannot afford the coverage, coverage becomes more 
affordable through allowing the deduction.
  Action is necessary tonight on this measure. Because while many 
people, most Americans face an April 15 tax filing deadline, the 
farmers I represent in North Dakota and throughout the country face a 
March 1 filing deadline. Prompt action this measure will allow this 
deduction. That is why I so strongly support this bill.
  Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from 
Pennsylvania [Mr. English], a valued new member of the Committee on 
Ways and Means and a New Member of the House.
  Mr. ENGLISH of Pennsylvania. Mr. Chairman, I rise in strong support 
of H.R. 831. In it we propose to permanently expand access to health 
care for farmers and other small business people and to finance it by 
closing a grotesque tax loophole whose time has come and gone. The tax 
preference we are eliminating does not help the underclass. It does not 
help the poor and disadvantaged. It only helps the rich and well-
connected who know how to game the system.
  The American people cannot understand why we have a tax loophole that 
allows investors in a $2.3 billion conglomerate to save over $500 
million on their taxes in order to give a $2 million profit to one 
businessman who happens to be a minority. That businessman as it turns 
out is the same retired Federal bureaucrat who designed this tax 
program in the first place.
  Mr. Chairman, I urge my colleagues to end this abuse, improve health 
care for the self-employed, and pass this bill.
  Mr. GIBBONS. Mr. Chairman, I reserve the balance of my time.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from New 
York [Mr. Forbes].
  Mr. FORBES. Mr. Chairman, I rise today in favor of H.R. 831, a bill 
to permanently restore the 25 percent tax deduction for health care 
premiums paid by the self-employed.
  The last Congress refused to renew this provision and it is important 
to the small business community. On eastern Long Island, small 
businesses are the job creators, the staple of our local economy. From 
Montauk to Smithtown and Patchogue to Port Jefferson, the hard-working, 
self-employed owners of small businesses are struggling under excessive 
taxes and burdensome regulations. These entrepreneurs cannot afford to 
hire new employees and rejuvenate our lagging local economy while the 
Federal Government demands more and more of small business earnings. 
Permanently restoring the 25 percent health care deduction for the 
self-employed is a good step in the right direction.
  The issue is really about fairness. Currently large businesses are 
allowed to deduct the entire cost of health care premiums for their 
employees and their families. On the other hand, self-employed business 
owners must pay 100 percent. It is basically unfair and this reverses 
that unfairness.
  The Nation's small businesses are the backbone of our economy, and it 
is time we gave them this break. I urge my colleagues to embrace H.R. 
831.
  Mr. GIBBONS. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from California [Mr. Tucker].
  Mr. TUCKER. I thank the gentleman for yielding me the time.
  Mr. Chairman, I rise in strong opposition to H.R. 831. My colleagues 
have pointed out that this is the right problem to attack. As a member 
of the Committee on Small Business, I certainly appreciate the need for 
a 25-percent deduction for self-employed business owners.
  Mr. Chairman, this may be the right problem, but it is certainly the 
wrong solution. It is the wrong approach and the wrong attempt to 
corret this problem.
  I have heard people talk about fairness. Certainly this is totally 
unfair. We are talking about trying to address one situation on the 
backs and on the burden of something that is totally unrelated. What I 
call it is laser-beam legislation. We have reached throughout the whole 
mass of laws and of matters and have zeroed in on one particular 
transaction dealing with Viacom and said that it would now be 
retroactive in order to repeal minority preferences and minority set-
asides in order to fund this particular need for health care insurance 
for self-employed or businesses.
  Once again, Mr. Chairman, it is the right problem but it is the wrong 
solution. As has been pointed out by my colleague, the gentleman from 
New York [Mr. Rangel], certainly these savings are not savings at all. 
The reasoning is fallacious. So the $400 million that my colleagues 
have said would be saved are chickens that are really not counted.
  In actuality what we are talking about is a very egregious attempt to 
dismantle and to disempower minority businesses and minority access to 
the FCC.
  Mr. Chairman, it is for these reasons that I strongly oppose H.R. 
831.
  Mr. ARCHER. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Pennsylvania [Mr. Fox].
  Mr. FOX of Pennsylvaniva. Mr. Chairman, I rise to speak in behalf of 
H.R. 831. Recently a Member of this body compared in a press commentary 
the actions of Congress to those of Adolf Hitler and the Third Reich.
  As a Member of the Congress of Jewish faith, I am personally troubled 
by those kinds of inappropriate comparisons. Invoking the image of 
Hitler, especially in contrast to this great body, is an insult, I 
believe, to Jews and anyone who respects the American Congress and the 
important work we were sent here to do.
  As the gentleman from Texas [Mr. Archer], the chairman, has stated, 
``By the use of inflammatory comments, you do democracy a deep 
injustice.'' This is all the more surprising with the fact that the 
Holocaust Museum is only 1 mile from the Capitol.

                              {time}  1920

  The United States in 1995 is vastly different from Germany in 1941 
when people were exterminated for simply being who they were.
  I support this legislation, a sound measure which will benefit the 
people of all races and is not intended to harm anyone. We need to pass 
this legislation, Mr. Chairman, so all people without regard to race, 
creed, national origin, or sex can afford health care insurance.
  [[Page H1927]] This bill permanently extends the now lapsed 25-
percent deduction for health insurance costs. This is not an assault on 
the poor nor an issue of us and you. This is not about race. This is an 
opportunity for millions of Americans to have health care which they 
would not otherwise be able to afford.
  Small business owners throughout my district of Montgomery County, PA 
come to me and ask for assistance to acquire health care. That is a 
good bill which benefits all people and deserves our support.
  Mr. GIBBONS. Mr. Chairman, I yield 1\1/2\ minutes to the gentlewoman 
from Texas [Ms. Jackson-Lee].
  (Ms. JACKSON-LEE asked and was given permission to revise and extend 
her remarks.)
  Ms. JACKSON-LEE. Mr. Chairman, how pained I am to have to stand here 
this evening to be able to talk about two jangled chords again. I 
certainly do appreciate the gentleman from Texas in his effort to deal 
with issues that all of us wholeheartedly agree on, and that is working 
men and women. But I have to rise to support the Gibbons and McDermott 
substitute which is not yet on the floor, which is about to raise the 
issue of health insurance suggesting that we can do this in a better 
way.
  We clearly can provide for those who are self-employed, but in 
addition to that we can provide a tax deduction for employees whose 
employers do not subsidize their health care. We can do this in 
conjunction with not turning back the clock that has been so evenly 
supported by Republican and Democratic Presidents alike, Reagan, 
Clinton, and Bush.
  I think it is important to realize, as William Raspberry said in his 
column in the Washington Post, are we really there yet, the kind of 
question your little one would ask you on a 100-mile trip. We are not 
there yet for equal opportunity for minorities. Why would we want to 
match and mix-match the issues of self-employed and working Americans 
with the question of opportunity in the purchase of Broadcast media for 
minorities which is long overdue?
  We really need to emphasize that the electronic media and the 
opportunity to access purchasing media by minority business persons is 
a good thing to have happen. It is a good thing to have happen under 
conditions established by the Federal Government because it can 
document that minorities have a long way to go to own these stations.
  Let us do the right thing; be fair to the self-employed. Let us be 
fair to those who are employed by the self-employed and let us be fair 
to minorities who would seek an opportunity to buy these wonderful 
stations that would serve the American people.
  Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from 
Massachusetts [Mr. Torkildsen].
  Mr. TORKILDSEN. Mr. Chairman, I thank the gentleman from Texas for 
yielding me this time. I rise in strong support of H.R. 831, the 
bipartisan bill to restore the permanent 25-percent health insurance 
deduction for self-employed Americans.
  Presently, self-employed Americans cannot deduct any of their health 
insurance premiums. In contrast, corporations, both large and small, 
enjoy 100 percent deductibility, as a cost of doing business.
  This deduction is a positive first step to help the self employed 
provide themselves with health insurance, while providing a boost to 
our economy and adding a small degree of fairness to the tax code. 
Eventually, I hope we will increase this deduction to 100 percent for 
the self employed.
  Self-employed business owners are not asking for a government hand-
out. They are simply asking for fairness and the same tax break that 
every corporation receives.
  Perhaps the most positive part of this legislation is that it is 
permanent. As any business owner knows, the ability to plan long-term 
and set business priorities over time is critical to not only growth 
and prosperity, but also survival. In the past, self-employed business 
men and women have been at the mercy of congressional reauthorization.
  I urge my colleagues to vote for this bill.
  Mr. GIBBONS. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
California [Ms. Waters].
  (Ms. WATERS asked and was given permission to revise and extend her 
remarks.)
  Ms. WATERS. Mr. Chairman, so far the debate has been about the 
proposed 25-percent health deduction for the self-employed. Now I 
support that. And I support that part of the substitute that allows for 
tax deduction for workers whose employers do not contribute to their 
health plans.
  But let me speak about the unspeakable. I am opposed to this bill 
because it dismantles an extremely viable and important program that 
allows participation by minorities in the broadcast industry. And the 
concept is now new.
  Back in 1943 the U.S. Government created an affirmative action 
program which authorized the FCC to provide tax relief for broadcast 
owners who were essentially part of monopolies. That was during World 
War II. This was not an affirmative action law for programs for blacks 
or Hispanics or women. It was affirmative action for white broadcast 
owners.
  Twenty years later the FCC used the same framework, the same law to 
provide the tax preference for those broadcast companies who would sell 
to minority-owned firms. This was done to open up ownership 
opportunities to minorities and to basically promote diversity in an 
all white, male-dominated industry.
  Now today we are asked to vote to dismantle this program. There are 
those who would argue it is too expensive and those who would say it is 
race-based. Is it too expensive that the Viacom deal will respond to 
get these tax benefits? They are only using the law in the way that it 
was framed. It is only fair that we continue to allow those who are 
playing by the rules to do so. Viacom will get its tax deferments. They 
should not be looked on as someone who is doing something wrong.
  I ask Members to oppose this bill because it is basically unfair and 
it attempts to eliminate those who are simply trying to play by the 
rules.
  Mr. ARCHER. Mr. Chairman, I yield 1 minute to the gentleman from Iowa 
[Mr. Latham].
  Mr. LATHAM. Mr. Chairman, I thank the gentleman for yielding me this 
time.
  Mr. Chairman, I rise today to commend our Ways and Means Committee 
Chairman, the gentleman from Texas, Mr. Bill Archer on his outstanding 
efforts to retroactively reinstate the 25 percent deductability of 
health insurance for self-employed. Small business people and farmers.
  This is one of the most important issues in my congressional district 
where tens of thousands of working families must purchase their own 
health insurance policies. More than a dozen other freshmen 
representatives joined me late last week in sending a letter to the 
leadership in both Houses requesting the earliest possible movement on 
this issue.
  I understand that there are great time pressures we have imposed on 
ourselves with the Contract With America and members of the minority 
party want to delay our timetable with a motion to recommit.
  However, restoring this tax deductability before March 1, in time for 
farm families to file their returns should be a point of bipartisan 
cooperation, and I hope we can move forward quickly.
  Mr. GIBBONS. Mr. Chairman, I yield such time as he may consume to the 
gentleman from New York [Mr. Flake].
  (Mr. FLAKE asked and was given permission to revise and extend his 
remarks.)
  Mr. FLAKE. Mr. Chairman, I rise in support of the McDermott 
substitute, and against any rescissions of preference for minority 
broadcasters.
  I rise today to speak on H.R. 831, the health insurance deduction/
minority broadcast preference.
  Mr. Chairman, by all means, I support extending health care benefits 
to all Americans. However, the question now becomes how do we pay for 
this measure?
  Mr. Chairman, I believe that it is extremely cynical for this 
Republican Congress to propose eliminating the minority broadcast 
preference in order to fund an important health care provision when 
just last year they killed the health care bill.
  Mr. Chairman, sometime in the near future, we will visit the welfare 
reform debate, and I can assure you that the deficit hawks will favor 
reducing entitlement programs and converting 
[[Page H1928]] funds into block grants to the States in an effort to 
reduce moneys spent on welfare programs.
  Mr. Chairman, my colleagues on the other side consistently argue that 
Americans should work hard and play by the rules. However, Mr. 
Chairman, it appears from this bill that when some Americans work hard 
and play by the rules the rules are arbitrarily changed.
  Mr. Chairman, this bill is being rushed through this Congress with 
virtually no debate. But more appalling, this bill is retrospective to 
January 17, 1995 for the sole purpose of eliminating the viacom deal.
  Mr. Chairman, let us as Americans rise above the racial divisiveness 
that cripples our great nation.
  Mr. GIBBONS. Mr. Chairman, I yield 1 minute to the gentleman from 
Minnesota [Mr. Oberstar].
  (Mr. OBERSTAR asked and was given permission to revise and extend his 
remarks.)
  Mr. OBERSTAR. Mr. Chairman, for our national broadcasting 
communications system, which operates on the public airwaves, to serve 
our diverse population, ownership of broadcast stations must reflect 
that diversity.
  The purpose of the minority tax certificate program is to offer 
minorities a means to own broadcasting facilities.
  This is not a quota system and it is not a setaside. It is the use of 
tax law to achieve a desirable social goal--opportunity for minorities 
to buy and operate broadcasting stations.
  One such minority-owned station, KBJR-TV in Duluth, MN, in my 
district, is owned by Granite Broadcasting Corp. KBJR-TV has long 
offered thoughtful, informative coverage of native Americans in 
northeastern Minnesota.

                              {time}  1930

  If there are abuses with the program, they ought to be assessed, 
addressed, and repaired. They should not be an excuse to eliminate this 
program, which the committee bill would do.
  The Gibbons-McDermott substitute will retain and reform the existing 
tax preference for sales of broadcast companies to minority-owned 
firms.
  I fully support the health insurance deduction provisions of the bill 
and especially support the McDermott substitute.
  Mr. ARCHER. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Louisiana [Mr. McCrery], a very valued member of our committee.
  Mr. McCRERY. Mr. Chairman, I rise in support of H.R. 831, a bill 
which will make permanent the 25 percent deduction for health insurance 
for the self-employed. We should strive to make health insurance more 
affordable, and this bill does that. It will make business expenditures 
by small businesses more certain, as they will be able to rely on the 
25 percent deduction for purchase of their health insurance, unlike 
past years when the temporary deduction expired, leaving the self-
employed in doubt as to their true costs.
  Should we go further by increasing the percentage of the health 
insurance costs of the self-employed which are deductible, or by 
extending this deduction to workers whose employers do not provide them 
with health insurance? Yes, and some of us will be working hard in the 
months ahead to include those even more attractive incentives in the 
Tax Code. But for now, it is important that we take this step in the 
right direction, important to make permanent this tax deduction that 
the self-employed have come to rely on.
  And a quick word, Mr. Chairman, about the proposal in Mr. Stark's 
motion to recommit to extend indefinitely the period of time which a 
former employee may remain on his former employer's health insurance.
  Mr. Cardin stated that such an extension would impose no additional 
costs on employers. In fact, Mr. Chairman, an indefinite extension of 
Cobra benefits not only imposes increased costs on employers, but, 
either directly or indirectly, imposes increased costs on the remaining 
employees in the business. The data shows that, when faced with paying 
their own premiums, former employees who are healthy seldom opt to 
continue their insurance, taking a chance that they will not require 
substantial medical care before getting another job which provides 
insurance. On the other hand, former employees with health problems 
continue on their former employer's insurance which drives up the cost 
for the whole group.
  Mr. GIBBONS. Mr. Chairman, I yield 3 minutes to the gentleman from 
Louisiana [Mr. Jefferson].
  Mr. JEFFERSON. Mr. Chairman, I rise to oppose section 2 of H.R. 831 
regarding the ``Repeal of Nonrecognition on FCC Certified Sales and 
Exchanges.'' I strongly support the objectives of H.R. 831 concerning 
the need to permanently extend the deduction for health insurance costs 
of self-employed individuals, however, I oppose the funding mechanisms 
suggested.
  Passing H.R. 831 would in effect repeal the FCC's Tax Certificate 
Program that the FCC administers under I.R.C. section 1071. The Tax 
Certificate Program was implemented to allow sellers of broadcast or 
cable facilities to defer capital gains taxes on the sales of broadcast 
or cable facilities. Because this is only a deferral of tax and not a 
waiver or elimination of it, ultimately, all parties involved will pay 
capital gains tax on the profits.
  The mischaracterization of this program as one which is a tax 
exemption is incorrect.
  I.R.C. section 1071 was enacted to effectuate the FCC's policies and 
goals relating to: First, promoting a diversity in obtaining broadcast 
licenses; second, preventing possible monopoly ownership of broadcast 
facilities, and third, stimulating reinvestment in the broadcasting 
business.
  Despite the efforts of the FCC to achieve diversity, the results have 
been less than impressive. Specifically, when the FCC implemented the 
provision relating to minority ownership, minorities owned less than 1 
percent of all broadcast licenses. Since the adoption of the Tax 
Certificate Program, approximately 300 tax certificates have been 
awarded by the FCC for broadcast licenses and cable sales in the 17-
year history of the program. During the same period, however, there 
have been approximately 15,000 broadcast license transactions. These 
figures demonstrate that although the program has led to an increase in 
minority ownership, the increase only represents approximately 3 
percent of ownership since the enactment of the Tax Certificate 
Program. Clearly, more must be done to provide an opportunity for 
minorities to fully participate in the ownership of broadcast licenses, 
thereby providing programming diversity. More importantly, the number 
of licenses issued to minority-owned business would likely be far less 
without the Tax Certificate Program.
  Mr. Chairman, there has been no reliable documentation demonstrating 
that the repeal of the Tax certificate Program will result in any 
additional tax revenue in the future. It is far more likely that 
sellers will find alternative methods to structure broadcast license 
sales that minimize the tax impact of the transaction. Additionally, 
cancellation of the program will eliminate a vital means for minorities 
to acquire ownership of broadcasting licenses, thereby reducing the 
FCC's goals of providing programming diversity.
  To ensure achievement of these goals and policies of the FCC, the FCC 
should be allowed to reform the current tax certificate program to 
provide implementation as provided in the Gibbons--McDermott 
substitute.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Georgia [Mr. Collins], a valued new member of the committee.
  Mr. COLLINS. of Georgia. Mr. Chairman, I thank the gentleman, the 
chairman of the Committee on Ways and Means, for yielding me this time.
  Mr. Chairman, I rise in support of H.R. 831, and I commend the 
chairman and the members of the Committee on Ways and Means for brining 
this measure to the floor of the House. It is an important issue, that 
of restoring and making permanent the deduction for the self-employed, 
those who purchase health care insurance for them and their families.
  I am pleased, too, to hear the chairman say that later on this year 
we are going to address the issue again, and we are going to increase 
that deductibility from 25 percent upward to hopefully 80 or 100 
percent.
  Also I support repealing the authority of the FCC to grant special 
tax favors to those who sell communications assets. I regret there are 
those in this 
[[Page H1929]] body who want to lead others to believe that this is 
going to prevent the sale of any asset or any communications system. 
There is no provision in H.R. 831 that will prevent the sale to anyone.
  H.R. 831 will, though, require anyone who does sell such assets to 
pay taxes on the gain of that sale, just the same as any other working 
American pays taxes on the profits that they earn or the income that 
they earn or any business, who sells an asset and has a gain.
  Mr. Chairman, I urge the support of the passage of 831, and I urge 
opposition to any substitute or any motion to recommit.
  Mr. GIBBONS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, as I said earlier in the debate, we are cleaning up 
some messes that began way back in World War II. They need to be 
corrected. I am sorry we did not get to them sooner. Some of them just 
became apparent recently.
  In the McDermott-Gibbons substitute, and I have designated the 
gentleman from Washington [Mr. McDermott] to handle that time and that 
proposal under the rule, we will make some substantial and some 
equitable changes in the broadcast licenses provision and also in the 
health care provision. The McDermott-Gibbons substitute takes the 
licensing provision and makes it a true minority participation device 
and not the kind of device that now exists. It is an improvement on the 
spirit of the provision as it was inculcated in the law way back in the 
1940's.
  Also, the Gibbons-McDermott, or McDermott-Gibbons, substitute 
provides for a more equitable distribution of the health care benefits 
that we are passing out here. As I pointed out in general debate, this 
is largely a leftover event from World War II where the whole idea of 
fringe benefits and the exclusion of health care insurance benefits 
from taxation all came about in a World War II accident that occurred 
here on the floor.

                              {time}  1940

  So, cleaning up those matters--and they ought to be done--and then 
Mr. Stark will come in with a motion to recommit that helps us by 
extending the COBRA benefits indefinitely to people who want to pay, 
out of their own pocket, the health insurance they had when they were 
an employee.
  So those are the kinds of things we are advocating here.
  Mr. Chairman, I yield the remaining time to the gentleman from South 
Carolina [Mr. Clyburn].
  The CHAIRMAN. The gentleman from South Carolina [Mr. Clyburn] is 
recognized for 30 seconds.
  (Mr. CLYBURN asked and was given permission to revise and extend his 
remarks.)
  Mr. CLYBURN. I thank the gentleman for yielding time to me.
  Mr. Chairman, I wish to support the alternative to what is being 
proposed. As Members know, all of us agree that there ought to be a way 
to pay for the 25-percent deduction of health insurance. This issue is 
not about that at all. I think that we know, from those of us who have 
been dealing with health insurance and its reform, that this is 
something we support.
  Mr. Chairman, I rise in opposition to this legislation. Let me first 
make this clear, I strongly support a 25-percent deduction for health 
insurance costs for self-employed individuals. This deduction has long 
been allowed and should continue. However, the financing for the 
permanent extension should not come from the repeal of the minority tax 
certificate program administered by the Federal Communications 
Commission.
  Since 1978, the FCC has developed its program of tax certificates, 
under Internal Revenue Code section 1071, which encourages minority 
ownership of telecommunications properties. The program has led to a 
five-fold increase in minority ownership of radio and television 
broadcast stations, and to an increase in minority ownership of cable 
systems, as well.
  This program, which allows a seller of a telecommunications property 
to defer gain on an FCC-approved sale to a minority interest, has 
enjoyed bipartisan support. In 1982, a Reagan administration-controlled 
FCC both extended the policy to cable systems and expanded the program 
to include investors who contribute to the stabilization of a capital 
base of a minority enterprise. Every year, from 1987 to 1994, Congress 
has repeatedly supported this program in annual appropriations 
legislation. Through a legislative rider, Congress has, among other 
edicts, prohibited the FCC to retroactively apply changes to this 
program. The current rider expires at the end of the 1995 fiscal year.
  While the FCC is currently forbidden by law to retroactively affect 
the tax certificate program, this legislation is now asking Congress to 
do just that: Repeal the minority tax certificate program retroactively 
to January 17, 1995, which we all know is targeted at a deal between 
the Viacom company and an African-American businessman. This request 
comes after lightning-quick and less than adequate consideration of 
this program by the Committee on Ways and Means. On February 8, 1995, 
the full committee, acting solely on the one hearing on the issue, 
reported H.R. 831 without amendment.
  Tax certificates make it possible for minorities to gain access to 
two vital ingredients needed to achieve ownership: information 
available about broadcast properties and access to capital. Tax 
certificates encourage brokers to seek out minorities as prospective 
buyers of broadcast properties. Without the program, minorities are 
less likely to be informed of prospective sales.
  The importance of the tax certificate program to all participants in 
the telecommunications field, the inadequate consideration by the 
Committee on Ways and Means, the bill's retroactive effect raise 
serious questions about the direction this body is going in, with 
respect to affirmative action.
  Mr. Chairman, I urge my colleagues to vote against this legislation.
  Mr. ARCHER. Mr. Chairman, to close debate, I yield the balance of our 
time to the gentleman from California [Mr. Thomas], chairman of the 
Subcommittee on Health, who has done such an outstanding job already in 
this Congress.
  (Mr. THOMAS asked and was given permission to revise and extend his 
remarks.)
  Mr. THOMAS. Mr. Chairman, I thank the chairman of the committee for 
yielding this time to me.
  Mr. Chairman, I have to say to my colleagues over on this side of the 
aisle in the minority that this is not your only opportunity to solve 
the health care problem. I know some of you may be anxious. We waited 
the entire 103d Congress for a health care measure to reach the floor. 
We waited in vain. Here we have an opportunity to deal with health care 
in the first month or so, and you may be thinking this is the only 
train. To that I say no; you will get ample opportunity to make changes 
to solve our health care problems in subcommittee, in committee, and, 
yes on the floor.
  I think this underscores the fact that we are under new management. I 
want to make three points about being under new management.
  First, the Democrats, in 1986, gave the self-employed a token 25 
percent deduction for health care. And kept them on a hot skillet 
dancing ever since.
  In 1994, the self-employed deduction expired. And now, as tax time 
comes, the self-employed are wondering whether or not they are going to 
be made whole since the provision expired in 1993. The answer is 
``yes.''
  In subcommittee we heard ample testimony that this is absolutely 
needed.
  Is it enough? Of course not. But all we are trying to do in this 
measure is extend current law and cover those people who, through no 
fault of their own, were left exposed last year. That is all we are 
doing. A modest measure.
  We are not trying to rethink the inequities of the tax code for all 
people, including those individuals who work for a corporation who are 
not provided their health insurance by that corporation.
  The self-employed are second-class citizens, the McDermott amendment 
wants to make those individuals who work for corporations who do not 
provide health care third-class citizens. They do not even get the 
self-employed level of deduction up front. So, clearly, you have 
concerns, Gee, I wish your concerns had been made more apparent in the 
last Congress; we could have moved legislation in this area.
  The second point I want to make is the rules under which we are 
examining this legislation. Not only was the minority afforded a 
substitute of their choice, but; my colleagues on the Democratic side 
have said we want this and this and this. You had an opportunity to put 
your package together. You did that.
  Not only that, the majority provided the motion to recommit. So you 
get 
[[Page H1930]] two bites of the apple. That is something that we on 
this side of the aisle in the minority of the past would like to have 
had but often times were denied. We are not denying that to you. 
Clearly, there has been a change.
  In committee, you had in front of you the legislative language that 
is in front of you now, and you had it ahead of time. That rarely 
occurred under the old management. The complaint that you only had the 
legislative language a day or two ahead of time pales when we used to 
deal with conceptual approaches announced the day of the hearing.
  Third, what November was really all about.
  The election in November was about change, not just doing the 
positive things legislatively as we are doing now and will do more of, 
but it was also to examine laws on the books that do not make any sense 
and get rid of them. And that is exactly what we are doing here 
tonight.
  You have heard this provision, which is funding health care for the 
self-employed, characterized a number of different ways.
  I think you need to know that, one, we are talking about turning what 
is now a tax break for millionaires, not minorities, the people who 
have the companies get the tax break, not the people who are buying 
them; and we are turning those tax breaks into health care for ordinary 
citizens.
  When you look at all of those self-employed, you are talking about 
millions of Americans but, more importantly, you are talking about a 
provision that on average provided benefits for 14 millionaires every 
year and converting that to 350,000 African-Americans and Hispanic-
American business owners getting provided some health insurance. That, 
it seems to me, is what November was all about, take a tax break for 
the rich and provide benefits for the many. That is what November was 
all about. That is what H.R. 831 is all about.
  Support H.R. 831.
  Mrs. LINCOLN. Mr. Chairman, as the author of my own bill to extend a 
tax deduction to the self-employed for health insurance, I rise today 
in support of the efforts of the House to restore and permanently 
extend the tax deduction for 25 percent of health insurance costs for 
self-employed individuals. However, it is my opinion that we should go 
even further by providing a 100-percent tax deduction.
  During this Congress, I introduced the Health Insurance Equity Act of 
1995, which would have given this 100 percent deduction to our self-
employed. I believe that the small businessmen and farmers who are the 
economic backbone of my district, and rural America in general, should 
enjoy this same privilege that corporate America currently enjoys.
  However, if we are to provide relief to our self-employed workers who 
are paying high prices for health insurance, we must support the 
legislation that is presented before us tonight. In addition, we have 
an opportunity to vote to extend the 25 percent tax deduction for 
health insurance premiums to employees whose employers do not subsidize 
their health insurance. If our goal is to help people help themselves, 
then I see no reason why we should not support this provision.
  Mr. Chairman, it is time to face the facts about purchasing health 
coverage today. Many of the 37 million uninsured are small business 
owners. Health care costs averaged $3,160 per person in 1992, with 
current increases projected to run in double digits through the end of 
the century. Prescription drug costs in many cases have risen more than 
60 percent since 1985. My constituents are asking for relief.
  It is imperative that we enact this piece of legislation today to 
show our constituents that we understand the problems they are facing. 
Therefore, I urge my colleagues to support congressional efforts to 
provide much-needed relief by helping to make health insurance more 
affordable for the hard-working citizens of our country.
  Mr. ORTON. Mr. Chairman, I rise in strong support of H.R. 831, 
legislation to restore and make permanent the 25-percent deduction for 
health insurance costs for the self-employed.
  In fact, I have cosponsored and supported similar legislation since 
first being elected to Congress. I cosponsored H.R. 784 in the 102d 
Congress and H.R. 162 in the last Congress. Both bills would have made 
this deduction permanent and expanded it to 100 percent over time.
  Mr. Chairman, this is a simple matter of fairness. When Chapter C 
corporations provide health insurance benefits for their officers and 
other employees, they enjoy full tax deductibility. However, if 
individuals take the initiative and start their own business, we deny 
them the right to deduct health insurance premiums.
  Prior to the end of 1993, we did allow a 25-percent deduction for 
health benefits. However, due to congressional infighting and the need 
to comply with PAYGO requirements, this meager 25-percent deduction 
expired. Last summer proposals to reinstate and expand this to 100-
percent deductibility were incorporated into comprehensive health care 
reform proposals. When health care reform died, so did chances for 
reinstatement of this provision.
  We need to do two things. First, we need to pass H.R. 831 and get it 
enacted into law quickly. The odds are overwhelming that we will pass 
this eventually. Let's do it quickly to avoid the burden of taxpayers 
having to file first without the deduction, then refile at a later 
date, claiming a refund.
  Second, we should move to enact 100-percent deductibility in the very 
near future. There is no policy justification for a mere 25-percent 
provision. That has come about from our inexcusable failure to resolve 
this issue on a permanent basis. As we consider a wide range of tax 
proposals this spring, I hope we will make enactment of a 100-percent 
health care deduction for the self-employed a high priority.
  Mrs. KELLY. Mr. Chairman, I rise in strong support of H.R. 831, which 
will take the long-overdue step of permanently extending the 25 percent 
deduction for health insurance costs for the self-employed.
  Small business is the country's most important motivator for 
innovation, job creation and economic growth. Creating a successful 
small business takes guts, determination, and hard work, but it 
represents the very best of the American dream.
  I know this firsthand, Mr. Chairman. Both myself and my husband are 
small business owners. We both have experienced the satisfaction of 
creating successful small businesses, creating new jobs, and 
contributing to our community.
  However, we have also felt the onerous tax and regulatory burdens 
that stand in the way of successful small businesses today. Self-
employed small business owners face a number of very unique problems, 
and the disparity in the tax treatment of health insurance costs 
represents one of the more troublesome of these.
  I believe tonight's vote is a referendum on tax fairness. Our Tax 
Code currently provides large corporations with a 100 percent deduction 
for health care insurance premiums. Unless we act and pass this 
legislation, however, self-employed entrepreneurs will be forced to 
shoulder the full cost of their insurance premiums.
  Making permanent the 25-percent deduction will take a small but 
needed step toward restoring a degree of equity in the manner in which 
we treat small business in this country.
  Let's support our small businesses, Mr. Chairman, by passing H.R. 
831. And once we have accomplished this goal, I believe we should take 
the next logical step and raise the deductibility for the self-employed 
to 100 percent.
  Mr. STOKES. Mr. Chairman, I rise in strong opposition to H.R. 831. I 
must first make it clear that I have consistently supported the 
extension of a health insurance deduction for self-employed 
individuals, but I cannot support the unacceptable way this bill seeks 
to pay for such a deduction. This legislation represents the majority's 
first direct attempt to attack affirmative action. If is cynical and 
repugnant to me that this bill seeks to--under the guise of helping 
Americans--attack an equal opportunity for all Americans. This flawed 
and hurried legislation should not only be defeated because it fails to 
consider the consequences of the bill, but represents a clear attack on 
equal opportunity for minorities in America.
  The bill before us will not only attempt to undo an important civil 
rights accomplishment of the U.S. Congress, but also seeks to undermine 
the spirit of legislation intended to promote freedom of speech and 
economic opportunities for minorities.
  The stated purposes of H.R. 831 is to extend health insurance 
benefits. This bill would retroactively eliminate section 1071 of the 
Internal Revenue Code, that authorizes the Federal Communications 
Commission to provide certificates to sellers of broadcast properties 
to minorities. These certificates allow the seller to defer taxation on 
the gain from the sale, and encourage minority participation in 
broadcasting. Section 1071 creates a preference that is designed to 
achieve a remedial and legitimate public policy goal.
  While I agree that Congress should make health care available to all 
Americans, the despicable attempt to play self-employed 
[[Page H1931]] workers in need of health insurance against minorities 
in need of business opportunities is reprehensible. This tactic 
represents the worst in politics and I am ashamed that such a racially 
divisive measure has even been proposed. This legislation goes well 
beyond its legitimate objective of providing health care. In fact, this 
bill is specifically designed to inhibit the will and conscience of the 
American people by eliminating financial incentives for a program the 
current majority has long sought to weaken, if not totally eliminate: 
Affirmative action.
  A measure of this kind requires detailed analysis of the impact it 
may have on the American people, but no such review has or will take 
place. The facts show that this bill is now before us without the 
requisite hearings, subcommittee oversight or even sufficient time to 
review the bill itself.
  Adding to the cynical approach employed by this legislation, I am sad 
to see that this law is retroactive and has been engineered to take the 
unprecedented step of eliminating a particular transaction. This kind 
of legislation against individuals establishes a dangerous precedent.
  As a representative of the urban district of Cleveland, OH, I have 
witnessed the severity of the racial and economic problems this Nation 
and its inner cities now face. The need for diversity in the media is 
clear. Ending monopoly ownership by a single community of the primary 
means for informing, educating and entertaining Americans is essential 
in a free society that seeks the free and diverse expression of ideas. 
Prior to the implementation of section 1071, the FCC unsuccessfully 
attempted to diversify broadcast ownership. It has only been with the 
implementation of section 1071 that many minorities who grew up in 
segregated America have had a real chance to participate in 
broadcasting.
  All Americans loose with the legislation because the elimination of 
opportunities to make broadcasting look more like America perpetuates 
the stereotypes, racist attitudes, and misunderstandings that always 
accompany ignorance. In today's global economy we must overcome such 
ignorance in favor of a more open and inclusive broadcast system.
  Perhaps the most negative impact of this proposed legislation will be 
on congressional efforts to end discrimination and exclusion through 
affirmative action. Within the last two decades, affirmative action has 
been the primary tool that has allowed minority and women workers to 
break through the many barriers of discrimination that have helped to 
keep them unemployed, underpaid, and in a place where there is little 
or no opportunity for advancement.
  Despite the steps our Nation has taken to move forward in the area of 
affirmative action, this legislation represents a new onslaught on 
civil rights. Congressional opponents of affirmative action should 
realize that equal opportunity does not belong specifically to one race 
of people. Black Americans born in this country also have a contract 
with America. That contract, by virtue of birth, is rooted in both the 
Constitution and the Declaration of Independence. When it comes to 
opportunity in this country they have every right to believe in the 
doctrine, ``We hold these truths to be self evident, that all men are 
created equal.''
  Mr. Speaker, the truth of affirmative action programs is that they do 
not grant preferential treatment to selected Americans, but provide for 
a means of equal opportunity employment for members of our society 
whose voices have been choked off by the destructive and brutal 
oppression of racism and exclusion.
  It is my belief that H.R. 831 and the circumstances under which it is 
presented in this House attempt to mislead and American people to 
believe that cookie cutter, simplistic solutions will cure what ails 
this Nation. Nothing could be further from the truth. As our Nation 
faces and epidemic discrimination and poverty, the solution to these 
problems will not be found in quick fixes like this bill. The American 
people elected us to act in their best interest, not compromise their 
welfare because government refuses to have the courage to meet its 
obligation to maintain equal opportunity for the citizens who need it 
the most. I urge my colleagues to vote against this bill.
  Mrs. MEEK of Florida. Mr. Chairman, the bill on the floor today, H.R. 
831, is a thinly-veiled effort to muzzle the voices of minorities in 
this country.
  For the past two decades, under Democratic and Republican 
administrations, the policy of the United States has been to provide 
tax benefits to encourage and promote the sale of radio, television, 
and cable companies to minority-owned firms.
  The present leadership of the House talks a lot about empowerment, 
but it is obvious from this bill that empowerment does not extend to 
minorities who want to break into the broadcast industry--an industry 
which has extraordinary barriers to entry. Minorities are still vastly 
underrepresented in the broadcast business. More than 97 percent of all 
broadcast licenses are held by white men. The number of licenses issued 
to minority-controlled businesses would be even less without this 
program.
  The goal of the tax provision that H.R. 831 would repeal is to allow 
African-Americans, Hispanic-Americans, Asian-Americans and other 
minorities the opportunity to break into the relatively closed society 
of broadcast entrepreneurs and to promote the diversity of broadcast 
viewpoints. There is a great national need for American minority 
communities to have the media outlets and the opportunity to express 
themselves.
  However, under the guise of providing help to self-employed people by 
allowing them to deduct from their taxes part of their expenses for 
health insurance, H.R. 831 would wipe out the minority ownership 
incentives in the tax law--incentives that have led to a five-fold 
increase in minority ownership of radio and television broadcast 
stations, and to an increase in minority ownership of cable systems as 
well.
  Mr. Chairman, I strongly favor legislative changes to tighten up the 
administration of this tax incentive program to make ironclad certain 
that minority Americans demonstrate real equity ownership in the media 
properties they buy. Diversity is important, and I want to insure that 
real gains are made by minorities in the broadcast industry.
  But repeal is not reform. It is merely a muzzle on voices straining 
against great odds to be heard.
  Mr. FOGLIETTA. Mr. Chairman, I rise today against this legislation 
which seeks to dismantle the minority preference program run by the 
FCC.
  We all know that the best way to get people out of poverty's reach is 
to provide them with jobs and opportunity. However, my Republican 
colleagues want to pay for one valid tax provision by repealing another 
which assists in empowering so many minority entrepreneurs across the 
country. This is dead wrong.
  I know that this small sector of the economy is especially successful 
for minorities, because my hometown of Philadelphia is home to a number 
of African-American-owned radio, television, and cable networks. They 
empower people through employment. As we are closing down so many roads 
to opportunity, I want to see this avenue remain open. The Gibbons-
McDermott substitute will make it work better.
  Maybe my Republican colleagues have tuned in and they don't like what 
they're hearing--broad opposition to the Contract With America.
  I urge my colleagues not to turn down the volume on these minority 
voices. Vote against H.R. 831.
  Mr. EMERSON. Mr. Chairman, I rise today in strong support of H.R. 
831. In the 103d Congress I cosponsored legislation to make this 
deduction permanent, thus eliminating the need for yearly self-renewal. 
Unfortunately, this legislation fell victim to end-of-the-session 
wrangling. This deduction is very important to residents of the Eighth 
District of Missouri. Ideally, I would like to see this deduction 
increased to 100 percent, the amount currently enjoyed by most large 
corporations. It is my hope that we can increase the deduction to this 
amount in the future.
  The House Small Business Committee estimates that the 25-percent tax 
deduction enabled as many as 400,000 Americans to obtain health care 
coverage which otherwise was out of their economic reach. Most small 
business owners, including farmers and ranchers, need coverage as much 
as folks who work in Fortune 500 firms, but oftentimes are without the 
on-hand economic resources to pay for preventive care--let alone the 
costs should an illness occur.
  Over the last 2 years, we have learned what Americans want and don't 
want when it comes to health care reform. Providing access to coverage 
through our tax code seems to be an easily accomplished option and one 
that should cross party lines. It is a bit of an insurance policy to 
help small businesses bolster our Nation's economic engine and provide 
jobs for more Americans, while looking after some vital health care 
interests at the same time. I urge passage of this important 
legislation.
  Mrs. VUCANOVICH. Mr. Chairman, I rise in support of H.R. 831, to 
reinstate and make permanent the 25-percent tax deduction for health 
insurance to self-employed individuals.
  For too long, a disparity has been in existence in our tax system. 
Our system has given a preference to employees of large corporations, 
harming the self-employed individuals in the process. Small 
businessowners, farmers, ranchers, have had to come to Congress time 
and time again to ask that a tax deduction be granted and extended to 
them. Unfortunately, the 103d, Congress dropped the ball, allowing this 
important deduction to expire in 1993. Promises were made that the 
deduction would be reinstated, but intertwined in the debacle of 
national health care reform--no action was taken.
  [[Page H1932]] Well, its been over a year since then and the new team 
is taking possession of the ball and going all the way with a slam dunk 
with this legislation. It is time we give tax fairness to our self-
employed and H.R. 831 is the right vehicle to do just that. I give my 
support to this measure and I encourage my colleagues to back their 
constituents by supporting the measure too.
  Mr. BUYER. Mr. Chairman, H.R. 831, a bill to allow permanent 
deductibility of health insurance costs for the self-employed is long 
overdue and I enthusiastically support it. The old saying, ``It may be 
late but it's not too late,'' is so true in this case.
  I applaud my colleague from Texas, Mr. Bill Archer, for recognizing 
the huge injustice that would fall upon many self-employed if this 
legislation would not pass. It is my belief that the Tax Code should be 
fair to all. Under current law, employees of a company that provides 
health benefits are allowed to exclude those benefits from their 
taxable incomes; the self-employed enjoy no such benefit.
  To the estimated 3 million who would file for the 25-percent 
deduction, H.R. 831 prevents a tax increase many self-employed would 
most likely incur on this year's returns.
  Mr. Chairman, restoring the deductibility for small businessowners, 
the self-employed, and family farmers is of great interest to residents 
of the Fifth District of Indiana. They are the backbone to the rural 
economy and should be provided the same benefits that the big 
corporations are permitted in major metropolitan areas. The Tax Code 
must not be discriminatory.
  Furthermore, I support Mr. Archer's scrutiny of our current tax law 
and the Ways and Means Committee's efforts to establish a system of law 
and public policies that are indifferent to race or gender.
  Mr. Chairman, it is becoming more and more clear that section 1071 of 
the Internal Revenue Code has increasingly been abused. For example, of 
the minority-owned radio stations that received FCC tax certificates 
between 1979-92, only 29 percent of those stations were still 
controlled by the original minority purchaser at the end of 1992.
  In many cases, such investors often turn around and sell their stake 
in the company for millions of dollars above their initial interest. 
Thus, by allowing a section 1071 in many of these cases, hundreds of 
millions of dollars--even billions of dollars--have been lost to the 
American taxpayer. Section 1071 has been abused for too long. It has 
become one of the most grotesque abuses of our tax system I have seen 
in all my years.
  Let us close the loopholes, reform our Tax Code so it is race and 
gender blind, and allow our small businessmen, self-employed, and 
family farmers to receive the same benefits the giant corporations are 
privy to. In short, H.R. 831 is a beginning to make the Tax Code more 
friendly and fair.
  Mr. KLECZKA. Mr. Chairman, I would like to express my support for 
H.R. 831, the health premium deduction for the self-employed. This bill 
would permanently extend the 25-percent health insurance deduction for 
the self-employed, and would do so retroactively so that these 
individuals may take advantage of it when they file their tax returns 
this Spring. My colleagues, self-employed individuals are waiting for 
us to act, and we owe it to them to pass this legislation 
expeditiously.
  This much needed deduction has been extended, and extended, and 
extended again. It is time to provide some stability for the many small 
employers who rely on this assistance by extending it once and for all. 
If this deduction is good policy--and I believe it is--then let us give 
it the credibility it deserves and make it a stable part of our tax 
law.
  Restoring the 25-percent deduction is a matter of simple fairness. 
Corporations can deduct 100 percent of the costs of providing insurance 
to their employees, but self-employed people, mostly small businesses 
and farmers, can no longer deduct even the meager 25 percent that they 
used to be able to deduct. The least we can do is restore this minimal 
assistance to them. While the 25-percent amount is not nearly what the 
large employer receives, it is an important first step toward leveling 
the playing field in a responsible manner.
  Permanently restoring this deduction is also consistent with the goal 
of encouraging health insurance coverage for all Americans. According 
to the Small Business Administration, there are 2.6 million uninsured 
self-employed Americans--making that group one of the largest groups of 
uninsured citizens. Without the 25-percent deduction, the number of 
uninsured in this segment of the population would likely increase. 
Hopefully, by making the tax break permanent, we can encourage more of 
the self-employed to buy insurance.
  Passing H.R. 831 is the fair thing to do. It is good for small 
business and will help encourage health care coverage. Moreover, the 
bill enjoys bipartisan support. Mr. Chairman, I urge that we adopt this 
provision.
  The CHAIRMAN. All time for general debate has expired.
  Pursuant to the rule, the amendment printed in the bill is considered 
as adopted, and the bill, as amended, is considered as having been 
read.
  The text of the bill, as amended, is as follows:

                                H.R. 831

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. PERMANENT EXTENSION OF DEDUCTION FOR HEALTH 
                   INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.

       (a) In General.--Subsection (l) of section 162 of the 
     Internal Revenue Code of 1986 (relating to special rules for 
     health insurance costs of self-employed individuals) is 
     amended by striking paragraph (6).
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1993.

     SEC. 2. REPEAL OF NONRECOGNITION ON FCC CERTIFIED SALES AND 
                   EXCHANGES.

       (a) In General.--Subchapter O of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by striking part V (relating 
     to changes to effectuate FCC policy).
       (b) Clerical Amendment.--The table of parts for such 
     subchapter O is amended by striking the item relating to part 
     V.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to--
       (A) sales and exchanges on or after January 17, 1995, and
       (B) sales and exchanges before such date if the FCC tax 
     certificate with respect to such sale or exchange is issued 
     on or after such date.
       (2) Binding contracts.--
       (A) In general.--The amendments made by this section shall 
     not apply to any sale or exchange pursuant to a written 
     contract which was binding on January 16, 1995, and at all 
     times thereafter before the sale or exchange, if the FCC tax 
     certificate with respect to such sale or exchange was applied 
     for, or issued, on or before such date.
       (B) Sales contingent on issuance of certificate.--A 
     contract shall be treated as not binding for purposes of 
     subparagraph (A) if the sale or exchange pursuant to such 
     contract, or the material terms of such contract, were 
     contingent, at any time on January 16, 1995, on the issuance 
     of an FCC tax certificate. The preceding sentence shall not 
     apply if the FCC tax certificate for such sale or exchange is 
     issued on or before January 16, 1995.
       (3) FCC tax certificate.--For purposes of this subsection, 
     the term ``FCC tax certificate'' means any certificate of the 
     Federal Communications
      Commission for the effectuation of section 1071 of the 
     Internal Revenue Code of 1986 (as in effect on the day 
     before the date of the enactment of this Act).

     SEC. 3. NONRECOGNITION OF INVOLUNTARY CONVERSIONS NOT TO 
                   APPLY IF REPLACEMENT PROPERTY ACQUIRED FROM 
                   RELATED PERSON.

       (a) In General.--Section 1033 of the Internal Revenue Code 
     of 1986 (relating to involuntary conversions) is amended by 
     redesignating subsection (i) as subsection (j) and by 
     inserting after subsection (h) the following new subsection:
       ``(i) Nonrecognition Not To Apply if Replacement Property 
     Acquired From Related Person.--Subsection (a) shall not apply 
     if the replacement property or stock acquired is acquired 
     from a related person. For purposes of the preceding 
     sentence, a person is related to another person if the 
     relationship between such persons would result in a 
     disallowance of losses under section 267 or 707(b).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to replacement property or stock acquired on or 
     after February 6, 1995.

     SEC. 4. PHASEOUT OF EARNED INCOME CREDIT FOR INDIVIDUALS 
                   HAVING MORE THAN $2,500 OF TAXABLE INTEREST AND 
                   DIVIDENDS.

       (a) In General.--Section 32 of the Internal Revenue Code of 
     1986 is amended by redesignating subsections (i) and (j) as 
     subsections (j) and (k), respectively, and by inserting after 
     subsection (h) the following new subsection:
       ``(i) Phaseout of Credit for Individuals Having More than 
     $2,500 of Taxable Interest and Divendends.--If the aggregate 
     amount of interest and dividends includible in the gross 
     income of the taxpayer for the taxable year exceeds $2,500, 
     the amount of the credit which would (but for this 
     subsection) be allowed under this section for such taxable 
     year shall be reduced (but not below zero) by an amount which 
     bears the same ratio to such amount of credit as such excess 
     bears to $650.''
       (b) Inflation Adjustment.--Subsection (j) of section 32 of 
     such Code (relating to inflation adjustments), as 
     redesignated by subsection (a), is amended by striking 
     paragraph (2) and by inserting the following new paragraphs:
       ``(2) Interest and dividend income limitation.--In the case 
     of a taxable year beginning in a calendar year after 1996, 
     each dollar amount contained in subsection (i) shall be 
     increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1995' 
     [[Page H1933]] for `calendar year 1992' in subparagraph (B) 
     thereof.
       ``(3) Rounding.--If an amount as adjusted under paragraph 
     (1) or (2) is not a multiple of $10 such dollar amount shall 
     be rounded to the nearest multiple of $10.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

  The CHAIRMAN. No further amendment is in order except the amendment 
in the nature of a substitute printed in House Report 104-38.
  The amendment in the nature of a substitute may be offered only by 
the gentleman from Florida, Mr. GIBBONS, or his designee. It shall be 
considered as having been read and is not subject to amendment.
  The debate on the amendment will be equally divided and controlled by 
the proponent and an opponent of the amendment in the nature of a 
substitute.
  Mr. GIBBONS. Mr. Chairman, I rise to yield my time to the gentleman 
from Washington [Mr. McDermott]. I endorse the amendment. I would like 
to give the gentleman from Washington credit for having worked this 
out. I yield my time and the ability to yield such time as he may deem 
necessary to the gentleman from Washington [Mr. McDermott].
  The CHAIRMAN. Does the gentleman from Florida [Mr. Gibbons] designate 
the gentleman from Washington [Mr. McDermott] as his designee?
  Mr. GIBBONS. I do so designate the gentleman from Washington [Mr. 
McDermott] as the Member to handle the amendment, and I yield to him at 
this time.
  (Mr. McDDERMOTT asked and was given permission to revise and extend 
his remarks.)


    amendment in the nature of a substitute offered by mr. mcdermott

  Mr. McDERMOTT. Mr. Chairman, I offer the amendment in the nature of a 
substitute, printed in House Report 104-38.
  The CHAIRMAN. The Clerk will designate the amendment in the nature of 
a substitute.
  The CLERK. The text of the amendment in the nature of a substitute is 
as follows:

       Amendment in the nature of a substitute offered by Mr. 
     McDermott.
       Strike all after the enacting clause and insert the 
     following:
              TITLE I--PROVISIONS RELATING TO HEALTH CARE

     SEC. 101. RETROACTIVE RESTORATION OF DEDUCTION FOR HEALTH 
                   INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.

       (a) In General.--Paragraph (6) of section 162(l) of the 
     Internal Revenue Code of 1986 (relating to special rules for 
     health insurance costs of self-employed individuals) is 
     amended by striking ``December 31, 1993'' and inserting 
     ``December 31, 1995''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1993.

     SEC. 102. PERMANENT DEDUCTION FOR HEALTH INSURANCE COSTS OF 
                   EMPLOYEES AND SELF-EMPLOYED INDIVIDUALS.

       (a) In General.--Part VII of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to additional 
     itemized deductions) is amended by redesignating section 220 
     as section 221 and by inserting after section 219 the 
     following new section:

     ``SEC. 220. HEALTH INSURANCE COSTS.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a deduction an amount equal to 25 percent 
     of the amount paid during the taxable year for insurance 
     which constitutes medical care for the taxpayer, his spouse, 
     and dependents.
       ``(b) Limitation Based on Earned Income.--No deduction 
     shall be allowed under subsection (a) to the extent that the 
     amount of such deduction exceeds the sum of--
       ``(1) the taxpayer's wages, salaries, tips, and other 
     employee compensation includible in gross income, plus
       ``(2) the taxpayer's earned income (as defined in section 
     401(c)(2)).
       ``(c) Other Coverage.--Subsection (a) shall not apply to 
     any taxpayer for any calendar month for which the taxpayer is 
     eligible to participate in any subsidized health plan 
     maintained by any employer of the taxpayer or of the spouse 
     of the taxpayer.
       ``(d) Phasein of Deduction for Employees.--In the case of 
     taxable years beginning before January 1, 2000, to the extent 
     that the amount paid for insurance referred to in subsection 
     (a) is allocable to coverage for a month for which the 
     individual has no earned income (as defined in section 
     401(c)(2)), subsection (a) shall be applied with respect to 
     such amount by substituting the percentage determined in 
     accordance with the following table for `25 percent'.

                                               ``In the  The percentage
                                      years beginning in calendais:    
    1996...................................................15 percent  
    1997...................................................15 percent  
    1998...................................................20 percent  
    1999..................................................20 percent.  

       ``(e) Special Rules.--
       ``(1) Coordination with medical deduction, etc.--Any amount 
     paid by a taxpayer for insurance to which subsection (a) 
     applies shall not be taken into account in computing the 
     amount allowable to the taxpayer as a deduction under section 
     213(a).
       ``(2) Treatment of certain s corporation shareholders.--
     This section shall apply in the case of any individual 
     treated as a partner under section 1372(a), except that--
       ``(A) for purposes of this section, such individual's wages 
     (as defined in section 3121) from the S corporation shall be 
     treated as such individual's earned income (within the 
     meaning of section 401(c)(1)), and
       ``(B) there shall be such adjustments in the application of 
     this section as the Secretary may by regulations prescribe.
       ``(3) Deduction not allowed for self-employment tax 
     purposes.--The deduction allowable by reason of this section 
     shall not be taken into account in determining an 
     individual's net earnings from self-employment (within the 
     meaning of section 1402(a)) for purposes of chapter 2.''
       (b) Conforming Amendments.--
       (1) Subsection (l) of section 162 of such Code is hereby 
     repealed.
       (2) Subsection (a) of section 62 of such Code is amended by 
     inserting after paragraph (15) the following new item:
       ``(16) Health insurance costs of self-employed 
     individuals.--The deduction allowed by section 220 but only 
     to the extent that the amount of the deduction does not 
     exceed the taxpayer's earned income (as defined in section 
     401(c)(2)) for the taxable year.''
       (3) The table of sections for part VII of subchapter B of 
     chapter 1 of such Code is amended by striking the last item 
     and inserting the following new items:

``Sec. 220. Health insurance costs.
``Sec. 221. Cross reference.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
TITLE II--MODIFICATION OF RULES FOR NONRECOGNITION OF GAIN UNDER F.C.C. 
        TAX CERTIFICATE PROGRAM AND FOR INVOLUNTARY CONVERSIONS
     SEC. 201. LIMITATIONS ON NONRECOGNITION OF GAIN UNDER F.C.C. 
                   TAX CERTIFICATE PROGRAM.

       (a) In General.--Section 1071 of the Internal Revenue Code 
     of 1986 (relating to gain from sale or exchange to effectuate 
     policies of F.C.C.) is amended by redesignating subsection 
     (b) as subsection (c) and by inserting after subsection (a) 
     the following new subsection:
       ``(b) Limitations.--
       ``(1) In general.--Subsection (a) shall apply only if the 
     sale or exchange is a qualified telecommunications 
     transaction.
       ``(2) Limitation on amount of nonrecognition.--The amount 
     of gain which is not recognized under subsection (a) with 
     respect to a qualified telecommunications transaction (or a 
     series of related transactions) shall not exceed $50,000,000.
       ``(3) Qualified telecommunications transaction.--For 
     purposes of this subsection, the term `qualified 
     telecommunications transaction' means any sale or exchange of 
     property if--
       ``(A) the Commission certifies that the sale or exchange is 
     in furtherance of the Commission's Minority Ownership Policy, 
     and
       ``(B)(i) such property is owned by an eligible person at 
     all times during the 3-year period beginning on the date of 
     such sale or exchange, or
       ``(ii) if the property sold or exchanged was acquired by 
     the taxpayer by reason of a qualified contribution to the 
     capital of an eligible corporation or an eligible 
     partnership, such corporation or partnership was an eligible 
     person at all times during the 3-year period beginning on the 
     date of such contribution.
       ``(4) Eligible person.--For purposes of this subsection--
       ``(A) In general.--The term `eligible person' means--
       ``(i) any eligible individual,
       ``(ii) any eligible corporation, and
       ``(iii) any eligible partnership.
       ``(B) Eligible individual.--The term `eligible individual' 
     means any individual if an FCC tax certificate could have 
     been issued under the Commission's Minority Ownership Policy 
     for any sale or exchange of property to such individual.
       ``(C) Eligible corporation.--The term `eligible 
     corporation' means any corporation in which eligible 
     individuals directly or indirectly own--
       ``(i) stock possessing more than 50 percent of the total 
     voting power of the stock of such corporation, and
       ``(ii) stock having a value equal to more than 20 percent 
     of the total value of the stock of such corporation.
       ``(D) Eligible partnership.--The term `eligible 
     partnership' means any partnership in which eligible 
     individuals directly or indirectly--
       ``(i) have actual control of the partnership, and
       ``(ii) own partnership interests having a value equal to 
     more than 20 percent of the total value of the partnership 
     interests of such partnership.

[[Page H1934]]

       ``(5) Treatment of buy-sell arrangements, etc.--For 
     purposes of paragraphs (3) and (4)--
       ``(A) In general.--Property held by an eligible person 
     shall be treated as held by an ineligible person if--
       ``(i) an ineligible person has an option or other right to 
     acquire such property, or
       ``(ii) the eligible person has an option or other right to 
     require an ineligible person to acquire such property.
       ``(B) Treatment of warrants, etc.--If an ineligible person 
     holds a warrant, convertible security, or similar instrument 
     issued by any entity, such person shall be treated as holding 
     the interest in the entity which such person could have 
     acquired on the exercise of his rights under the instrument.
       ``(C) Ineligible person.--For purposes of this paragraph, 
     the term `ineligible person' means any person who is not an 
     eligible person.
       ``(6) Other definitions.--For purposes of this subsection--
       ``(A) FCC tax certificate.--The term `FCC tax certificate' 
     means any certificate of the Commission for the effectuation 
     of this section for purposes of carrying out the Commission's 
     Minority Ownership Policy.
       ``(B) Minority ownership policy.--The term `Minority 
     Ownership Policy' means the Commission's policy, as in effect 
     on January 16, 1995, to encourage ownership of 
     telecommunications facilities and licenses by women and 
     members of minority groups.
       ``(C) Qualified contribution to capital.--The term 
     `qualified contribution to capital' means any contribution to 
     the capital of an eligible corporation or an eligible 
     partnership pursuant to the contribution to capital 
     provisions of the Commission's Minority Ownership Policy.
       ``(D) Commission.--The term `Commission' means the Federal 
     Communications Commission.
       ``(7) Extension of statute of limitation.--
       ``(A) Deficiencies.--The statutory period for the 
     assessment of any deficiency attributable to any failure to 
     meet the requirements of paragraph (3)(B) shall not expire 
     before the close of the 3-year period beginning on the date 
     that the taxpayer certifies to the Secretary that such 
     requirements have been met, and such deficiency may be 
     assessed before the expiration of such 3-year period 
     notwithstanding the provisions of any law or rule of law 
     which would otherwise prevent such assessment.
       ``(B) Overpayments.--A refund or credit of any overpayment 
     of tax attributable to any failure to meet the requirements 
     of paragraph (3)(B) may be allowed or made (notwithstanding 
     the operation of any law or rule of law (including res 
     judicata)) if claim therefor is filed before the close of the 
     3-year period referred to in subparagraph (A).
       ``(8) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out the purposes 
     of this subsection, including regulations aggregating 
     transactions for purposes of paragraph (2).''
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to--
       (A) sales and exchanges on or after January 17, 1995, and
       (B) sales and exchanges before such date if the FCC tax 
     certificate with respect to such sale or exchange is issued 
     on or after such date.
       (2) Binding contracts.--
       (A) In general.--The amendments made by this section shall 
     not apply to any sale or exchange pursuant to a written 
     contract which was binding on January 16, 1995, and at all 
     times thereafter before the sale or exchange, if the FCC tax 
     certificate with respect to such sale or exchange was applied 
     for, or issued, on or before such date.
       (B) Sales contingent on issuance of certificate.--A 
     contract shall be treated as not binding for purposes of 
     subparagraph (A) if the sale or exchange pursuant to such 
     contract, or the material terms of such contract, were 
     contingent, at any time on January 16, 1995, on the issuance 
     of an FCC tax certificate. The preceding sentence shall not 
     apply if the FCC tax certificate for such sale or exchange is 
     issued on or before January 16, 1995.
       (3) FCC tax certificate.--For purposes of this subsection, 
     the term ``FCC tax certificate'' has the meaning given to 
     such term by section 1071(b) of the Internal Revenue Code of 
     1986, as amended by this section.

     SEC. 202. NONRECOGNITION ON INVOLUNTARY CONVERSIONS NOT TO 
                   APPLY IF REPLACEMENT PROPERTY ACQUIRED FROM 
                   RELATED PERSON.

       (a) In General.--Section 1033 of the Internal Revenue Code 
     of 1986 (relating to involuntary conversions) is amended by 
     redesignating subsection (i) as subsection (j) and by 
     inserting after subsection (h) the following new subsection:
       ``(i) Nonrecognition Not To Apply if Replacement Property 
     Acquired From Related Person.--Subsection (a) shall not apply 
     if the replacement property or stock acquired is acquired 
     from a related person. For purposes of the preceding 
     sentence, a person is related to another person if the 
     relationship between such persons would result in a 
     disallowance of losses under section 267 or 707(b).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to replacement property or stock acquired on or 
     after February 6, 1995.
                      TITLE III--REVENUE INCREASES
Subtitle A--Denial of Earned Income Credit for Individuals Having More 
                    Than $2,500 of Investment Income

     SEC. 301. DENIAL OF EARNED INCOME CREDIT FOR INDIVIDUALS 
                   HAVING MORE THAN $2,500 OF INVESTMENT INCOME.

       (a) In General.--Section 32 of the Internal Revenue Code of 
     1986 is amended by redesignating subsections (i) and (j) as 
     subsections (j) and (k), respectively, and by inserting after 
     subsection (h) the following new subsection:
       ``(i) Denial of Credit for Individuals Having More Than 
     $2,500 of Investment Income.--
       ``(1) In general.--No credit shall be allowed under 
     subsection (a) for the taxable year if the aggregate amount 
     of disqualified income of the taxpayer for such taxable year 
     exceeds $2,500.
       ``(2) Disqualified income.--For purposes of paragraph (1), 
     the term `disqualified income' means--
       ``(A) interest, dividends, rents, and royalties to the 
     extent includible in gross income for the taxable year, and
       ``(B) interest which is received or accrued during the 
     taxable year and which is exempt from tax.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
       Subtitle B--Provisions Relating to International Taxation
     SEC. 311. REVISION OF TAX RULES ON EXPATRIATION.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 877 the following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Citizens.--If any United States citizen relinquishes 
     his citizenship during a taxable year, all property held by 
     such citizen at the time immediately before such 
     relinquishment shall be treated as sold at such time for its 
     fair market value and any gain or loss shall be taken into 
     account for such taxable year.
       ``(2) Certain residents.--If any long-term resident of the 
     United States ceases to be subject to tax as a resident of 
     the United States for any portion of any taxable year, all 
     property held by such resident at the time of such cessation 
     shall be treated as sold at such time for its fair market 
     value and any gain or loss shall be taken into account for 
     the taxable year which includes the date of such cessation.
       ``(b) Exclusion for Certain Gain.--The amount which would 
     (but for this subsection) be includible in the gross income 
     of any taxpayer by reason of subsection (a) shall be reduced 
     (but not below zero) by $600,000.
       ``(c) Property Treated as Held.--For purposes of this 
     section, except as otherwise provided by the Secretary, an 
     individual shall be treated as holding--
       ``(1) all property which would be includible in his gross 
     estate under chapter 11 were such individual to die at the 
     time the property is treated as sold,
       ``(2) any other interest in a trust which the individual is 
     treated as holding under the rules of section 679(e) 
     (determined by treating such section as applying to foreign 
     and domestic trusts), and
       ``(3) any other interest in property specified by the 
     Secretary as necessary or appropriate to carry out the 
     purposes of this section.
       ``(d) Exceptions.--The following property shall not be 
     treated as sold for purposes of this section:
       ``(1) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the date the 
     individual relinquishes his citizenship or ceases to be 
     subject to tax as a resident, meet the requirements of 
     section 897(c)(2).
       ``(2) Interest in certain retirement plans.--
       ``(A) In general.--Any interest in a qualified retirement 
     plan (as defined in section 4974(d)), other than any interest 
     attributable to contributions which are in excess of any 
     limitation or which violate any condition for tax-favored 
     treatment.
       ``(B) Foreign pension plans.--
       ``(i) In general.--Under regulations prescribed by the 
     Secretary, interests in foreign pension plans or similar 
     retirement arrangements or programs.
       ``(ii) Limitation.--The value of property which is treated 
     as not sold by reason of this subparagraph shall not exceed 
     $500,000.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing his United States citizenship on the 
     date the United States Department of State issues to the 
     individual a certificate of loss of nationality or on the 
     date a court of the United States cancels a naturalized 
     citizen's certificate of naturalization.
       ``(2) Long-term resident.--
       ``(A) In general.--The term `long-term resident' means any 
     individual (other than a citizen of the United States) who is 
     a lawful permanent resident of the United States and, 
     [[Page H1935]] as a result of such status, has been subject 
     to tax as a resident in at least 10 taxable years during the 
     period of 15 taxable years ending with the taxable year 
     during which the sale under subsection (a) is treated as 
     occurring.
       ``(B) Special rule.--For purposes of subparagraph (A), 
     there shall not be taken into account--
       ``(i) any taxable year during which any prior sale is 
     treated under subsection (a) as occurring, or
       ``(ii) any taxable year prior to the taxable year referred 
     to in clause (i).
       ``(f) Termination of Deferrals, Etc.--On the date any 
     property held by an individual is treated as sold under 
     subsection (a)--
       ``(1) any period deferring recognition of income or gain 
     shall terminate, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply and the unpaid portion of such tax shall be due and 
     payable.
       ``(g) Election by Expatriating Residents.--Solely for 
     purposes of determining gain under subsection (a)--
       ``(1) In general.--At the election of a resident not a 
     citizen of the United States, property--
       ``(A) which was held by such resident on the date the 
     individual first became a resident of the United States 
     during the period of long-term residency to which the 
     treatment under subsection (a) relates, and
       ``(B) which is treated as sold under subsection (a),
     shall be treated as having a basis on such date of not less 
     than the fair market value of such property on such date.
       ``(2) Election.--Such an election shall apply to all 
     property described in paragraph (1), and, once made, shall be 
     irrevocable.
       ``(h) Deferral of Tax on Closely Held Business Interests.--
     The District Director may enter into an agreement with any 
     individual which permits such individual to defer payment for 
     not more than 5 years of any tax imposed by subsection (a) by 
     reason of holding any interest in a closely held business (as 
     defined in section 6166(b)) other than a United States real 
     property interest described in subsection (d)(1).
       ``(i) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.
       ``(j) Cross Reference.--

  ``For termination of United States citizenship for tax purposes, see 
section 7701(a)(47).''

       (b) Definition of Termination of United States 
     Citizenship.--Section 7701(a) of such Code is amended by 
     adding at the end the following new paragraph:
       ``(47) Termination of united states citizenship.--An 
     individual shall not cease to be treated as a United States 
     citizen before the date on which the individual's citizenship 
     is treated as relinquished under section 877A(e)(1).''
       (c) Conforming Amendments.--
       (1) Section 877 of such Code is amended by adding at the 
     end the following new subsection:
       ``(f) Termination.--This section shall not apply to any 
     individual who is subject to the provisions of section 
     877A.''
       (2) Paragraph (10) of section 7701(b) of such Code is 
     amended by adding at the end the following new sentence: 
     ``This paragraph shall not apply to any individual who is 
     subject to the provisions of section 877A.''
       (d) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 of such Code is 
     amended by inserting after the item relating to section 877 
     the following new item:

``Sec. 877A. Tax responsibilities of expatriation.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) United States citizens who relinquish (within the 
     meaning of section 877A(e)(1) of the Internal Revenue Code of 
     1986, as added by this section) United States citizenship on 
     or after February 6, 1995, and
       (2) long-term residents (as defined in such section) who 
     cease to be subject to tax as residents of the United States 
     on or after such date.

     SEC. 312. IMPROVED INFORMATION REPORTING ON FOREIGN TRUSTS.

       (a) In General.--Section 6048 of the Internal Revenue Code 
     of 1986 (relating to returns as to certain foreign trusts) is 
     amended to read as follows:
     ``SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN FOREIGN 
                   TRUSTS.

       ``(a) Notice of Certain Events.--
       ``(1) General rule.--On or before the 90th day (or such 
     later day as the Secretary may prescribe) after any 
     reportable event, the responsible party shall--
       ``(A) notify each trustee of the trust of the requirements 
     of subsection (b), and
       ``(B) provide written notice of such event to the Secretary 
     in accordance with paragraph (2).
       ``(2) Contents of notice.--The notice required by paragraph 
     (1)(B) shall contain such information as the Secretary may 
     prescribe, including--
       ``(A) the amount of money or other property (if any) 
     transferred to the trust in connection with the reportable 
     event,
       ``(B) the identity of the trust and of each trustee and 
     beneficiary (or class of beneficiaries) of the trust, and
       ``(C) a statement that each trustee of the trust has been 
     informed of the requirements of subsection (b).
       ``(3) Reportable event.--For purposes of this subsection, 
     the term `reportable event' means--
       ``(A) the creation of any foreign trust by a United States 
     person,
       ``(B) the transfer of any money or property to a foreign 
     trust by a United States person, including a transfer by 
     reason of death,
       ``(C) a domestic trust becoming a foreign trust,
       ``(D) the death of a citizen or resident of the United 
     States who is a grantor of a foreign trust, and
       ``(E) the residency starting date (within the meaning of 
     section 7701(b)(2)(A)) of a grantor of a foreign trust 
     subject to tax under section 679(a)(3).
     Subparagraphs (A) and (B) shall not apply with respect to a 
     trust described in section 404(a)(4) or 404A.
       ``(4) Responsible party.--For purposes of this subsection, 
     the term `responsible party' means--
       ``(A) the grantor in the case of a reportable event 
     described in subparagraph (A) or (E) of paragraph (3),
       ``(B) the transferor in the case of a reportable event 
     described in paragraph (3)(B) other than a transfer by reason 
     of death,
       ``(C) the trustee of the domestic trust in the case of a 
     reportable event described in paragraph (3)(C), and
       ``(D) the executor of the decedent's estate in the case of 
     a transfer by reason of death.
       ``(b) Trust Reporting Requirements.--If a foreign trust, at 
     any time during a taxable year of such trust--
       ``(1) has a grantor who is a United States person and--
       ``(A) such grantor is treated as the owner of any portion 
     of such trust under the rules of subpart E of part I of 
     subchapter J of chapter 1, or
       ``(B) any portion of such trust would be included in the 
     gross estate of such grantor if the grantor were to die at 
     such time, or
       ``(2) directly or indirectly distributes, credits, or 
     allocates money or property to any United States person 
     (whether or not the trust has a grantor described in 
     paragraph (1)),

     then such trust shall meet the requirements of subsection (c) 
     (relating to trust information and agent) and subsection (d) 
     (relating to annual return).
       ``(c) Contents of Section 6048 Statement.--
       ``(1) In general.--The requirements of this subsection are 
     met if the trust files with the Secretary a statement which 
     contains such information as the Secretary may prescribe and 
     which--
       ``(A) identifies a United States person who is the trust's 
     limited agent to provide the Secretary with such information 
     that reasonably should be available to the trust for purposes 
     of applying sections 7602, 7603, and 7604 with respect to any 
     request by the Secretary to examine trust records or produce 
     testimony related to any transaction by the trust or with 
     respect to any summons by the Secretary for such records or 
     testimony, and
       ``(B) contains an agreement to comply with the requirements 
     of subsection (d).
       ``(2) Special rule.--A foreign trust which appoints an 
     agent described in paragraph (1)(A) shall not be considered 
     to have an office or a permanent establishment in the United 
     States solely because of the activities of such agent 
     pursuant to this section. For purposes of this section, the 
     appearance of persons or production of records by reason of 
     the creation of the agency shall not subject such persons or 
     records to legal process for any purpose other than 
     determining the correct treatment under this title of the 
     activities and operations of the trust.
       ``(d) Annual Returns and Statements.--The requirements of 
     this subsection are met if--
       ``(1) the trust makes a return for the taxable year which 
     sets forth a full and complete accounting of all trust 
     activities and operations for the taxable year, and contains 
     such other information as the Secretary may prescribe; and
       ``(2) the trust furnishes such information as the Secretary 
     may prescribe to each United States person--
       ``(A) who is treated as the owner of any portion of such 
     trust under the rules of subpart E of part I of subchapter J 
     of chapter 1,
       ``(B) to whom any item with respect to the taxable year is 
     credited or allocated, or
       ``(C) who receives a distribution from such trust with 
     respect to the taxable year.
       ``(e) Time and Manner of Filing Information.--Any notice, 
     statement, or return required under this section shall be 
     made at such time and in such manner as the Secretary shall 
     prescribe.
       ``(f) Modification of Return Requirements.--Secretary is 
     authorized to suspend or modify any requirement of this 
     section if the Secretary determines that the United States 
     has no significant tax interest in obtaining the required 
     information.''
       (b) Penalties.--Section 6677 of such Code (relating to 
     failure to file information returns with respect to certain 
     foreign trusts) is amended to read as follows:

     ``SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT TO 
                   CERTAIN FOREIGN TRUSTS.

       ``(a) Failure To Report Certain Events.--
       ``(1) In general.--In the case of a reportable event 
     described in any subparagraph of section 6048(a)(3) for which 
     a responsible party does not file a written notice meeting 
     the requirements of section 6048(a)(2) within the time 
     specified in section 6048(a)(1), the responsible party shall 
     pay a penalty of 
     [[Page H1936]] $10,000. If any failure described in the 
     preceding sentence continues for more than 90 days after the 
     day on which the Secretary mails notice of such failure to 
     the responsible party, such party shall pay a penalty (in 
     addition to the $10,000 amount) of $10,000 for each 30-day 
     period (or fraction thereof) during which such failure 
     continues after the expiration of such 90-day period.
       ``(2) 35-percent penalty.--In the case of a reportable 
     event described in subparagraph (A), (B), or (C) of section 
     6048(a)(3) (other than a transfer by reason of death), the 
     aggregate amount of the penalties under paragraph (1) shall 
     not be less than an amount equal to 35 percent of the gross 
     value of the property involved in such event (determined as 
     of the date of the event).
       ``(3) Responsible Party.--For purposes of this subsection, 
     the term `responsible party' has the meaning given to such 
     term by section 6048(a)(4).
       ``(b) Failure To Make Certain Statements and Returns.--
       ``(1) In general.--In the case of any failure to meet the 
     requirements of section 6048(b), the appropriate tax 
     treatment of any trust transactions or operations shall be 
     determined by the Secretary in the Secretary's sole 
     discretion from the Secretary's own knowledge or from such 
     information as the Secretary may obtain through testimony or 
     otherwise.
       ``(2) Monetary penalty.--In the case of any failure to meet 
     the requirements of section 6048(b) with respect to a trust 
     described in such section by reason of paragraph (1) thereof, 
     the grantor described in such paragraph (1) shall pay a 
     penalty of $10,000 for each taxable year with respect to 
     which the foreign trust fails to meet such requirements. If 
     any failure described in the preceding sentence continues for 
     more than 90 days after the day on which the Secretary mails 
     notice of such failure to such grantor, such grantor shall 
     pay a penalty (in addition to any other penalty) of $10,000 
     for each 30-day period (or fraction thereof) during which 
     such failure continues after the expiration of such 90-day 
     period.
       ``(c) Reasonable Cause Exception.--No penalty shall be 
     imposed by this section on any failure which is shown to be 
     due to reasonable cause and not due to willful neglect. The 
     fact that a foreign jurisdiction would impose a civil or 
     criminal penalty on the taxpayer (or any other person) for 
     disclosing the requested documentation is not reasonable 
     cause.
       ``(d) Deficiency Procedures Not To Apply.--Subchapter B of 
     chapter 63 (relating to deficiency procedures for income, 
     estate, gift, and certain excise taxes) shall not apply in 
     respect of the assessment or collection of any penalty 
     imposed by this section.''
       (c) Clerical Amendments.--
       (1) The table of sections for subpart B of part III of 
     subchapter A of chapter 61 of such Code is amended by 
     striking the item relating to section 6048 and inserting the 
     following new item:

``Sec. 6048. Information with respect to certain foreign trusts.''

       (2) The table of sections for part I of subchapter B of 
     chapter 68 of such Code is amended by striking the item 
     relating to section 6677 and inserting the following new 
     item:

``Sec. 6677. Failure to file information with respect to certain 
              foreign trusts.''

       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply--
       (A) to reportable events occurring on or after February 6, 
     1995, and
       (B) to the extent such amendments require reporting for any 
     taxable year under section 6048(b) of the Internal Revenue 
     Code of 1986 (as added by this section), to taxable years 
     beginning after the date of the enactment of this Act.
       (2) Notices.--For purposes of section 6048(a) of such Code, 
     the 90th day referred to therein shall in no event be treated 
     as being earlier than the 90th day after the date of the 
     enactment of this Act.
     SEC. 313. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS 
                   HAVING ONE OR MORE UNITED STATES BENEFICIARIES.

       (a) In General.--Section 679 of the Internal Revenue Code 
     of 1986 (relating to foreign trusts having one or more United 
     States beneficiaries) is amended to read as follows:
     ``SEC. 679. FOREIGN TRUSTS HAVING ONE OR MORE UNITED STATES 
                   BENEFICIARIES.

       ``(a) Transferor Treated as Owner.--
       ``(1) In general.--A United States person who directly or 
     indirectly transfers property to a foreign trust (other than 
     a trust described in section 404(a)(4) or section 404A) shall 
     be treated as the owner for his taxable year of the portion 
     of such trust attributable to such property if for such year 
     there is a United States beneficiary of such trust.
       ``(2) Exception.--
       ``(A) In general.--Paragraph (1) shall not apply to any 
     sale or exchange of property to a trust if--
       ``(i) the trust pays fair market value for such property, 
     and
       ``(ii) all of the gain to the transferor is recognized at 
     the time of transfer.
       ``(B) Certain obligations not taken into account.--For 
     purposes of subparagraph (A), in determining whether the 
     transferor received fair market value, there shall not be 
     taken into account--
       ``(i) any obligation of--

       ``(I) the trust,
       ``(II) any grantor or beneficiary of the trust, or
       ``(III) any person who is related (within the meaning of 
     section 643(i)(3)) to any grantor or beneficiary of the 
     trust, and

       ``(ii) except as provided in regulations, any obligation 
     which is guaranteed by a person described in clause (i).
       ``(C) Treatment of deemed sale election under section 
     1057.--For purposes of subparagraph (A), a transfer with 
     respect to which an election under section 1057 is made shall 
     not be treated as a sale or exchange.
       ``(3) Special rules applicable to foreign grantor who later 
     becomes a united states person.--A nonresident alien 
     individual who becomes a United States resident within 5 
     years after directly or indirectly transferring property to a 
     foreign trust shall be treated for purposes of this section 
     and section 6048 as having transferred such property, and any 
     undistributed income (including all realized and unrealized 
     gains) attributable thereto, to the foreign trust immediately 
     after becoming a United States resident. For this purpose, a 
     nonresident alien shall be treated as becoming a resident of 
     the United States on the residency starting date (within the 
     meaning of section 7701(b)(2)(A)).
       ``(b) Beneficiaries Treated as Transferors in Certain 
     Cases.--For purposes of this section and section 6048, if--
       ``(1) a citizen or resident of the United States who is 
     treated as the owner of any portion of a trust under 
     subsection (a) dies,
       ``(2) property is transferred to a foreign trust by reason 
     of the death of a citizen or resident of the United States, 
     or
       ``(3) a domestic trust to which any United States person 
     made a transfer becomes a foreign trust,

     then, except as otherwise provided in regulations, the trust 
     beneficiaries shall be treated as having transferred to such 
     trust (as of the date of the applicable event under paragraph 
     (1), (2), or (3)) their respective interests (as determined 
     under subsection (e)) in the property involved.
       ``(c) Trusts Acquiring United States Beneficiaries.--If--
       ``(1) subsection (a) applies to a trust for the 
     transferor's taxable year, and
       ``(2) subsection (a) would have applied to the trust for 
     the transferor's immediately preceding taxable year but for 
     the fact that for such preceding taxable year there was no 
     United States beneficiary for any portion of the trust,

     then, for purposes of this subtitle, the transferor shall be 
     treated as having received as an accumulation distribution 
     taxable under subpart D an amount equal to the undistributed 
     net income (as determined under section 665(a) as of the 
     close of such immediately preceding taxable year) 
     attributable to the portion of the trust referred to in 
     subsection (a).
       ``(d) Trusts Treated as Having a United States 
     Beneficiary.--
       ``(1) In general.--For purposes of this section, a trust 
     shall be treated as having a United States beneficiary for 
     the taxable year unless--
       ``(A) under the terms of the trust, no part of the income 
     or corpus of the trust may be paid or accumulated during the 
     taxable year to or for the benefit of a United States person, 
     and
       ``(B) if the trust were terminated at any time during the 
     taxable year, no part of the income or corpus of such trust 
     could be paid to or for the benefit of a United States 
     person.

     To the extent provided by the Secretary, for purposes of this 
     subsection, the term `United States person' includes any 
     person who was a United States person at any time during the 
     existence of the trust.
       ``(2) Attribution of ownership.--For purposes of paragraph 
     (1), an amount shall be treated as paid or accumulated to or 
     for the benefit of a United States person if such amount is 
     paid to or accumulated for a foreign corporation, foreign 
     partnership, or foreign trust or estate, and--
       ``(A) in the case of a foreign corporation, more than 50 
     percent of the total combined voting power of all classes of 
     stock of such corporation entitled to vote is owned (within 
     the meaning of section 958(a)) or is considered to be owned 
     (within the meaning of section 958(b)) by United States 
     shareholders (as defined in section 951(b)),
       ``(B) in the case of a foreign partnership, a United States 
     person is a partner of such partnership, or
       ``(C) in the case of a foreign trust or estate, such trust 
     or estate has a United States beneficiary (within the meaning 
     of paragraph (1)).
       ``(e) Determination of Beneficiaries' Interests in Trust.--
       ``(1) General rule.--For purposes of this section, a 
     beneficiary's interest in a foreign trust shall be based upon 
     all relevant facts and circumstances, including the terms of 
     the trust instrument and any letter of wishes or similar 
     document, historical patterns of trust distributions, and the 
     existence of and functions performed by a trust protector or 
     any similar advisor.
       ``(2) Special rule.--In the case of beneficiaries whose 
     interests in a trust cannot be determined under paragraph 
     (1)--
       ``(A) the beneficiary having the closest degree of kinship 
     to the grantor shall be treated as holding the remaining 
     interests in the 
     [[Page H1937]] trust not determined under paragraph (1) to be 
     held by any other beneficiary, and
       ``(B) if 2 or more beneficiaries have the same degree of 
     kinship to the grantor, such remaining interests shall be 
     treated as held equally by such beneficiaries.
       ``(3) Constructive ownership.--If a beneficiary of a 
     foreign trust is a corporation, partnership, trust, or 
     estate, the shareholders, partners, or beneficiaries shall be 
     deemed to be the trust beneficiaries for purposes of this 
     section.
       ``(4) Taxpayer return position.--A taxpayer shall clearly 
     indicate on its income tax return--
       ``(A) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(B) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''
       (b) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years ending on or after February 6, 1995.
       (2) Section 679(a).--Paragraphs (2) and (3) of section 
     679(a) of the Internal Revenue Code of 1986 (as added by this 
     section) shall apply to--
       (A) any trust created on or after February 6, 1995, and
       (B) the portion of any trust created before such date which 
     is attributable to actual transfers of property to the trust 
     on or after such date.
       (3) Section 679(b).--
       (A) In general.--Paragraphs (1) and (2) of section 679(b) 
     of such Code (as so added) shall apply to--
       (i) any trust created on or after the date of the enactment 
     of this Act, and
       (ii) the portion of any trust created before such date 
     which is attributable to actual transfers of property to the 
     trust on or after such date.
       (B) Section 679(b)(3).--Section 679(b)(3) of such Code (as 
     so added) shall take effect on February 6, 1995, without 
     regard to when the property was transferred to the trust.
     SEC. 314. FOREIGN PERSONS NOT TO BE TREATED AS OWNERS UNDER 
                   GRANTOR TRUST RULES.

       (a) In General.--So much of section 672(f) of the Internal 
     Revenue Code of 1986 (relating to special rule where grantor 
     is foreign person) as precedes paragraph (2) is amended to 
     read as follows:
       ``(f) Subpart Not To Result in Foreign Ownership.--
       ``(1) In general.--Notwithstanding any other provision of 
     this subpart, this subpart shall apply only to the extent 
     such application results in an amount being included 
     (directly or through 1 or more entities) in the gross income 
     of a citizen or resident of the United States or a domestic 
     corporation. The preceding sentence shall not apply to any 
     portion of an investment trust if such trust is treated as a 
     trust for purposes of this title and the grantor of such 
     portion is the sole beneficiary of such portion.''
       (b) Credit for Certain Taxes.--Paragraph (2) of section 
     665(d) of such Code is amended by adding at the end the 
     following new sentence: ``Under rules or regulations 
     prescribed by the Secretary, in the case of any foreign trust 
     of which the settlor or another person would be treated as 
     owner of any portion of the trust under subpart E but for 
     section 672(f), the term `taxes imposed on the trust' 
     includes the allocable amount of any income, war profits, and 
     excess profits taxes imposed by any foreign country or 
     possession of the United States on the settlor or such other 
     person in respect of trust income.''
       (c) Distributions by Certain Foreign Trusts Through 
     Nominees.--
       (1) Section 643 of such Code is amended by adding at the 
     end the following new subsection:
       ``(h) Distributions by Certain Foreign Trusts Through 
     Nominees.--For purposes of this part, any amount paid to a 
     United States person which is derived directly or indirectly 
     from a foreign trust of which the payor is not the grantor 
     shall be deemed in the year of payment to have been directly 
     paid by the foreign trust to such United States person.''
       (2) Section 665 of such Code is amended by striking 
     subsection (c).
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.
       (e) Transitional Rule.--If--
       (1) by reason of the amendments made by this section, any 
     person other than a United States person ceases to be treated 
     as the owner of a portion of a domestic trust, and
       (2) before January 1, 1996, such trust becomes a foreign 
     trust, or the assets of such trust are transferred to a 
     foreign trust,
     no tax shall be imposed by section 1491 of the Internal 
     Revenue Code of 1986 by reason of such trust becoming a 
     foreign trust or the assets of such trust being transferred 
     to a foreign trust.
     SEC. 315. GRATUITOUS TRANSFERS BY PARTNERSHIPS AND FOREIGN 
                   CORPORATIONS.

       (a) In General.--Subchapter C of chapter 80 of the Internal 
     Revenue Code of 1986 (relating to provisions affecting more 
     than one subtitle) is amended by adding at the end the 
     following new section:
     ``SEC. 7874. PURPORTED GIFTS BY PARTNERSHIPS AND FOREIGN 
                   CORPORATIONS.

       ``(a) In General.--Any property (including money) that is 
     purportedly a direct or indirect gift by a partnership or a 
     foreign corporation to a person who is not a partner of the 
     partnership or a shareholder of the corporation, 
     respectively, may be recharacterized by the Secretary to 
     prevent the avoidance of tax. The Secretary may not 
     recharacterize gifts made for bona fide business or 
     charitable purposes.
       ``(b) Statements on Recipient's Return.--A taxpayer who 
     receives a purported gift subject to subsection (a) shall 
     attach a statement to his income tax return for the year of 
     receipt that identifies the property received and describes 
     fully the circumstances surrounding the purported gift.
       ``(c) Exemption.--Subsection (a) shall not apply to 
     purported gifts received by any person during any taxable 
     year if the amount thereof is less than $2,500.
       ``(d) Regulations.--The Secretary may prescribe such rules 
     as may be necessary or appropriate to carry out the purposes 
     of this section.''
       (b) Clerical Amendment.--The table of sections for such 
     subchapter C of such Code is amended by adding at the end the 
     following new item:

``Sec. 7874. Purported gifts by partnerships and foreign 
              corporations.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts received after the date of the 
     enactment of this Act.
     SEC. 316. INFORMATION REPORTING REGARDING LARGE FOREIGN 
                   GIFTS.

       (a) In General.--Subpart A of part III of subchapter A of 
     chapter 61 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 6039E the following new section:

     ``SEC. 6039F. NOTICE OF LARGE GIFTS RECEIVED FROM FOREIGN 
                   PERSONS.

       ``(a) In General.--If the value of the aggregate foreign 
     gifts received by a United States person (other than an 
     organization described in section 501(c) and exempt from tax 
     under section 501(a)) during any taxable year exceeds 
     $100,000, such United States person shall furnish (at such 
     time and in such manner as the Secretary shall prescribe) 
     such information as the Secretary may prescribe regarding 
     each foreign gift received during such year.
       ``(b) Foreign Gift.--For purposes of this section, the term 
     `foreign gift' means any amount received from a person other 
     than a United States person which the recipient treats as a 
     gift or bequest. Such term shall not include any qualified 
     transfer (within the meaning of section 2503(e)(2)).
       ``(c) Penalty For Failure To File Information.--
       ``(1) In general.--If a United States person fails to 
     furnish the information required by subsection (a) with 
     respect to any foreign gift within the time prescribed 
     therefor (including extensions)--
       ``(A) the tax consequences of the receipt of such gift 
     shall be determined by the Secretary in the Secretary's sole 
     discretion from the Secretary's own knowledge or from such 
     information as the Secretary may obtain through testimony or 
     otherwise, and
       ``(B) such United States person shall pay (upon notice and 
     demand by the Secretary and in the same manner as tax) an 
     amount equal to 5 percent of the amount of such foreign gift 
     for each month for which the failure continues (not to exceed 
     25 percent of such amount in the aggregate).
       ``(2) Reasonable cause exception.--Paragraph (1) shall not 
     apply to any failure to report a foreign gift if the United 
     States person shows that the failure is due to reasonable 
     cause and not due to willful neglect.
       ``(d) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''.
       (b) Clerical Amendment.--The table of sections for such 
     subpart is amended by inserting after the item relating to 
     section 6039E the following new item:

``Sec. 6039F. Notice of large gifts received from foreign persons.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts received after the date of the 
     enactment of this Act in taxable years ending after such 
     date.
     SEC. 317. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS 
                   WHICH ARE NOT GRANTOR TRUSTS.

       (a) Modification of Interest Charge on Accumulation 
     Distributions.--Subsection (a) of section 668 of the Internal 
     Revenue Code of 1986 (relating to interest charge on 
     accumulation distributions from foreign trusts) is amended to 
     read as follows:
       ``(a) General Rule.--For purposes of the tax determined 
     under section 667(a)--
       ``(1) Sum of interest charges for each throwback year.--The 
     interest charge (determined under paragraph (2)) with respect 
     to any distribution is the sum of the interest charges for 
     each of the throwback years to which such distribution is 
     allocated under section 666(a).
       ``(2) Interest charge for year.--Except as provided in 
     paragraph (6), the interest charge for any throwback year on 
     such year's allocable share of the partial tax computed under 
     section 667(b) with respect to any distribution shall be 
     determined for the period--
     [[Page H1938]]   ``(A) beginning on the due date for the 
     throwback year, and
       ``(B) ending on the due date for the taxable year of the 
     distribution,
     by using the rates and method applicable under section 6621 
     for underpayments of tax for such period. For purposes of the 
     preceding sentence, the term `due date' means the date 
     prescribed by law (determined without regard to extensions) 
     for filing the return of the tax imposed by this chapter for 
     the taxable year.
       ``(3) Allocable partial tax.--For purposes of paragraph 
     (2), a throwback year's allocable share of the partial tax is 
     an amount equal to such partial tax multiplied by the 
     fraction--
       ``(A) the numerator of which is the amount deemed by 
     section 666(a) to be distributed on the last day of such 
     throwback year, and
       ``(B) the denominator of which is the accumulation 
     distribution taken into account under section 666(a).
       ``(4) Throwback year.--For purposes of this subsection, the 
     term `throwback year' means any taxable year to which a 
     distribution is allocated under section 666(a).
       ``(5) Periods of nonresidence.--The period under paragraph 
     (2) shall not include any portion thereof during which the 
     beneficiary was not a citizen or resident of the United 
     States.
       ``(6) Throwback years before 1996.--In the case of any 
     throwback year beginning before 1996--
       ``(A) interest for the portion of the period described in 
     paragraph (2) which occurs before the first taxable year 
     beginning after 1995 shall be determined by using an interest 
     rate of 6 percent and no compounding, and
       ``(B) interest for the remaining portion of such period 
     shall be determined as if the partial tax computed under 
     section 667(b) for the throwback year were increased (as of 
     the beginning of such first taxable year) by the amount of 
     the interest determined under subparagraph (A).''
       (b) Rule When Information Not Available.--Subsection (d) of 
     section 666 of such Code is amended by adding at the end the 
     following: ``In the case of a distribution from a foreign 
     trust to which section 6048(b) applies, adequate records 
     shall not be considered to be available for purposes of the 
     preceding sentence unless such trust meets the requirements 
     referred to in such section. If a taxpayer is not able to 
     demonstrate when a trust was created, the Secretary may use 
     any reasonable approximation based on available evidence.''
       (c) Abusive Transactions.--Section 643(a) of such Code is 
     amended by inserting after paragraph (6) the following new 
     paragraph:
       ``(7) Abusive transactions.--The Secretary shall prescribe 
     such regulations as may be necessary or appropriate to carry 
     out the purposes of this part, including regulations to 
     prevent avoidance of such purposes.''
       (d) Treatment of Use of Trust Property.--Section 643 of 
     such Code (relating to definitions applicable to subparts A, 
     B, C, and D) is amended by adding at the end the following 
     new subsection:
       ``(i) Use of Foreign Trust Property.--
       ``(1) General rule.--For purposes of subparts B, C, and D, 
     if, during a taxable year of a foreign trust a trust 
     participant of such trust directly or indirectly uses any of 
     the trust's property, the use value for such taxable year 
     shall be treated as an amount paid to such participant (other 
     than from income for the taxable year) within the meaning of 
     sections 661(a)(2) and section 662(a)(2).
       ``(2) Exemption.--Paragraph (1) shall not apply to any 
     trust participant as to whom the aggregate use value during 
     the taxable year does not exceed $2,500.
       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Use value.--Except as provided in subparagraph (B), 
     the term `use value' means the fair market value of the use 
     of property reduced by any amount paid for such use by the 
     trust participant or by any person who is related to such 
     participant.
       ``(B) Special rule for cash and cash equivalent.--A direct 
     or indirect loan of cash, or cash equivalent, by a foreign 
     trust shall be treated as a use of trust property by the 
     borrower and the full amount of the loan principal shall be 
     the use value.
       ``(C) Use by related party.--
       ``(i) Use by a person who is related to a trust participant 
     shall be treated as use by the participant.
       ``(ii) If property is used by any person who is a related 
     person with respect to more than one trust participant, then 
     the property shall be treated as used by the trust 
     participant most closely related, by blood or otherwise, to 
     such person.
       ``(D) Property includes cash and cash equivalents.--The 
     term `property' includes cash and cash equivalents.
       ``(E) Trust participant.--The term `trust participant' 
     means each grantor and beneficiary of the trust.
       ``(F) Related person.--A person is related to a trust 
     participant if the relationship between such persons would 
     result in a disallowance of losses under section 267(b) or 
     707(b). In applying section 267 for purposes of the preceding 
     sentence--
       ``(i) section 267(e) shall be applied as if such person or 
     the trust participant were a pass-thru entity,
       ``(ii) section 267(b) shall be applied by substituting `at 
     least 10 percent' for `more than 50 percent' each place it 
     appears, and
       ``(iii) in determining the family of an individual under 
     section 267(c)(4), such section shall be treated as including 
     the spouse (and former spouse) of such individual and of each 
     other person who is treated under such section as being a 
     member of the family of such individual or spouse.
       ``(G) Subsequent transactions regarding loan principal.--If 
     any loan described in subparagraph (B) is taken into account 
     under paragraph (1), any subsequent transaction between the 
     trust and the original borrower regarding the principal of 
     the loan (by way of complete or partial repayment, 
     satisfaction, cancellation, discharge, or otherwise) shall be 
     disregarded for purposes of this title.''
       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after the date of the enactment of this Act.
       (2) Interest charge.--The amendment made by subsection (a) 
     shall apply to interest for throwback years beginning before, 
     on, or after the date of the enactment of this Act.
     SEC. 318. RESIDENCE OF ESTATES AND TRUSTS.

       (a) Treatment as United States Person.--Paragraph (30) of 
     section 7701(a) of the Internal Revenue Code of 1986 is 
     amended by striking subparagraph (D) and by inserting after 
     subparagraph (C) the following:
       ``(D) any estate or trust if--
       ``(i) a court within the United States is able to exercise 
     primary supervision over the administration of the estate or 
     trust, and
       ``(ii) in the case of a trust, one or more United States 
     fiduciaries have the authority to control all substantial 
     decisions of the trust.''
       (b) Conforming Amendment.--Paragraph (31) of section 
     7701(a) of such Code is amended to read as follows:
       ``(31) Foreign estate or trust.--The term `foreign estate' 
     or `foreign trust' means any estate or trust other than an 
     estate or trust described in section 7701(a)(30)(D).''
       (c) Effective Date.--The amendments made by this section 
     shall apply--
       (1) to taxable years beginning after December 31, 1996, and
       (2) at the election of the trustee of a trust, to taxable 
     years beginning after the date of the enactment of this Act 
     and on or before December 31, 1996.
     Such an election, once made, shall be irrevocable.
                                                                    ____

  The CHAIRMAN. The gentleman from Washington [Mr. McDermott] will be 
recognized for 30 minutes, and the gentleman from Texas [Mr. Archer] 
will be recognized for 30 minutes.
  The Chair recognizes the gentleman from Washington [Mr. McDermott].
  Mr. McDERMOTT. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, you have heard a lot of talk today about fairness. The 
amendment I propose today is as simple as it is fair. It simply extends 
to employees who must buy their own health insurance exactly the same 
tax deduction that the majority has proposed for the self-employed.
  In other words, it gives employees the same 25-percent deduction of 
the cost of health insurance that the Contract on America offers to 
employers.
  Now, how can Congress justify giving a deduction to small employers, 
but not to the people who work for small employers? Would you give a 
tax break to a self-employed lawyer who must buy his own health 
insurance, but not to his secretary who works for the lawyer and who 
also must buy his or her own insurance? Both are engaged in exactly the 
same conduct of purchasing health insurance. Providing tax incentives 
to purchase health insurance serves the same policy goals for both 
employers and employees.
  For many, this tax deduction will be the difference between being 
able to afford health insurance and not. To provide a deduction for the 
employer but not for the employee cannot be defended. We must be the 
Congress of all the people.
  The question you ask then is how do we pay for it? How do we pay for 
those hard-working Americans who are shut out by the Republican 
proposal?
                              {time}  1945

  The lion's share of the money to pay for the employee getting the 
same deduction as their employers comes from changing the capital gains 
tax rules on Americans who renounce their citizenship for tax purposes. 
What better way could there be to enable hard-working, patriotic 
Americans to purchase health insurance than by increasing the capital 
gains on extraordinarily wealthy individuals who renounce this country?
  Certainly, Mr. Chairman, no one can vote to protect tax breaks for 
those who turn their backs on America. The remainder of the money comes 
from changing the tax rules on foreign 
[[Page H1939]] trusts and on reforming the FCC minority ownership 
program Members have heard talked about.
  The reform of the FCC program will assure that the original purpose 
of the incentive program is fulfilled, to encourage the communications 
industry to sell minority businesses interested in entering the 
communications field. When this program started in 1978, less than a 
half of a percent of broadcasts were done by minorities. Today we are 
up to 3 percent. It is not a perfect program, but it has worked.
  To assure the long-term viability of this program, my substitute caps 
the amount of the capital gain deferral each transaction can receive at 
$50 million.
  This reform in the FCC program preserves the highest goals of equal 
opportunity and retains an incentive, this word ``incentive,'' that 
great market tool consistently advocated by the Speaker and the 
majority leader and the whole majority, an incentive to develop new 
business opportunities.
  The total elimination of the FCC program initiated at the last minute 
by the chairman of the Committee on Ways and Means has nothing to do 
with the ostensible purpose of H.R. 831, whichever everyone on this 
floor agrees with, which is to provide a tax deduction to enable people 
to buy insurance on their own.
  The overriding purpose of this amendment is to return the bill to its 
original purpose, one which would give a unanimous vote and include 
hard-working employees who do not get health insurance through their 
jobs.
  The number of Americans without health insurance increased by 1 
million last year, mainly because more employers either dropped health 
insurance or failed to offer it.
  The number of employees offering health insurance has been steadily 
declining since 1980. Nobody on this floor should have any illusions 
that these deductions to employers and employees will solve the 
overwhelming problem we have.
  At best, it is a lottery, whether anybody could actually buy 
insurance as an individual. But these deductions give people a small 
margin that enables them to hold onto some health insurance until the 
Congress, as we are promised by the gentleman from California [Mr. 
Thomas] and others, will be ready to address the fundamental problem of 
health insurance.
  I hope we can show the American people that every Member of the House 
will act today to assure that all Americans who cannot obtain health 
insurance through their job will get a 25-percent deduction to assist 
their own efforts to insure themselves. The line drawn by this bill 
between employers and employees as proposed is a false one and cannot 
be defended. For that reason, I have offered this amendment.
  Mr. Chairman, I reserve the balance of my time.
  Mr. ARCHER. Mr. Chairman, I rise in opposition to the amendment.
  The CHAIRMAN. The gentleman from Texas [Mr. Archer] is recognized for 
30 minutes.
  Mr. ARCHER. Mr. Chairman, I yield myself 4 minutes.
  Mr. Chairman, the McDermott substitute would continue the FCC's 
policy of promoting minority ownership of broadcast facilities through 
special individualized tax breaks for millionaire sellers of those 
facilities. This loophole of up to $17 million per seller under the 
McDermott amendment has no justifiable place in the tax code and cries 
out for repeal.
  In essence, the FCC awards or denies tax benefits based on the race 
or ethnic background of the buyer. This is wrong. Tax benefits should 
not be conditioned on classifications such as race or ethnicity. Our 
Nation's tax laws should be, as I am, color blind.
  Those supporting the McDermott substitute argue that repeal of 
section 1071 represents, and I quote them, ``the driving of a wedge 
within our society between people based on racial and ethnic grounds.''
  But is that not exactly what the FCC minority policies do? The 
minorities favored under the FCC tax certificate program are black, 
Hispanic, Asian, Alaska Natives and American Indians. Does it make any 
sense
 for our tax laws to be used to favor one person because he is African 
American or Asian while disfavoring another because he is white? Does 
this not in fact drive a wedge in our society between people based on 
racial and ethnic grounds?

  Under the FCC's policies, a family descended from Spanish Jews, 
forced from Spain in 1492 by Ferdinand and Isabella, thereby qualified 
for the minority tax certificate program because they were judged by 
the FCC to be Hispanic. Yet non-Hispanic Jewish Americans perhaps 
driven from Europe by the Holocaust do not qualify. Is this not exactly 
the kind of racial and ethnic wedge the proponents of section 1071 say 
they are worried about? But McDermott would continue this. What is a 
minority? Should the FCC look into the family tree as to the ancestors 
of every American before determining whether they qualify or not?
  The FCC minority tax certificate program is not even needs based. 
Indeed some of the minority investors who have reportedly benefited 
from the program are millionaires like Oprah Winfrey, Bill Cosby, and 
Dave Winfield. You cannot convince me that radio and TV station owners 
will not sell to these individuals without the benefit of a special 
rifle shot tax loophole.
  Unfortunately, despite the progress that has been made in recent 
decades, yes, there still can be discrimination in our society. And I 
strongly believe that remedies must be available to provide redress to 
individuals who experience discrimination because of their race. But 
the discrimination inherent in the FCC's minority ownership policy is 
not intended to remedy racial discrimination. In fact, the FCC has 
never claimed that there was any discrimination in the allocation of 
radio or TV licenses.
  Does the FCC believe there is a particular minority viewpoint that 
will be expressed only by minority owners? Such a concept implies that 
people's thoughts and views are based on the color of their skin, a 
concept which I would have thought most Americans would find offensive 
today.
  Greater minority participation in all of the bounty our Nation has to 
offer is a goal shared by every Member of Congress, but the way to 
achieve that goal is not by giving special preference to some at the 
expense of opportunity to others.
  Programs which try to achieve an ideal racial mix in ownership of 
businesses by discriminating in the name of anti-discrimination are 
doomed to failure.
  I urge a vote against the McDermott substitute.
  Mr. Chairman, I reserve the balance of my time.
  Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from 
Florida [Mr. Diaz-Balart].
  Mr. DIAZ-BALART. Mr. Chairman, I thank the gentleman from Washington 
for yielding time to me.
  This is obviously a very serious issue. It is an issue that is not to 
be taken lightly, and I have extraordinary respect for Members on both 
sides of this issue.
  I think that what we are facing here really is something that is 
somewhat the use of a hatchet or an axe or a sword, when we can and we 
should use a scalpel.
  The reality of the matter is that in 1978, it has been stated, less 
than half a percent of radio and television stations in this country 
were owned by blacks or Hispanics. Not 20 percent, which should be the 
quota, that is not what we sought by this FCC policy permitted under 
this section of the law. No one is talking about a quota. But, rather, 
an encouragement for people like in my community, who literally got off 
the boat a couple of decades ago, have been saving and with a lot of 
hard work and perseverance, are able to buy, a couple of them, have 
been able to buy radio stations because of 1071. So I am not an expert 
on this, but I know that it worked with regard to people that have the 
ability to permit the first amendment to be a reality and not simply a 
piece of paper in the telecommunications age.

                              {time}  1950

  Therefore, Mr. Chairman, with the decibels low, with respect for all 
points of view in this issue, without raising the decibels with 
accusations, which I think are unwarranted, like racism and this kind 
of thing, I do think, though, that this is a very serious issue, and 
that we should address it seriously.
  [[Page H1940]] Like Kondracke, Morton Kondracke said just a week ago 
in Roll Call, and I agree with him:

       We would do well to approach the coming conflict in a 
     spirit of reform. . . . We would be better off to amend 
     preferences rather than sweep them away. . . . This society 
     is already angry enough.

  I think we should remember those words as we face these issues, 
especially with successful programs that have permitted, as I have said 
before, the first amendment to be a reality in the telecommunications 
age.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
California [Mr. Thomas], chairman of the Subcommittee on Health of the 
Committee on Ways and Means.
  (Mr. THOMAS asked and was given permission to revise and extend his 
remarks.)
  Mr. THOMAS. Mr. Chairman, as we look at this McDermott substitute, I 
think it is really important to keep in mind recent history.
  For example, Mr. Chairman, the gentleman from Washington [Mr. 
McDermott] offered legislation in the last Congress in the area of 
health care reform. He criticized the Republican offer because he 
demanded fundamental reform before the year 2000. By 1998, he said we 
had to have the system completely reformed.
  He stands before us tonight in the name of equity, and he said, Mr. 
Chairman, he said these folks who work for corporations who do not 
provide health insurance are going to be treated the same as self-
employed.
  I just did a reality check. I thought what we were doing, Mr. 
Chairman, was reaching back to the last year and giving the self-
employed 25 percent. That would be 1994. In 1995 we are going to give 
them 25 percent. In 1996 we are going to give them 25 percent, in 1997, 
and so on.
  What I found out in the McDermott amendment is that these folks do 
not get anything for 1994, nor for 1995. He starts them out at 15 
percent for 1996. What do they do in 1997? Another 15 percent. In the 
year 1998, when he demanded fundamental reform for everybody or the 
program was not any good, he is going to give them 20 percent.
  Let us look at this for what it is. It is a gimmick. Mr. Chairman, I 
urge the Members, come to my subcommittee as we offer full health care 
reform. I want to hear all the ideas. I would say to the gentleman from 
Washington [Mr. McDermott], I did not hear this idea in subcommittee.
  I am looking forward to testimony so we can make sure that all 
Americans are treated fairly and equally, rather than trying some token 
gimmick to try to head off the first measure coming to the floor. I do 
hope people look at the specifics and understand why the McDermott 
amendment is being offered. Support H.R. 831. It is a fairness issue.
  Mr. McDERMOTT. Mr. Chairman, I yield 1 minute to the gentleman from 
New York [Mr. Rangel].
  Mr. RANGEL. Mr. Chairman, I thank my friend, the gentleman from 
Washington, for attempting to really try to help the self-employed in 
getting deductions for their insured, for insurance.
  The truth is, Mr. Chairman, health insurance has nothing to do with 
what is on the floor today. Health insurance is the sugarcoating for 
repealing the FCC provision.
  Mr. Chairman, I do not mind that happening, but if they are going to 
shoot me down, do it with a hearing. My distinguished chairman tells me 
that he is color blind. Mr. Chairman, I thought he was putting me on 
when he first said it, but then I checked with some of his friends, and 
I understand he does have a physical problem in detecting color.
  However, when we go into the board rooms in these great United 
States, and let me make it abundantly clear, there is no greater 
country in the world for anybody than these great United States, but 
somehow, Mr. Chairman, we have to believe that not everyone has the 
same defect. They are not color blind. If we go into the television 
board rooms, the editorial board rooms, the people that tell us what 
America is all about, they are not color blind.
  If we want to correct the injustices that are here, let us have 
hearings and let us do it right. To do it in the middle of the night is 
not fair, and to make it retroactive is not good law.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Kentucky [Mr. Bunning], a respected member of the committee.
  (Mr. BUNNING of Kentucky asked and was given permission to revise and 
extend his remarks.)
  Mr. BUNNING of Kentucky. Mr. Chairman, I rise in strong support of 
H.R. 831 and in opposition to the McDermott substitute.
  With H.R. 831, the House is for once doing the right thing. It 
permanently extends the health insurance deduction for the self-
employed and repeals an aberration in the Tax Code. It is a clean 
simple bill that deserves to sail through this House.
  Mr. Chairman, our Tax Code should be color blind. Neither Congress 
nor the IRS should be in the business of passing out tax breaks or tax 
increases based on creed or color. H.R. 831 repeals the only provision 
in the Tax Code that bases its treatment on skin color.
  H.R. 831 is a straightforward bill that is paid for without smoke or 
mirrors. On the other hand, the McDermott substitute offers up one 
revenue raiser dealing with foreign trusts that its sponsor could not 
even explain to the Rules Committee.
  The McDermott substitute also proposes that we keep intact the only 
provision in the Tax Code that passes out tax breaks based on creed or 
color.
  Mr. Chairman, the 25 percent deduction for the self-employed lapsed 
over a year ago, but after a lot of hemming and hawing the House is 
only now getting around to extending it permanently. The administration 
and the then-Democratic majority talked the talk all last year about 
helping the self-employed, but they never got around to really doing 
anything about it.
  Now that the new majority is walking the walk the new minority wants 
to delay things again. It's time to help the self-employed by 
permanently extending the deduction and to help the taxpayers by 
closing a loophole.
  Mr. Chairman, over 3 million Americans are relying on us to extend 
the law that allows them to deduct their health insurance costs. The 
farmers and the self-employed in my district are counting on us to do 
the right thing.
  I strongly urge my colleagues to support H.R. 831 and to oppose the 
McDermott substitute.
  Mr. Chairman, I rise in strong support of H.R. 831. For once, the 
House is doing the right thing.
  The Tax Code provision that gives over 3 million self-employed 
workers the ability to deduct their health insurance costs lapsed over 
a year ago. Since then these people have been slowly twisting in the 
wind, wondering if Congress was going to step up and restore their 
deduction for the 1994 tax year.
  This is an issue of the utmost importance to the many small farmers 
and other self-employed individuals in my congressional district. If 
Congress does not act before April 15, these individuals will not be 
able to deduct these costs from their 1994 taxes and will be left high 
and dry.
  The House now has the chance to step in and help extract these people 
from tax limbo. A strong vote today will hopefully help convince those 
in the other body to take up this matter quickly so that we can get a 
bill to the President's desk as soon as possible.
  Mr. Chairman, H.R. 831 also gives us the chance to kill two birds 
with one stone. To pay for the 25 percent deduction, the bill repeals 
section 1071 of the Tax Code that allows the FCC to issue tax 
certificates to companies that sell telecommunications properties to 
businesses with minority interests. The selling companies are allowed 
to indefinitely defer taxes on any gains on the sale of radio broadcast 
facilities. It's part of the code that needs to be repealed.
  The legislative history of section 1071 makes it clear that Congress 
originally passed this provision to provide tax deferrals only in 
instances where a sale or exchange of communications-related property 
was an involuntary divestiture to comply with the FCC's rules regarding 
ownership of broadcast facilities.
  But, in the 1970's, without congressional approval, the FCC broadened 
the meaning of section 1071 and began allowing tax deferrals for 
voluntary divestitures that met certain criteria. In 1978, the FCC 
adopted a policy in which it would grant tax deferrals to companies or 
individuals who voluntarily sold their 
[[Page H1941]] broadcast facilities to an entity that had a minority 
controlled interest.
  Now, section 1071 is the only provision of the tax code that allows a 
Federal agency to administer what is essentially an entitlement program 
to big businesses that understand how to unfairly manipulate the rules 
that promote minority control of media outlets.
  For instance, under this provision of the code, a recent deal between 
Viacom, the minority controlled Mitgo Corp., and InterMedia Partners 
qualifies for a tax deferral and would end up costing the American 
taxpayers over $600 million.
  The upshot of the Viacom deal is that Viacom will get an indefinite 
tax deferral of $640 million, and the African-American owner of Mitgo 
will walk away from the deal in several years with roughly $5 million 
in profits after having sold his interest in Viacom's cable television 
systems to Telecommunications, already the largest cable TV operator in 
the country. Everybody wins but the taxpayers.
  The bottom line is that the FCC is now using section 1071 to promote 
a policy that was never part of the original congressional intent for 
that part of the code. Without congressional approval, the agency 
expanded its power to grant tax breaks, and it's now time for Congress 
to rein in the FCC.
  Mr. Chairman, I think that the Internal Revenue Code should be color 
blind. Individuals should not get tax breaks nor should they get taxed 
more because of their skin color; there should not be carve-outs in the 
code for businesses just because a minority interest is involved. I see 
no reason why the Tax Code should not be used as another arm of 
Affirmative Action and it's time to remove section 1071 from the code.
  As a side note, Mr. Chairman, I need to note how ironic I find that 
the House is only now getting around to extending the self-employed 
health insurance deduction after haggling for over 2 years about how to 
pass a health care reform that provides health care coverage to more 
Americans.
  Ever since the 25-percent deductibility for the self-employed lapsed 
at the end of 1993, the administration and the then-Democratic majority 
lamented how they wanted to help these individuals with their health 
insurance costs.
  But because of the administration's all-or-nothing strategy on health 
care reform last year, the self-employed got just that--nothing. At any 
point over the past 14 months, the administration or the then-majority 
could have moved legislation at any time to permanently, or even 
temporarily, extend the 25 percent deduction for the elf-employed. They 
did not do so.
  The 25 percent deduction for the self-employed was held hostage 
because the President refused to consider any health-related 
legislation except for a radical health care bill. When health care 
reform legislation died at the end of the last Congress, so did any 
hopes for passing the 25 percent deduction.
  Now, finally, it is getting passed. The administration and the then-
majority talked a pretty good talk about helping the self-employed pay 
for health insurance, but it is the new majority that is walking the 
walk.
  Frankly, I would like to see the self-employed be able to deduct 100 
percent of their health insurance costs. Businesses can claim the full 
deduction for their employees' insurance costs, and I see no reason why 
the self-employed should be treated any differently under the Tax Code. 
There just is not any reason for this disparate treatment.
  H.R. 831 is only the first step in permanently establishing parity in 
this area between the self-employed and every other business in 
America. The sooner that Congress gives the self-employed workers in 
this country the same tax break that it gives to other businesses, the 
better. I expect that Chairman Archer will eventually move to give the 
self-employed the ability to deduct 100 percent of their health 
insurance costs, and I will do what I can to support him.
  Mr. McDERMOTT. Mr. Chairman, I yield 1 minute to the gentleman from 
New Jersey [Mr. Menendez].
  (Mr. MENENDEZ asked and was given permission to revise and extend his 
remarks.)
  Mr. MENENDEZ. Mr. Chairman, I rise in strong support of the McDermott 
substitute. It represents a balanced compromise that extends the 
benefits of tax deductions for health insurance to millions more 
Americans, and carefully preserves the best aspects of the tax 
provisions related to the sale of broadcast facilities to minority 
owners.
  Mr. Chairman, the rhetoric of empowerment flows freely from the same 
lips that today have condemned section 1071, and the irony is almost 
overpowering. Section 1071 is designed expressly to empower minorities 
to build businesses that employ people, serve the market, and generate 
revenue.
  Minority buyers pay market price for the broadcast facilities 
purchased under this provision. There are no subsidies. These 
provisions have encouraged sales to minorities without distorting the 
market, precisely the kind of empowerment that is so pervasive in 
Republican rhetoric these days.
  Mr. Chairman, there is no special gain or advantage for minority 
bidders. Instead, it is the seller who enjoys the tax break. What could 
be more Republican? Vote for the McDermott substitute.
  Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the gentleman from New 
Jersey [Mr. Zimmer], a valued new member of the committee.
  Mr. ZIMMER. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  Mr. Chairman, the supporters of section 1071 have characterized this 
debate as the first battle in an impending war over affirmative action. 
As someone who personally believes very strongly that the Federal 
Government has a decisive role to play in promoting civil rights and 
equal opportunity, I ask the defenders of this tax giveaway, do they 
really want to do battle on this battlefield? Even if they believe in 
affirmative action, they have to concede that section 1071 is a 
particularly goofy program, even by the standards of the tax code, and 
it is an incredible waste of taxpayer dollars.
  It will continue to be a waste of taxpayer dollars, even if the 
Gibbons-McDermott amendment is adopted. The Gibbons-McDermott amendment 
would not change the essential character of section 1071. Every cent of 
the tax benefit would still go to the sellers of communications 
properties; generally speaking, rich white guys.
  Not one cent of this taxpayer subsidy would have to go to the 
minority purchaser. The minority purchaser still would not have to show 
that he or she is economically disadvantaged, or that he or she needs 
help economically to make the purchase.
  Mr. Chairman, even if the purchaser is a millionaire himself, he 
would not have to contribute a single dollar to the purchasing entity. 
Is this what we mean by affirmative action? By tying the future of 
affirmative action to this misbegotten program, Members are making a 
dreadful mistake and doing a real disservice to their cause.
  My Democratic colleagues who inveigh against corporate welfare and 
trickle-down economics ought to recognize them when they see them, and 
not try to perpetuate this giveaway. Evidently, the sponsors of the 
Gibbons-McDermott amendment understand that the Viacom deal is 
indefensible, because they would block it, too, under their own 
proposal.
  Although they propose scaling back the maximum size of this loophole, 
they have not attempted to change its essential nature.
                              {time}  2010

  It is still basically a subsidy for rich white people.
  In the course of this debate, in the committee and on the floor, we 
have heard a lot of heated rhetoric. We have heard about Adolf Hitler. 
We have heard about David Duke. We have heard about playing the race 
card. I urge the champions of civil rights in this Chamber not to 
expend your rhetorical heavy artillery on this cause, to save it for a 
more worthwhile cause. I urge this House to reject the Gibbons-
McDermott amendment.
  Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from 
Maryland [Mr. Mfume].
  Mr. MFUME. Mr. Chairman, let me say to you and remind myself that 
this debate really is not about the deductibility of health insurance 
for the self-employed. That might be the intent by some, but the effect 
is something altogether different, and at some point in time we ought 
to stand up and admit that. Because if we were really serious about 
doing away with this second-class citizenship that they now enjoy, we 
would have approved the Cardin amendment, which was an 80-percent 
deduction, or the Mfume amendment, which has a 100-percent deduction 
and paid for with surplus funds. Or we would even now support the 
McDermott substitute. But we are not doing that. This is not about 
them. This is about a charade, a bigger smoke screen. Because this 
makes the 25 percent permanent. It says, ``You're going 
[[Page H1942]] to permanently be second-class citizens, those of you 
who are self-employed.'' So if we are real and if we are serious, we 
ought to give them what everybody else has, and that is an 80- or 100-
percent deduction.
  Second point. This is not about what this bill allows. It is about 
what it disallows. It disallows an incentive. There are those who would 
argue that we should not be giving incentives to businessmen. I do not 
ever remember hearing that argument from the other side of the aisle 
until today.
  If we are going to talk seriously and be frank, let's say what people 
are thinking. People are looking at this, ladies and gentlemen, and 
seeing this as a race debate. That is how people are seeing it around 
the country. Not me. Not the chairman. Not the one who has got the 
substitute. The people are seeing it. Because we are playing it that 
way. We are. Someone said this is about affirmative action. This is not 
the fight about affirmative action. I want to be very clear about this. 
This is the flare that goes up before the firefight, that lights the 
horizon, that shows the way.
  Let me suggest that the real fight is on the horizon. I would hope 
and I would remind individuals who are here today who think that 
affirmative action will go down quietly that that is not the case.
  Mr. ARCHER. Mr. Chairman, I yield 3 minutes to the gentleman from 
California [Mr. Herger], a valued member of the committee.
  Mr. HERGER. Mr. Chairman, I rise in strong opposition to the 
amendment offered by the gentleman from Washington. Recently I 
participated in a Ways and Means subcommittee hearing on this very 
program which basically rewards individuals buying communications 
properties for at least nominally including minority partners. Over the 
last 17 years, this Federal Program which defers taxation of gains in a 
sale to a minority purchaser has cost American taxpayers over $2 
billion while the number of minority-owned communications businesses 
has grown very little.
  Further, 71 percent of all radio stations purchased by minority-
controlled groups were resold within an average of 3\1/2\ years. Even 
proponents of affirmative action admit that this program does nothing 
for the poor or uneducated.
  Mr. Chairman, I believe that minority buyers are entitled to every 
advantage available to nonminorities. However, I strongly oppose 
creating special racial subgroups of Americans in the tax code. Of all 
the government-run-amok Federal programs, this has got to be one of the 
very worst. It is just not equitable that average citizens should pay 
taxes while multibillion-dollar communication firms and a select few 
upper class minorities get a free ride on up to $50 million. Clearly, 
this law creates a hole in the Internal Revenue Code that tax attorneys 
can drive a truck through.
  Mr. Chairman, let's treat all citizens equally under the Tax Code. 
Vote ``no'' on this amendment.
  Mr. McDERMOTT. Mr. Chairman, I yield 1 minute to the gentlewoman from 
California [Ms. Woolsey].
  (Ms. WOOLSEY asked and was given permission to revise and extend her 
remarks.)
  Ms. WOOLSEY. Mr. Chairman, I rise in support of the McDermott 
substitute to allow both the self-employed and employees, employees who 
are not covered, not insured by their employers, to deduct a portion of 
the cost of their health insurance.
  The McDermott substitute is both sensible and fair. Allowing 
uninsured employees who purchase their own coverage to take the same 
deduction that we are giving their employer may reduce the number of 
Americans who are not insured. The McDermott substitute will encourage 
individuals who are currently uninsured to buy health insurance. And 
the McDermott substitute does this at no cost to employers. What could 
make better sense?
  Mr. Chairman, we have a long way to go to reform health care in 
America and to achieve universal coverage for all Americans. But the 
McDermott substitute is a step in the right direction.
  I urge my colleagues to vote for the McDermott substitute.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Texas [Mr. Bonilla].
  Mr. BONILLA. Mr. Chairman, H.R. 831 is a tax bill and the race card 
has been played and that is very unfortunate.
  I happen to be an American of Hispanic descent who grew up in a 
family where my father often worked 3 jobs to put food on the table and 
my grandmother worked for 30 years as a maid in a hospital to support 
herself.
  In my family, no one ever expected to be treated differently. All we 
ever expected was a fair shot. People who play the race card sadly have 
no substance in their arguments. This is a tax break that has not 
worked. It was originally designed to increase minority participation 
in broadcasting but this has not happened. In fact, the percentage of 
minority ownership has actually decreased.
  If you want to play the race card, look at it this way. You are 
helping hundreds and maybe thousands of minorities in this country who 
are self-employed, like Jose Cuevas, small businessman in Midland who 
needs this tax break; people like Julius Brooks, an African-American 
small businessman in my district.
  Let's vote for this bill and against the McDermott substitute because 
it helps all Americans.
  When I was young, the Bible taught us and we sang in church that red 
or yellow, black or white, we are all precious in his sight.
  Mr. MFUME. Will the gentleman yield?
  Mr. BONILLA. H.R. 831 is color-blind. We should vote for it and 
against the McDermott amendment.
  Mr. MFUME. Will the color-blind gentleman yield?
  Mr. BONILLA. I will not yield.
  Mr. MFUME. Will the gentleman yield for a moment?
  The CHAIRMAN. The time of the gentleman from Texas [Mr. Bonilla] has 
expired.
                      announcement by the chairman

  The CHAIRMAN. The Chair would remind all Members to address their 
remarks through the Chair.
  Mr. McDERMOTT. Mr. Chairman, I yield 1 minute to the gentleman from 
New Mexico [Mr. Richardson].
  (Mr. RICHARDSON asked and was given permission to revise and extend 
his remarks.)
  Mr. RICHARDSON. Mr. Chairman, this is a wedge issue. This is the 
opening salvo on the Contract With America's war on minorities. Next it 
is affirmative action, and it is going to cover women.
  Mr. Chairman, we could have financed this provision through the 
compliance provisions in the administration package. The tax 
certificate was specifically targeted.
  What is wrong with this provision? It has been on the books since 
1978. No Republican President has gone after it. What we have here is 
diversity in the airwaves, allowing minorities to compete.

                              {time}  2020

  Is there quotas when it is only 3 percent of minorities that own 
stations, 323 radio-television stations owned by minorities? What is 
wrong with in a ghetto or Indian reservation or Hispanic area for 
minorities within those communities to have a chance to own some of 
these radio stations? What is wrong if somebody has made money out of 
these provisions? Are loopholes only going to go to the nonminorities? 
Do we have an opportunity here to undo this legislation?
  The McDermott amendment is a good provision. This is a bad amendment, 
but it is the first in a salvo of many initiatives that are wrong and 
should not happen, and it should be rejected by this House.
  H.R. 831 reinstates the 25% health insurance deduction for self-
employed persons. H.R. 831 is in large part paid for by repealing the 
Federal Communications Commission (FCC) Sect. 1071, the minority 
broadcasting tax certificate, that allows sellers to defer capital 
gains on the sale of media properties to minorities.
  Broadened in 1978 to include minorities, the FCC minority 
broadcasting tax certificate allows sellers to defer capital gains on 
the sale of media properties to minorities.
  The FCC tax certificate has enabled scores of minorities to own and 
control broadcast cable businesses. It has made for a five-fold 
[[Page H1943]] increase in minority control of radio and television 
stations, and to a lesser extent cable systems.
  Before 1978, minorities owned less than one-half of one percent 
(0.5%) of the total broadcast licenses issued by the FCC. A 1994 study 
reports that there are 323 radio and television stations owned and run 
by minorities, nearly 3%.
  It is doubtful that repeal will raise promised revenues or result in 
savings, since many sales would never take place without the tax 
certificate. There are other alternatives--such as stock swaps--that 
allow sellers to benefit from tax-free exchanges.
  The FCC Sect. 1071 simply gives minority businesses that may not have 
stocks or other capital the opportunity to compete. Most sellers would 
not take a chance on minority buyers without the FCC Sect. 1071 tax 
certificate and would look instead to other tax-free transactions.
  The FCC tax certificate is a true ``empowerment'' program for the 
Hispanic market. It provides business development in minority 
communities, self-sufficiency, and creates jobs.
  The FCC tax certificate promotes diversity in the airwaves. For 
millions of Latinos, for example, having immediate Spanish language 
information could mean the difference between life and death in a 
disaster situation.
      Impact of McDermott Amendment on FCC Tax Certificate Program


                                H.R. 831

       Section 1071 of the Internal Revenue Code allows the 
     Federal Communications Commission to issue tax certificates 
     to companies that sell communications properties as a result 
     of changes in FCC policy, allowing the seller to defer tax on 
     the gain if the proceeds are reinvested in qualifying 
     communications properties.) The FCC policy has been 
     principally used to accomplish diversity in broadcast 
     ownership. Since 1978, the FCC has issued tax certificates to 
     firms that sold properties to qualified minority buyers.
       H.R. 831 would abolish the Section 1071 tax certificate 
     program outright.


                        The Mc Dermott Amendment

       Section 1071 is retained only for ``qualified 
     transactions'' under the FCC's Minority Ownership Policy.
       Tax could only be deferred on gain up to $50 million per 
     transaction or group of related transactions. (The $50 
     million cap allows minority buyers to use tax certificates in 
     major markets, but bars ``mega-deals'' from qualifying for 
     tax certificates. The restriction on ``related transactions'' 
     ensures that sellers cannot break up sales into $50 million 
     parcels to evade the cap.)
       The FCC must certify that the sale is in furtherance of the 
     FCC's Minority Ownership Policy.
       The sale must be made to an ``eligible'' individual, 
     corporation, or partnership, i.e.:
       an individual qualifying under the FCC's Minority Ownership 
     Policy (Black, Hispanic, Native American, Alaska Native, 
     Asian, and Pacific Islander);
       a corporation in which eligible individuals--directly or 
     indirectly--own more than 50% of the voting stock and stock 
     representing more than 20% of the value of the corporation;
       a partnership in which eligible individuals directly or 
     indirectly--have actual control and own at least 20% of the 
     value of the partnership.
       Permitting indirect ownership recognizes that there may be 
     intermediate owners (e.g., the corporation may be a 
     subsidiary of a minority-controlled corporation).
       Property must be held by the minority buyer for at least 3 
     years. Buyout or repurchase agreements by ineligible persons 
     would be prohibited.

       ESTIMATED REVENUE EFFECTS OF POSSIBLE DEMOCRATIC SUBSTITUTIONS TO H.R. 831--FISCAL YEARS 1995-2000       
                                              [Millions of dollars]                                             
----------------------------------------------------------------------------------------------------------------
        Provision             Effective       1995      1996      1997      1998      1999      2000     1995-00
----------------------------------------------------------------------------------------------------------------
1. Limit gain section                                                                                           
 1071 transactions to $50                                                                                       
 million.................          1/17/95       295       344        82        77        98       121     1,016
2. Modify section 1033\1\          2/16/95        13        30        40        53        74       106       316
3. Disallow the EITC to                                                                                         
 taxpayers with income                                                                                          
 over $2,500 from the                                                                                           
 following sources;                                                                                             
 Interest, tax exempt                                                                                           
 interest, dividends, and                                                                                       
 gross revenues from                                                                                            
 rents and royalties.....    tyba 12/31/95  ........        56       562       608       641       686     2,553
4. Health insurance                                                                                             
 deductions:                                                                                                    
    a. Self-employed                                                                                            
     individuals, 25%                                                                                           
     deduction...........    tyba 12/31/93      -487      -398      -435      -484      -536      -584    -2,925
    b. Employees not                                                                                            
     eligible for                                                                                               
     employer-subsidized                                                                                        
     insurance: 15% in                                                                                          
     1996, 15% in 1997,                                                                                         
     20% in 1998, 20% in                                                                                        
     1999, and 25%                                                                                              
     thereafter..........    tyba 12/31/95  ........      -208      -644      -774      -997    -1,159    -3,782
5. a. Revise taxation of                                                                                        
 income from foreign                                                                                            
 trusts..................           2/6/95        88       182       195       210       226       242     1,142
    b. Revise tax                                                                                               
     treatment of                                                                                               
     renouncers of                                                                                              
     citizenship.........           2/6/95        60       181       248       323       405       494     1,711
                          --------------------------------------------------------------------------------------
      Total..............  ...............       -31       187        48        13       -89       -94        31
----------------------------------------------------------------------------------------------------------------
\1\This estimate includes adjustment to account for interaction with limiting the gain on section 1071          
  transactions to $50 million                                                                                   
                                                                                                                
Note: Details may not add to totals due to rounding.                                                            
Joint Committee on                                                                                              
 Taxation.                                                                                                      

                                                 Project for the


                                            Republican Future,

                                Washington, DC, February 21, 1995.
     Memorandum to: Republican leaders.
     From: William Kristol.
     Subject: Moving Forward on Affirmative Action
       ``I think the worst thing that could happen is you take an 
     issue like affirmative action or the whole issue of civil 
     rights and race relations in this country and make it a 
     political issue. That's the most dangerous thing that could 
     happen . . . On affirmative action, we clearly oppose moving 
     backwards. Where you have discrimination, you need to have a 
     remedy. That includes affirmative action.''--White House 
     Chief of Staff Leon Panetta, on ``Meet the Press,'' February 
     12, 1995.
       ``Affirmative action was never meant to be permanent, and 
     now is truly the time to move on to some other approach. You 
     can try to paint Republican opponents as having been captured 
     by the far right and the like, but that's not going to make 
     the Democratic Party the majority party again. In fact, 
     there's a bad potential for this issue to drive a wedge right 
     through the Democratic Party, if it doesn't yield some.''--
     Democratic strategist Susan Estrich, in The New York Times, 
     February 16, 1995.
       Ironies abound in politics; large issues have a way of 
     forcing themselves into public debate in unexpected form, on 
     an unpredictable schedule. We're now halfway through the 
     Republican Contract's 100-day legislative calendar. The GOP 
     House and Senate have already achieved some notable 
     successes. But neither chamber has yet cast, to the best of 
     our knowledge, a floor vote on any bill that directly undoes 
     an existing government program. Until now, that is. And the 
     bill and program in question aren't mentioned in the Contract 
     at all. In fact, the bill the House is scheduled to vote on 
     (and will likely pass) today, Ways and Means Committee 
     Chairman Bill Archer's H.R. 831, would actually kill a large 
     tax break.
       Now as it happens, the tax break involved is preposterous 
     and Chairman Archer's legislation is self-evidently 
     necessary. It would pay for a permanent extension of the 25 
     percent deduction for self-employed health insurance costs. 
     That's a good cause. But the bill's true subject is 
     affirmative action. And we'd be for it, and for doing it
      now, even if it paid for nothing--because it represents a 
     strategically intelligent first step in what should be a 
     major element of the Republican Party's larger, post-
     Contract agenda: a rollback of the massive system of 
     racial preferences and setasides that has come to infect 
     federal law and American life over the past 25 years.
       Chairman Archer's bill repeals section 1071 of the Internal 
     Revenue Code, which since 1978 has been interpreted by the 
     Federal Communications Commission to allow companies selling 
     broadcast properties to ``minority controlled'' enterprises 
     to defer taxes on any capital gain. Mr. Archer's principal 
     complaint against this provision is that its World War II-era 
     provisions have been oozily transformed by the FCC into an 
     agency-granted tax break--a usurpation of Congressional 
     prerogative and authority. He's right. But there's also a 
     much deeper ugliness at work in the FCC program, as recent 
     news accounts of an attempt by the Viacom Corporation to take 
     advantage of it make clear.
       Viacom, the world's second largest media and entertainment 
     company, plans to sell off its cable television stations to a 
     group of investors dominated by InterMedia Partners and Tele-
     Communications Inc., the giant cable company. It's a $2.3 
     billion deal. But because, technically speaking, the investor 
     of record in this deal is a minority, Viacom would be 
     permitted to defer hundreds of millions of dollars--maybe 
     more than a billion--in taxes. And the real purchasers here 
     won't be inconvenienced at all; the deal's investor of record 
     is allowed to cash out his $1 million stake at a hefty profit 
     after just a few years. He is, incidentally, one Frank 
     Washington, who as a Carter Administration FCC attorney in 
     1978 designed the whole ``minority ownership program'' in the 
     first place.
       Not to put too fine a point on it, Viacom is engaged in a 
     particularly vulgar, though perfectly legal, affirmative 
     action scam. But it's not a new one; again, this particular 
     FCC initiative has been in place, doling out more than 300 
     such tax certificates, for 17 years. And the program isn't an 
     isolated affirmative action grotesquerie, either. There is 
     the huge 8(a) set-aside program at the Small Business 
     Administration, for example. And hundreds of other programs 
     and provisions, 
[[Page H1944]] written into the sinews of federal law and 
administrative practice, make similar distinctions among American 
citizens on the basis of their skin color--with ever-increasingly 
questionable effects on their ostensible beneficiaries, and to the 
obvious detriment of race relations nationwide.
       What's interesting, then, is that all of a sudden it seems 
     possible that mere scrutiny of these programs will be enough 
     to demolish them. Many of us long ago came to the conclusion 
     that affirmative action, at this point in American history, 
     is virtually indefensible. What's striking about the current 
     political situation, in the aftermath of November 8, is how 
     many other people apparently think so, too. Consider this: 
     Charlie Rangel, second-ranking Democrat on Ways and Means, 
     could produce only 10 of 15 possible Democratic votes against 
     Chairman Archer's bill in committee, and was reduced to 
     invoking Adolf Hitler in his churlish post-vote press 
     release. Or this: Susan Estrich, no right-winger she, tells 
     The New York Times (as quoted above) that the statute of 
     limitations on slavery and segregation has run out, and that 
     affirmative action should be scrapped. Period.
       Of course, it's easy for Ms. Estrich to speak so bluntly 
     and candidly; she has no current institutional responsibility 
     to the Democratic Party, whose alignment of constituencies is 
     such that any debate on affirmative action may blow it 
     completely apart. Which is why Leon Panetta (also quoted 
     above) is so eager to deny that affirmative action is a 
     legitimate political issue at all--what kind of issue does he 
     think it is, we wonder?--and why he wants us to understand 
     that any near-term political movement on the question of race 
     preference will be movement ``backwards.''
       Republicans are not obliged to alter or trim their 
     principles for the convenience of Democratic Party voter 
     mobilization, of course, which is why we say: move forward--
     it's the right thing to do. Men like California state 
     assembly Speaker Willie Brown will decry any rollback as 
     ``totally and completely racist'' (USA Today, February 16). 
     Jim McDermott (D-WA) will try to muddy the waters with a 
     substitute to H.R. 831 that blocks the Viacom tax break while 
     otherwise preserving the FCC program. And Mr. Panetta will 
     probably warn, again, that ``discrimination'' needs a 
     ``remedy.'' But the guessing here is that neither Congress 
     nor ordinary voters will be fooled. Discrimination does have 
     a remedy; it's illegal. Affirmative action--counting citizens 
     by race, and allocating benefits accordingly--is something 
     else, something that increasingly strikes more and more 
     Americans of all colors as fundamentally unfair and 
     incompatible with their own best traditions and highest 
     hopes. Witness the spectacular early success of the 
     California Civil Rights Initiative (CCRI), whose sponsors 
     haven't even begun collecting the requisite signatures for 
     ballot approval in 1996, but is already considered a 
     virtually sure thing for passage.
       Congressional Republicans need not immediately reach for a 
     CCRI-like magic bullet that would in one fell swoop erase 
     every offensive jot of race consciousness from federal 
     practice. Constructing such a law would be a complicated 
     undertaking, in any case, so thoroughly has affirmative 
     action buried itself in our laws and regulations. And the 
     effort need not be rushed. It wouldn't be a bad thing to have 
     the affirmative action debate again and again, program by 
     program and law by law, as the next several months go by. 
     It's only through such revealing debate, after all, that a 
     full public consensus about the need to close our affirmative 
     action era can be achieved. Bill Archer has done us the 
     service of beginning such a responsible and level-headed 
     debate by readying Congress, for the first time in a quarter 
     century, to dismantle a race-conscious federal program. 
     Republicans should continue the service by doggedly pursuing 
     the subject in the future.
       The sudden willingness, even courage, of American 
     politicians to challenge what was until very recently 
     unchallengeable--racial preferences--is a clear sign of how 
     completely November's Congressional election has altered our 
     national landscape. Almost every American political piety of 
     the past few decades is now squarely on the table, open for 
     debate at last. These are debates that the Democratic Party, 
     defender of the status quo, can only fear. And those 
     Republicans who might privately worry over what to do once 
     our first 100 days are complete can take heart: there is a 
     broader, just as popular, just as principled agenda available 
     for our future pursuit. Establishing a system of color-blind 
     law and public policies is a not inconsiderable case in 
     point.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Florida [Mr. Canady].
  Mr. CANADY of Florida. Mr. Chairman, I thank the gentleman for 
yielding me this time.
  Mr. Chairman, I rise in opposition to the McDermott substitute.
  The outright repeal of IRS section 1071 is essential if we are to 
start dismantling the failed system of race-based preferences and move 
toward the goal of a color blind society.
  The inherent flaws in the system which section 1071 perpetuates--a 
system which provides benefits to some members of our society and 
denies benefits to others based solely on their race or ethnicity--are 
undeniable.
  Justice Sandra Day O'Connor, writing about the racial preference 
system in the case of Richmond versus J.A. Croson Co., said of such 
systems:

       They endorse race-based reasoning and the conception of a 
     Nation divided into racial blocs, thus contributing to an 
     escalation of racial hostility and conflict . . . Such 
     policies may embody stereotypes that treat individuals as the 
     product of their race, evaluating their thoughts and 
     efforts--their very worth as citizens--according to a 
     criterion barred to the Government by history and the 
     Constitution.

  According to studies at Rutgers and George Washington universities, 
FCC minority preference programs, including the application of section 
1071, have done little to foster diversity in programming. Moreover, of 
the minority-owned radio stations that received FCC tax certificates 
between 1979-92, only 29 percent of those stations were still 
controlled by the minority purchaser at the end of 1992. Many minority 
investors choose to quickly divest their interests and reap significant 
profits.
  Under section 1071, we have the worst of both worlds: we perpetuate a 
system of racial classification--and at the same time provide enormous 
benefits to individuals who are far from disadvantaged.
  By repealing IRS Code Section 1071, we will save the taxpayers $1.4 
billion over 5 years. But just as importantly, we will eliminate a 
Federal Program that has not only failed in its intended goal, but 
given credence to the idea that we should deal with people on the basis 
of the color of their skin.
  I encourage my colleagues to oppose the McDermott substitute.
  Mr. McDERMOTT. Mr. Chairman, I yield 1 minute to the gentleman from 
North Dakota [Mr. Pomeroy].
  Mr. POMEROY. Mr. Chairman, I support the bill but the substitute 
makes it much better. Speaker after speaker on both sides of the aisle 
have spoken about the need to pass legislation in the interest of tax 
fairness, giving self-employed a partial deduction, representing 
equitable treatment for the total tax deduction allowed businesses and 
corporations.
  Tax fairness also makes it imperative we allow a deduction not just 
for the self-employed, but to all others who purchase their coverage 
because they are not covered at their place of employment. No one has 
offered one word of defense for treating businesses differently than 
self-employed or for treating self-employed different from all other 
employees.
  Clearly all of us must believe when it comes to health insurance, 
corporations and those who are self-employed are no more entitled to 
tax breaks than all other men and women who purchase their health 
insurance. This substitute improves the bill and should be passed. I 
urge the Members of this House not to discriminated between business 
and self-employed or self-employed and all other employees. Pass the 
substitute.
  Mr. ARCHER. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Minnesota [Mr. Ramstad], a valued member of the 
committee.
  (Mr. RAMSTAD asked and was given permission to revise and extend his 
remarks.)
  Mr. RAMSTAD. Mr. Chairman, I rise in strong opposition to the 
McDermott amendment and in strong support of H.R. 831.
  This measure restores the extremely important 25-percent deduction 
for health insurance costs for self-employed.
  Mr. Chairman, it is grossly unfair that farmers, small business 
owners, and other self-employed Americans can't fully deduct health 
care expenses like other businesses.
  Hundreds of thousands of self-employed Americans across the country 
are already preparing their 1994 tax forms. They need relief now.
  This measure also rectifies a problem in the current tax code that 
has given a Federal agency unprecedented authority to craft tax policy.
  That is why it is important to vote against the McDermott amendment, 
which fails to adequately close the section 1071 loophole, which costs 
taxpayers hundreds of millions of dollars a year.
  Let us move quickly to pass the legislation and restore certainty and 
fairness to the lives of America's self-employed
  I urge my colleagues to vote in favor of H.R. 831.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
Washington [Mrs. Smith].
  [[Page H1945]] Mrs. SMITH of Washington. Mr. Chairman, I thank the 
gentleman for yielding me this time.
  Mr. Chairman, I rise today in opposition to the McDermott substitute 
amendment. While the McDermott substitute also restores a small health 
insurance tax deduction for self-employed, it pays for it in a 
desperate and haphazard manner.
  Both Republicans and Democrats alike realize the importance of the 25 
percent health insurance deduction. This deduction restores an element 
of fairness to the system. For too long, self-employed individuals have 
faced daunting circumstances when attempting to obtain health insurance 
for themselves and their family. Because the 25 percent insurance 
deduction expired on December 31, 1993, self-employed individuals are 
facing a tax filing on April 15 without any deduction at all.
  The very least this Congress can do is reinstate this deduction; more 
importantly, make it permanent. Do not play around with it, do not make 
it political just make it permanent.
  I commend the chairman and the members of the committee for doing 
this so quickly because it will actually put money back in the hands of 
small businesses to pay for their own families' health insurance, which 
is what they need to do with this money instead of giving it to the 
Government.
  I guess I want to conclude by saying it amazed me that a bill that 
seemed so good that came at the request of so many in my State of 
Washington would have so much political rhetoric behind it. It seemed 
so reasonable to pay for this bill by a tax loophole that has become a 
front by using minorities to be able to use them, so white billionaires 
could actually take advantage of a tax loophole. It amazed me that my 
colleagues, some from Washington, would actually support big business 
welfare and using people of minorities as a front.
  Let us get back to the bill and the purpose of this bill.
  Mr. McDERMOTT. Mr. Chairman, I yield such time as she may consume to 
the gentlewoman from Illinois [Mrs. Collins].
  Mrs. COLLINS of Illinois. Mr. Chairman, I rise in full support of the 
McDermott substitute and against H.R. 831 as currently written.
  Mr. Chairman, I rise in opposition to H.R. 831 and in support of the 
McDermott substitute.
  Mr. Chairman, I strongly question the particular method by which my 
Republican friends purport to pay for the costs of the legislation 
before us--by retroactively eliminating the Federal Communications 
Commission's [FCC] minority tax certificate program to simply target a 
straightforward, legal transaction between an African-American 
entrepreneur, Frank Washington, and Viacom, Inc.
  Ironically, eliminating the tax certificate program will have the 
effect of dooming this particular transaction and, therefore, any 
expected revenue to the Treasury as a result. In other words, yes 
that's right, my GOP colleagues will actually increase the deficit with 
this legislation given the fact that the revenue estimates from the 
Joint Committee on Taxation rely heavily on the Viacom deal, which is 
moot given the repeal of section 1071 of the Tax Code.
  This retroactively smacks of political posturing, pure and 
purposefully.
  The tax certificate program has been a key element in expanding the 
number of minority-owned and operated television, radio, and cable 
stations across our country and bringing more citizens into the great 
public policy debates of our time.
  Despite the fact that diversity in these industries has been 
constitutionally upheld as a vital goal of U.S. telecommunications 
policy, despite the fact that today only 2.9 percent of broadcast firms 
are minority-controlled, despite the fact that undercapitalization 
continues to be a major impediment to minority representation in all 
telecommunications-related fields, the Republican leadership of this 
body sees the FCC minority tax certificate program as a needless 
initiative.
  It was a sad commentary on the Republican party when it chose this 
undemocratic action of preventing minorities who wish to own and 
operate TV, radio, cable, satellite, et cetera from embarking upon the 
information superhighway. This clearly is a despicable undertaking to 
sever lines of open communication and to silence those who might 
counteract the debatable rhetoric of the rightwing airwave wordsmiths.
  All the minority tax certificate program does is seek to create a 
fair opportunity for minority entrepreneurs that have, unfortunately, 
been historically locked out of the broadcasts and cable markets.
  Do my colleagues on the other side of the aisle believe that 
diversity of ownership in the telecommunications arena is not a valid 
objective? I think not.
  I urge my colleagues to vote no on H.R. 831, and reject this blatant 
Republican step in an inevitable series of attempts to roll back the 
clock on equal opportunity for America's minorities.
  Mr. McDERMOTT. Mr. Chairman, I yield such time as he may consume to 
the gentleman from California [Mr. Dixon].
  (Mr. DIXON asked and was given permission to revise and extend his 
remarks.)
  Mr. DIXON. Mr. Chairman, I rise in support of the McDermott 
substitute.
  Mr. Chairman, I rise in support of the Gibbons-McDermott amendment. I 
rise also to express my deep concern about H.R. 831.
  I strongly support the efforts of the Committee on Ways and Means to 
restore and make permanent the tax deduction for 25 percent of the 
health insurance costs for self-employed individuals. I cosponsored 
legislation to achieve that goal in the 103d Congress, as well as in 
the present Congress.
  However, it is extremely unfortunate that the majority has chosen to 
pay for the deduction with the elimination of the minority preference 
program in broadcasting. If ever there was a situation where the best 
interests of one group of Americans is pitted against those of 
another--this is it.
  From both a symbolic and practical standpoint, this is bad policy. 
For 17 years the Federal Government has sought to encourage minority 
entrepreneurs to enter the telecommunications market through the 
preference program. Now the committee has sent a signal that it is no 
longer necessary to work in an affirmative fashion to enhance minority 
ownership in the broadcasting industry.
  Nothing could be further from the truth.
  While there has been a fivefold increase in minority ownership of 
broadcasting stations since inception of the preference program, 
minority ownership currently stands at only 2.9 percent. Minorities are 
still vastly underrepresented in the broadcasting industry. Elimination 
of the preference program will serve to sanction that situation.
  There was no legitimate rationale for the committee to eliminate the 
preference program. The substitute now before us was offered in 
committee to address criticisms of the program--but retain its basic 
goals. The majority chose instead to completely dismantle the program.
  I take strong issue with the majority's contention that the Tax Code 
should be colorblind. Enhancing access to capital and encouraging 
minority entrepreneurship should be viewed as an essential element in 
this Nation's efforts to revitalize minority communities and empower 
Americans long denied opportunity. The Tax Code is an appropriate 
vehicle to achieve those objectives.
  Enough has not been done; the playing field is not level, and 
preferences for certain groups of Americans historically denied 
opportunity are as relevant and necessary in 1995 as they were in 1978 
when this program began.
  The Republican majority is clearly committed to using the Tax Code to 
encourage a range of economic goals. I regret that expanding access to 
capital in the minority community is not one of them.
  While I support making permanent the extension of the deduction for 
health insurance costs for the self-employed, I cannot support 
legislation that accomplishes that goal by denying opportunity to 
another group of Americans.
  The Gibbons-McDermott substitute not only expands the health care 
deduction to employees whose employers do not subsidize their health 
care--it does so without elimination of minority preference in 
broadcasting.
  I urge my colleagues to support the substitute.
  Mr. McDERMOTT. Mr. Chairman, I yield such time as he may consume to 
the gentleman from Louisiana [Mr. Fields].
  (Mr. FIELDS of Louisiana asked and was given permission to revise and 
extend his remarks.)
  Mr. FIELDS of Louisiana. Mr. Chairman, I rise in strong opposition to 
the bill and in support of the substitute.
  Mr. Chairman, while I rise in favor of the permanent extension of the 
current 25-percent health insurance deduction for the self-employed, I 
strongly object to the means by which the legislation proposes to 
replace the $2.9 billion in revenue which will be lost with a deduction 
for health care cost.
  This bill is a double edged sword in that supporting a tax deduction 
for working Americans will injure other hard working Americans.
  [[Page H1946]] This legislation brings us to a crossroad, on one hand 
the self-employed benefit from deduction, and on the other we take away 
a policy the Federal Communications Commission established over 20 
years ago. The tax incentives provided to businesses giving minority-
owned firms has given opportunities to over 300 minority-owned firms 
increasing minority ownership from 0.5 percent to 2.9 percent. 
Repealing this law, today, severely effects the highly innovative and 
forward moving communications industry. While there is no proof that 
dismantling section 1071 will provide more revenues to make up for the 
25-percent self-employed health insurance deduction there are facts to 
back up the need for this program. This program provides for program 
diversity which must not be abandoned. We can not let the bill stand as 
is.
  Mr. Speaker, we must work to not allow the vying of one group of 
working Americans against another. It is not fair to ask us to support 
this and I hope Members will act responsibly and vote down H.R. 831.
  Mr. McDERMOTT. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from Michigan [Mr. Levin].
  (Mr. LEVIN asked and was given permission to revise and extend his 
remarks.)
  Mr. LEVIN. Mr. Chairman, we must pass legislation to assure deduction 
of health costs for the self-employed. We also need to make sure that 
the present section 1071 is not violated in letter or spirit.
  I believe that the Viacom transaction is so large that it goes beyond 
an appropriate use of section 1071, and the Gibbons amendment provides 
a reasonable middle path. It is appropriate to review programs that aim 
to encourage opportunities for minorities as to their specific 
purposes, their structure, and their effectiveness or lack of it. But 
there has not been a comprehensive review of section 1071. There was no 
hearing at all at full committee.
  The facts are that since the FCC began to apply the tax certificate 
program to minorities, minority ownership has risen from a tiny half 
present to 3 percent. The vast majority of transactions have been quite 
small and the average holding period by the new owners has been 5 
years, and in more than 100 transactions the original owners still hold 
the license. The McDermott language limits the use of 1071 to 
transactions with these characteristics.
  It is said the law should be color-blind. That does not mean it 
should be blind to racial or other discrimination.
  If the House does not adopt the Gibbons-McDermott amendment it will 
be up to the Senate to take a more comprehensive look at section 1071. 
It deserves that careful look, just as the deduction for health 
insurance deserves action tonight.
  I support the Gibbons-McDermott amendment.
  Mr. ARCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Oklahoma [Mr. Watts], a new and respected Member.
  Mr. WATTS of Oklahoma. Mr. Chairman, I have great respect for the men 
and women on both sides of this debate on H.R. 831. However, in my 
opinion, I think much of the opposition's debate on H.R. 831 and repeal 
of 1071 is off point.
  Many of my colleagues think that this repeal is pointed toward 
minorities. If we do away with this provision, then minorities would 
somehow lose out on benefits that could help them prosper.
  In fact, the unintended consequence of this well-intentioned policy 
is to benefit the business that sells to a minority rather than the 
minority.
  Moreover, since 1941 minority ownership of broadcast outlets has 
increased by less than 2.2 percent. We can encourage minority ownership 
by supporting measures other than this warped method of taxation.
                              {time}  2030

  This abuse of the system is the worst example of administrative 
interpretation gone awry. I think the intent was good, but clearly this 
was not its intended purpose. The purpose was not to allow companies to 
avoid millions of dollars in taxes. I ask those who agree and those who 
disagree with this bill and really want to make a difference in the 
prosperity of the minority community to join me and support free 
enterprise with capital formation and relaxing lending regulations. We 
need to support enterprise zones and give tax incentives for business 
development in areas that do not produce revenues now.
  Most of all, we need to renew our culture and encourage basic 
education, and I take this opportunity to say, Mr. Chairman, give 
Americans a flat tax.
  Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from 
California [Mr. Miller].
  (Mr. MILLER of California asked and was given permission to revise 
and extend his remarks.)
  Mr. MILLER of California. Mr. Chairman and members of the committee, 
I rise in strong support of the Gibbons-McDermott substitute to extend 
the 25-percent deduction to employees who are not eligible to 
participate in employer-sponsored health plans.
  I noted with interest yesterday that the Republicans on the Committee 
on Ways and Means are looking for a definition of work. Well, they have 
to understand that that is what millions of Americans do every day when 
they get up out of bed; they go to work. Millions of Americans go to 
work and work every day, but they are not able to provide health 
insurance for themselves or for their family.
  What the McDermott bill would do is to say that those workers are 
every bit as noble as self-employed individuals. This would make sure 
that we would have equity and fairness in providing the deduction so 
that people who take it upon themselves to go out and try to provide 
health insurance for themselves would get the same deductions as the 
self-employed individual.
  When you find the definition of work, you will find there are 
millions of Americans that do it every day, and they ought to be 
extended the same dignity that you give to self-employed individuals.
  Mr. ARCHER. Mr. Chairman, I yield 5 minutes to the gentlewoman from 
Connecticut [Mrs. Johnson], chairman of the Subcommittee on Oversight 
and a valued member of our committee.
  Mrs. JOHNSON of Connecticut. I thank the chairman for yielding this 
time to me.
  Mr. Chairman, repeal of section 1071 is not a retreat from our 
commitment to equal opportunity for minorities in America. In fact, the 
case for repeal is clear and convincing. No one can defend the deals 
that have been made under section 1071. Clarence McGee got a 29-percent 
stake in a station for the investment of $290 plus $106 million in 
borrowed money collateralized by the station's assets and cash flow.
  Washington Redskins owner Jack Kent Cooke purportedly has received 
tens of millions of dollars of tax breaks from the FCC, using minority 
tax certificates four times in recent years.
  In 1993, the Times Mirror sold four TV stations for $335 million to a 
``minority partnership,'' in which the minority partner invested 
$153,000 in borrowed money.
  The Times Mirror, on the other hand, reportedly received a tax break 
of somewhere between $35 million and $80 million in the transaction.
  Now, remember, folks, we had testimony in hearings over and over 
again that these deals are done at the market rate. The tax benefit 
goes to the seller, to the Times Mirror. That is who got the tax break. 
It is not the disadvantaged poor, it is the affluent rich, no matter 
what color their skin, that are getting the tax breaks from these 
deals.
  Mr. RANGEL. Mr. Chairman, will the gentlewoman yield?
  Mrs. JOHNSON of Connecticut. I yield to the gentleman from New York 
briefly.
  Mr. RANGEL. I thank the gentlewoman for yielding. I will be brief.
  Let me make it abundantly clear that the only reason that the big, 
rich, white folks get the tax benefits is because the minorities are 
not a part of understanding when these benefits are there. This is 
given to them to search out for minorities so we can get our foot in 
the door.
  Mrs. JOHNSON of Connecticut. Reclaiming my time, there are many 
examples of very rich, affluent minority members who are benefiting 
from this program and others who are being made rich because they have 
the inside track on how to be part of these big deals. It is not your 
ordinary folk out there who on the whole are benefiting from these 
deals.
  Let me address the issue of restructure and reform.
  [[Page H1947]] If the program is benefiting the wrong people, why not 
restructure it in form? First of all, there is no evidence that this 
approach works.
  Over the almost 20 years of this approach, minority ownership has 
gone from 0.5 percent to under 3 percent. Over about 20 years, that 
growth is far more rationally attributable to the growth in wealth in 
the minority community than to this program.
  Second, because the substitute continues the practice of a Federal 
agency handing out tax breaks, it perpetuates a loophole that will 
continue to benefit primarily the affluent doing big deals in America.
  We heard over and over again how this program functions. We heard 
over and over again that there is very little evidence of any of its 
benefits, in part because the Congress would not allow the oversight 
work to proceed because it seemed to be demonstrating that the program 
was ineffective.
  Restructuring cannot help a program that in fact does not work.
  Furthermore, restructuring a program that gives a Federal agency the 
right to, on its own hook, hand out millions of dollars of subsidies is 
bad in principle.
  I for one do not believe the day has come when we can eliminate 
affirmative action policies. But I also agree with Justice Sandra Day 
O'Connor that, ``Because racial classifications themselves are 
inherently divisive, they must always be narrowly tailored to remedy 
the effects of past racial discrimination.'' As Johnathan Rauch, the 
author of an article on FCC programs, which recently appeared in the 
New Republic put it best:

       The policy, however admirable the intentions, makes a 
     mockery of Justice Lewis Powell's pronouncement in Bakke: 
     ``Preferring members of any one group for no reason other 
     than race or ethnic origin is discrimination for its own 
     sake. This the Constitution forbids.''

  I urge a ``no'' vote on the amendment and a ``yes'' vote on the bill.
  Mr. McDERMOTT. Mr. Chairman, I yield such time as he may consume to 
the gentleman from Ohio [Mr. Stokes].
  (Mr. STOKES asked and was given permission to revise and extend his 
remarks.)
  Mr. STOKES. I thank the gentleman for yielding this time to me.
  I rise in opposition to H.R. 831 and in support of the McDermott 
substitute.
  Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from 
California [Mr. Becerra].
  (Mr. BECERRA asked and was given permission to revise and extend his 
remarks.)
  Mr. BECERRA. I thank the gentleman for yielding.
  Mr. Chairman, let me thank the gentleman for yielding some time and 
acknowledge to the rest of the Members what I think we all know: Most 
of the people that have taken to this well to speak are here to support 
the health insurance tax deduction for self-employed, something we all 
believe should be extended.
  But, unfortunately I do not believe a number of us could support H.R. 
831 the way it is. That is why we wish to speak on behalf of the 
McDermott amendment.
  When you take a look at what we are doing here. We are cutting out 
opportunity for some to provide it to others. That is not the way to do 
it, to rob from Peter to give to Pauline.
  If you take a look at your radio stations and your television 
stations, if you turn on that radio and change that dial or change the 
channel on that TV, everywhere across the Nation you can count up every 
radio station and every TV station, and you can only count up 323 
stations that are minority owned. You can virtually count 323 stations 
just on your radio dial in Los Angeles alone, but throughout the Nation 
we have 323 that are minority owned.

                              {time}  2040

  And that is because we have this tax certification program that has 
helped raise that level of ownership five times. And now we are here to 
eliminate it without even having held a public hearing to discuss the 
merits of the program. Well, there are some in this House who would 
support the media magnate by the name of Rupert Murdoch and give him 
tax breaks but are not unwilling to support people who have been closed 
out from media altogether for far too long.
  I would say we take a look at what we are doing here, take a look at 
who we are trying to give opportunity to and say yes to the McDermott 
amendment and no to H.R. 831.
  Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from 
New York [Mr. Hinchey].
  Mr. HINCHEY. Mr. Chairman, it is obviously a good idea to allow 
people who are self-employed to deduct the cost of their health 
insurance premiums. And for that measure, this is a good bill.
  The problem is, it does not go nearly far enough. Why only 25 
percent? Why are we not allowing people who are self-employed to deduct 
the full cost of their health insurance premiums? This bill ought to do 
that.
  There is another deficiency as well. This bill does not relate to the 
insurance premiums of employees. The McDermott substitute would correct 
that deficiency. People who are out working, working every day, 
carrying lunch pails, standing in line, working in supermarkets and 
checkout counters and factory situations, many of them do not have 
health insurance. We ought to make it possible for them to get health 
insurance, too. They ought to be able to deduct the cost of their 
health insurance, a minimum of 25 percent. They ought to be able to 
deduct the full cost of that health insurance. We really have not done 
our job unless we do that.
  The McDermott substitute would provide at least the beginnings of 
that kind of allowability for deduction of those health insurance 
premiums. I very strongly support the McDermott substitute, because it 
will allow employees also to deduct the cost of their health insurance 
premiums.
  Yes, let us do it for people who are self-employed. Let us not stop 
at 25 percent. Let us go to the full cost of that health insurance. But 
let us take the first step here tonight by passing the McDermott 
substitute and providing that people who are employees will also have 
the opportunity to get health insurance by deducting the cost of those 
health insurance premiums.
  Let us pass the McDermott substitute.
  Mr. McDERMOTT. Mr. Chairman, do I have the right to close?
  The CHAIRMAN. The right to close rests with the gentleman from Texas 
[Mr. Archer].
  Mr. McDERMOTT. Mr. Chairman, I reserve the balance of my time.
  Mr. ARCHER. Mr. Chairman, as the Chair actually stated, we have the 
right to close, and I reserve the balance of my time.
  Mr. McDERMOTT. Mr. Chairman, I yield such time as he may consume to 
the gentleman from Virginia [Mr. Scott].
  (Mr. SCOTT asked and was given permission to revise and extend his 
remarks.)
  Mr. SCOTT. Mr. Chairman, I rise in support of the McDermott-Gibbons 
amendment.
  Mr. Chairman, I rise in support of the Gibbons-McDermott substitute 
for H.R. 831. Not only does the substitute provide for equitable tax 
treatment for the people most adversely affected by the absence of 
health care insurance, it also addresses, at least partially, a problem 
that Congress has failed to adequately address--the absence of health 
care insurance for hard-working Americans.
  Why we continue to ``stick our heads in the sand'' and pretend we 
don't see or feel the cost of health care to people without insurance 
is beyond me. After we allow them to fall into financial ruin and 
poorer health due to exhorbitant health care costs, we then pay a lot 
more through government health care provisions and higher health 
insurance and service costs to those who still can pay for it. We will 
pay much more through these methods than we will for a 25-percent 
deduction for uninsured or underinsured individuals.
  Employees in small businesses who are paying for health insurance are 
generally paying a lot more than employees in large group plans. The 
substitute will ensure that they can acquire more insurance or at least 
continue the limited coverage they already have.
  I also believe that the modifications of the nonrecognition of gain 
for involuntary conversions under the FCC Tax Certificate Program in 
the Gibbons-McDermott substitute are also reasonable ways to address 
any perceived short-comings in a program that has proved highly 
successful in bringing minorities clearly into the mainstream.
  Mr. Chairman, it is time that we face up to the cost of health care 
we are already paying 
[[Page H1948]] indirectly. We should adopt the Gibbons-McDermott 
substitute as a part of directly recognizing and partially addressing a 
serious and ever-growing crisis for American families.
  Mr. McDermott. Mr. Chairman, I yield such time as she may consume to 
the gentlewoman from Hawaii [Mrs. Mink].
  (Mrs. MINK of Hawaii asked and was given permission to revise and 
extend her remarks.)
  Mrs. MINK of Hawaii. Mr. Chairman, I rise in support of the Gibbons-
McDermott substitute.
  Mr. Chairman, I rise in strong support of the Gibbons-McDermott 
substitute to H.R. 831.
  Throughout the past Congress it was made unmistakably clear that our 
health care system and the way in which it is financed must be 
significantly reformed. Health care costs are escalating, placing a 
considerable burden upon the Federal and state governments, as well as 
the private sector. Additionally, the number of working Americans who 
lack any form of health insurance continues to increase. At last count, 
there were 37 million working Americans without health insurance--
surely there are many more now. People without insurance do not cease 
to get sick, however, and someone--usually the doctor or hospital--must 
pay the bills. This causes prices to go up for all of us, making health 
insurance even less affordable than it is now. The Gibbons-McDermott 
substitute, however, takes steps to remedy this problem.
  The Gibbons-McDermott substitute would expand the number of insured 
Americans in two ways. First, like H.R. 831, it would restore and 
extend the 25-percent deduction for self-employed individuals, which 
expired in 1993. Secondly, and most importantly, it would allow a 25-
percent deduction for health insurance purchased by individuals whose 
employers do not provide health insurance. In this way, many of the 
more than 37 million uninsured Americans would have a new incentive to 
purchase health insurance. Again, only by increasing the number of 
insured people, can health care costs be reduced and health insurance 
be made affordable to all.
  H.R. 831, however, unlike the Gibbons-McDermott substitute, would not 
add any additional incentives which were not already in place in 1993. 
H.R. 831 only reinstates and extends the then existing 25-percent 
deduction for health care insurance purchased by a self-employed 
individual. H.R. 831 does nothing to expand the number of individuals 
who have health insurance. The Gibbons-McDermott substitute, on the 
other hand, addresses the root cause of our health care crises--the 
fact that many working Americans cannot afford health insurance. By 
allowing those whose employer do not provide health insurance to 
receive the same deduction as the self-employed, all workers are put on 
a level playing field and have an equal incentive to purchase health 
insurance.
  In addition to taking real steps to solve our health care crisis, the 
Gibbons-McDermott substitute significantly reforms, but does not 
eliminate the tax preferences which have been used to encourage 
increased minority ownership of broadcasting companies.
  The Gibbons-McDermott bill would place stringent limits upon 
individuals who seek to benefit from tax laws encouraging the sale of 
broadcasting companies to minority-owned firms. The Gibbons-McDermott 
bill would: limit the seller's deferrable gain on sale to $50 million; 
require minority purchasers to prove equity ownership; require minority 
purchasers to show voting control and management control; demand that 
minority purchasers hold their property for three years following its 
sale; and, prohibit ineligible parties from having the right to buy out 
minority investors. These provisions will not only allow minorities to 
participate in the largely white-controlled communications industry, 
but they will also provide safeguards against fraud and abuse by both 
the seller and the minority buyer.
  H.R. 831, however, would completely gut this program. Its proponents 
argue that this program is costly and widely abused. The Gibbons-
McDermott substitute, however, solves these problems. It limits costs 
by reducing the allowed deferrable gain to $50 million, and it adds 
significant protections against fraud by purchasers and sellers.
  Most importantly, now is not the time to eliminate laws which 
encourage minority ownership of broadcasting companies. Because of this 
law, minority ownership has risen since 1978 from 0.5 percent to 2.7 
percent of all broadcast stations. This more than 500 percent increase 
represents success by small, minority-owned businesses, which provide 
economic opportunities in their communities, add greater diversity in 
local broadcasting. Removing this protection would destroy all of the 
progress which has been achieved thus far, and would make it virtually 
impossible to achieve the goal of fairly integrating the ownership and 
operation of the broadcast media.
  For the above stated reasons, I strongly urge that we vote to pass 
the Gibbons-McDermott substitute.
  Mr. McDERMOTT. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, we are here today on a fundamental decision that nobody 
disagrees with. Everybody here believes that we ought to extend the 25-
percent deduction for self-employed people for buying health insurance. 
But that is not the issue. The real issue here is how are we going to 
pay for it.
  And when we brought this bill to committee, I offered a whole series 
of tax exemptions that we could have used to pay for it, but we chose 
the one that we are here dealing with today, which is section 1071 of 
the Tax Code.
  Members may ask why we chose that one, and I will quote here from a 
memo from the Project for a Republican Future to the Republican leaders 
by William Kristol, dated February 21, in which he says, ``the bill's 
true subject is affirmative action.''
  Now, this is like that story about the small boy standing next to the 
road when the King went by who said, the Emperor has no clothes. Mr. 
Kristol took the clothes off because he says:

       It represents a strategic, intelligent first step in what 
     should be a major element of the Republican party's larger 
     post-contract agenda, a roll back of the massive system of 
     racial prejudices and set-asides that have come to infect 
     federal law and American life over the last 25 years.

  That is what this issue is about. That is why this was chosen as the 
way to fund this. There is no question. The consultants told them to do 
it, and that is what they did.
  Now, I wish more than anything standing here, I wish this was a 
color-blind society. I wish that the gentleman from Texas [Mr. Archer] 
was absolutely correct. I wish we were not having this debate. But we 
all know this is not a color-blind society. The reason why we have 
these preferential tax credits and why they are there, everybody 
figured out, well, if we want minorities to know when a radio station 
or television station is up for sale, we got to have somebody who owns 
one go looking for them. Otherwise the decisions will all be made in 
the board rooms or at the local club or the golf course. And they will 
never ever know it was for sale in the first place. So when we put in 
this tax deduction, it is true, the minorities do not get it. They do 
not get it at all. But it gives them access, like we wanted to give 
last year, access in health care.
  I accept a certain amount of, well, I do not know what, from Members 
about this being a rather modest health care reform proposal. I could 
make a much larger one here tonight. I would be glad to put it out 
here. But the fact is this is a modest proposal to give people access 
to buy radio, television, cable networks, personal communication. And 
the reason why this program is here is because of some words that 
Justice Blackmun said in a dissenting opinion. He said that 
``arrangements of successful affirmative action programs by race-
neutral means is impossible.'' This means you cannot have a successful 
effort to bring women and minorities into the telecommunications 
industry without taking into consideration race and gender.
  Now, nobody says this has been a roaring success. But it is a way 
that has worked. In my city there are two black-owned radio stations. 
There is one native American-owned radio station. And they came through 
this program. And there are 300 of them across the country that would 
not have been there had it not been for this program.
  I am saying that I gave people a choice. Do we
   want to destroy this program, or would we like to tighten it up? All 
of us agree on this side that that was an egregious deal. Nobody is 
standing up here defending the Viacom deal, get that straight. But we 
do think that there is room for this program. It has a purpose and a 
place in our trying to deal in this society with the problems that we 
have had in the past.

  For that reason, I urge the adoption of this substitute amendment.
  Mr. ARCHER. Mr. Chairman, I yield the balance of our time to the 
gentleman from Texas [Mr. Armey], the respected majority leader of the 
House.
  Mr. ARMEY. Mr. Chairman, I thank the gentleman for yielding time to 
me.
  Mr. Chairman, let me just reiterate several points that the gentleman 
from Texas [Mr. Archer] has made earlier in this debate, because I 
think they are 
[[Page H1949]] very important to our decision on the McDermott 
substitute.
  First, the legislative history of section 1071 clearly shows that 
Congress originally intended the statute to apply only to involuntary 
sales of radio stations. The FCC itself has admitted that this 
rationale no longer applies.
  Second, there is no requirement that one must be actually 
disadvantaged to qualify for the FCC minority tax certificate. Scarce 
Federal resources should be used to help those who are truly in need, 
not multibillion dollar telecommunications companies.
  Third, there is no substance to the FCC's policy rationale of 
promoting programming diversity.
                              {time}  2050

  Our Nation's air waves carry abundant programming, directed at people 
of different races and ethnic backgrounds. In addition, public access 
channels have been set aside on the cable systems of every community to 
ensure that everyone in America has access to the Nation's air waves.
  More important, studies show that minority broadcasters are driven by 
the same motives as any other broadcasters, to make money by maximizing 
ratings. Under our free market system, broadcasters have two basic 
choices. They can either design programming that will appeal to their 
audiences, or they can go out of business.
  Mr. Chairman, the fact is that the diversity of programming premise 
is a red herring. The FCC uses tax certificates in its Personal 
Communications Services licensing program, and this has nothing to do 
with the originating or programming for the air waves.
  Mr. Chairman, after we strip off all the veneer, what we are left 
with is this: the FCC is using the tax code to promote racial and 
ethnic diversity in the ownership of broadcast facilities, period. 
Although the FCC has not yet fixed a number on what it believes to be 
the ideal racial and ethnic mix, its policies come dangerously close to 
sounding like a quota system for minority ownership of communications 
companies.
  Mr. Chairman, what is truly amazing is that in the mid eighties the 
FCC itself tried to examine whether its programs were constitutionally 
permissible. However, in 1987, the Democrat-controlled Congress stepped 
in and actually prohibited the agency from conducting such an 
examination, or addressing even the abuse in the tax certification 
program.
  Section 1071 has already cost the Nation's taxpayers a bundle, and 
will cost them another $1.4 billion over the next 5 years.
  Mr. Chairman, if someone came before the Congress today to propose 
giving a Federal agency the power to hand out tax breaks to carry out 
whatever policies that agency decided to adopt, they would be laughed 
out of the building. Imagine the uproar that would be heard across this 
land if the Pentagon asked for such authority.
  Moving the authority to issue the tax certificate to the Internal 
Revenue Service does not cover up that basic flaw. All that the 
substitute will do is eliminate the type of abusive transactions which 
prior congresses essentially forced the FCC to approve. It still keeps 
the FCC's basic policy in place, and that policy is offensive to the 
principle that our tax code should be color blind.
  The time has come to repeal section 1071. I urge my colleagues to 
defeat the McDermott substitute, pass the committee bill, and 
demonstrate that the time has come in America where we dare to respect 
the best dreams of the true civil rights leaders in this Nation's 
history.
  Ms. PELOSI. Mr. Chairman, I rise today to support the Gibbons/
McDermott substitute to H.R. 831.
  Mr. Chairman, this substitute would establish a 25-percent deduction 
for health insurance costs to employees not eligible to participate in 
an employer-sponsored health plan. For those employees whose health 
insurance is not employer-sponsored, this 25-percent deduction is an 
issue of fundamental fairness which deserves our support.
  Denying employees who must buy their own health insurance the same 
deduction we give their employers ignores real need.
  Had the Republicans on the Rules Committee allowed the rule for H.R. 
831 to be open, rather than completely closed, we could be considering 
other meritorious amendments to this legislation, such as the proposal 
to extend the current deduction to 80 percent. Unfortunately this rule, 
like so many others we have seen was closed.
  In addition, Mr. Chairman, the McDermott substitute would narrow the 
tax preference for sales of radio, T.V. and cable companies to 
minority-owned firms, rather than repealing it as under the bill.
  Before section 1071 was enacted minorities owned virtually to TV or 
radio stations in this country. Thanks to this provision of the 
Internal Revenue Code, the numbers of minority owned media properties, 
while still very small, are growing.
  Repeal of this section will completely undo the progress this Nation 
has made to provide opportunities for African-Americans, Asian-
Americans, Hispanic-Americans, and others to fully participate in the 
economic and social fabric of our Nation.
  I urge my colleagues to vote for the Gibbons/McDermott substitute.
  Mr. BISHOP. Mr. Chairman, I rise in support of the Gibbons-McDermott 
substitute for H.R. 831. Unlike the committee bill, the substitute 
provides for both a permanent 25-percent health insurance deduction for 
the self-employed and a tax preference for persons who sell broadcast 
facilities to minorities.
  Congress has provided for a health insurance tax deduction for the 
self-employed since 1986. As a freshman Member in 1993, I supported 
this deduction because it is good for business. It is good for farmers 
and for all who are self-employed. A self-employed individual should be 
permitted the same health insurance deduction that is provided to the 
Fortune 500 businesses. But at the least 25 percent.
  Mr. Chairman, I feel strongly, however, that a vote in support of the 
health insurance deduction should not mean a vote against the tax 
preference for sales of broadcast companies to minority-owned firms. 
These two worthwhile policies should not be mutually exclusive. In 
1978, Congress recognized the need for a tax preference for persons who 
sold broadcast facilities to minorities. The tax preference was 
developed in order to increase minority ownership of radio and 
television stations. Since that time, Congress has repeatedly 
reaffirmed this policy through annual appropriations legislation and 
the Reagan administration extended the policy to cable systems.
  Today, nearly 20 years later, the need for incentives to increase 
broadcast diversity is even greater. Opponents of the tax preference 
program point to one apparently legal transaction and allege the 
absence of real minority ownership in that transaction. If the program 
is subject to this type of abuse, then let us engage in corrective 
measures rather than act as extremists and repeal the entire program. 
Don't throw out the baby with the bathwater. The Gibbons-McDermott 
substitute provides for such corrective measures. In addition to 
requiring that minorities demonstrate real equity ownership, it also 
requires minorities to prove voting and management control.
  Mr. Chairman, I urge my colleagues to support the substitute bill 
which allows two beneficial policies to coexist.
  Mr. BENTSEN. Mr. Chairman, I rise in support of the McDermott 
substitute to the bill. This amendment will restore and make permanent 
the 25 percent health insurance tax deduction for the self-employed and 
extend it to hardworking employees. This benefit will help small 
business owners, farmers and other self-employed individuals contend 
with rising health care costs. It will also help those working 
individuals who do not have health benefits without burdening 
businesses.
  We must act now to help small business owners and employees who face 
real hardship when it comes to health insurance costs. As a member of 
the small business committee, I have seen and heard firsthand how much 
this deduction means to people who have to make ends meet solely for 
themselves.
  Under the McDermott substitute, we have an opportunity to extend this 
deduction to individuals whose employers do not subsidize their health 
insurance. While I have publicly stated that we should treat the small 
business as we treat large corporations, the same should be true for 
employees who do not currently receive health insurance through their 
workplace.
  We must ease the financial burden of employees without asking 
employers to pay. The McDermott substitute does that. This deduction, 
if enacted before the April 15 deadline, will provide substantial 
relief to over 9 million self-employed business owners, many millions 
more of employees, and hundreds of thousands of Texans who face their 
1994 tax returns with real concern.
  Ms. VELAZQUEZ. Mr. Chairman, I rise in strong support of the Gibbons-
McDermott substitute to H.R. 831. Not only does the substitute 
amendment restore the 25 percent health insurance tax deduction, but it 
also expands the benefit to employees who are currently ineligible to 
participate in employer-sponsored health plans.
  [[Page H1950]] Just as importantly, this substitute would expand the 
health insurance deduction without sacrificing the FCC's section 1071 
program. In an increasingly diverse society, it is alarming that women 
and persons of color play such a small role in the broadcasting 
industry. We can never be guided by the truth if we turn a deaf ear to 
this Nation's many voices.
  The section 1071 program's tax provisions have proven effective for 
enhancing the voices of women and minority individuals. Women and 
minorities held less than 1 percent of the total broadcasting licenses 
16 years ago, before section 1071 was enacted. Although women and 
minority broadcasters still struggle, they now control 3 percent of all 
broadcast licenses.
  Like any other program, section 1071 is subject to abuse. The 
Gibbons-McDermott substitute deals with these concerns as well. It 
would minimize minority ownership scams by requiring women and minority 
owners to both demonstrate equity ownership and substantiate voting and 
management control over their broadcast company. The substitute would 
also require minority owners to retain their FCC license for a minimum 
of 3 years.
  Mr. Chairman, only the Gibbons-McDermott substitute offers both 
health and fairness. It will expand health insurance coverage, without 
sacrificing diversity on the airwaves. I urge support for the Gibbons-
McDermott substitute.
  Ms. BROWN of Florida. Mr. Chairman, I rise in strong support of the 
Gibbons-McDermott substitute to H.R. 831, the Health Premium Deduction 
for the Self-Employed. We all agree with the purpose of this bill which 
is to permanently extend the tax deduction for 25 percent of health 
insurance costs of self-employed individuals. This is an issue that was 
supposed to be addressed in comprehensive health care legislation in 
the last Congress. So while I support this tax deduction, I would ask 
that we not forget about the need in this country for health care 
reform.
  This is a bill that should not have been controversial. I believe 
that it would have been passed without any opposition. Unfortunately, 
Members of the majority are using this bill to begin their assault on 
affirmative action programs. This is clearly just the beginning of a 
larger effort to dismantle efforts to assure that minorities can truly 
have an equal opportunity in the American society.
  I stand before you tonight outraged and offended by the Republicans' 
decision to pay for this program by repealing the FCC's minority 
preference program. We all know that the tax code is filled with tax 
breaks for wealthy white men, and yet the Republicans have picked the 
only tax provision affecting minorities to repeal.
  Nearly 20 years ago, the FCC established a policy of providing tax 
preferences for sales of radio, television, and cable companies to 
minority-owned firms. This policy has been supported by the past four 
administrations, both Democrat and Republican. The aim of the program 
is to increase minority ownership of radio and television stations and 
thus promote the diversity of broadcast views.
  Since this program went into effect, there have been over 300 sales 
to minority-owned firms, and minority ownership has increased from 0.5 
percent to 2.9 percent. However, it is clear that more must be done. 
Minorities are still vastly underrepresented in the broadcast business 
with more than 97 percent of all broadcast licenses being held by white 
men. Without this program, the number of licenses issued to minority-
controlled businesses would be far less as would the diversity of 
broadcast views.
  That's why I would urge my colleagues to carefully consider the 
Gibbons-McDermott substitute. It's a good bill. The substitute finances 
the health care tax deduction by levying a punitive tax on wealthy 
people who give up their U.S. citizenship in an effort to avoid taxes 
and revises the rules governing foreign trusts. In addition, the 
substitute addresses legitimate concerns about the FCC's minority 
preference program. It requires minorities to demonstrate real equity 
ownership in the company; to prove voting control and management 
control of the purchasing company; and to hold the property for 3 years 
after the sale.
  My colleagues, I look forward to the day when we don't have to have 
these laws, but it is clear and evident from the data and statistics 
that affirmative action is still needed to reverse past racial and sex-
based discrimination.
  I urge you to support the Gibbons-McDermott substitute.
  The CHAIRMAN. All time for debate has expired.
  The question is on the amendment in the nature of a substitute 
offered by the gentleman from Washington [Mr. McDermott].
  The question was taken; and the Chairman announced that the noes 
appeared to have it.


                             recorded vote

  Mr. GIBBONS. Mr. Chairman, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 191, 
noes 234, not voting 10, as follows:
                             [Roll No. 148]

                               AYES--191

     Abercrombie
     Ackerman                                                       ____
     Andrews
     Baesler
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Bonior
     Brewster
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant (TX)
     Cardin
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Danner
     Deal
     DeFazio
     DeLauro
     Dellums
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Durbin
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Fazio
     Fields (LA)
     Filner
     Flake
     Foglietta
     Ford
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Gibbons
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hamilton
     Hastings (FL)
     Hefner
     Hilliard
     Hinchey
     Holden
     Hoyer
     Jackson-Lee
     Jacobs
     Jefferson
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kleczka
     Klink
     LaFalce
     Lantos
     Laughlin
     Levin
     Lincoln
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy
     McDermott
     McHale
     McKinney
     McNulty
     Meehan
     Menendez
     Mfume
     Miller (CA)
     Mineta
     Minge
     Mink
     Moakley
     Mollohan
     Montgomery
     Moran
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Owens
     Pallone
     Pastor
     Payne (NJ)
     Payne (VA)
     Pelosi
     Peterson (FL)
     Pickett
     Pomeroy
     Poshard
     Rahall
     Reed
     Reynolds
     Richardson
     Rivers
     Ros-Lehtinen
     Rose
     Roybal-Allard
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Sisisky
     Skaggs
     Skelton
     Slaughter
     Spratt
     Stark
     Stenholm
     Stokes
     Studds
     Stupak
     Tanner
     Taylor (MS)
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Torricelli
     Towns
     Traficant
     Tucker
     Velazquez
     Vento
     Visclosky
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Williams
     Wilson
     Wise
     Woolsey
     Wyden
     Wynn
     Yates

                               NOES--234

     Allard
     Archer
     Armey
     Bachus
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bono
     Boucher
     Brownback
     Bryant (TN)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clinger
     Coble
     Coburn
     Collins (GA)
     Combest
     Cooley
     Cox
     Crane
     Cremeans
     Cubin
     Cunningham
     Davis
     DeLay
     Dickey
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Forbes
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Ganske
     Gekas
     Geren
     Gilchrest
     Gillmor
     Gilman
     Gingrich
     Goodlatte
     Goodling
     Goss
     Graham
     Greenwood
     Gunderson
     Gutknecht
     Hall (TX)
     Hancock
     Hansen
     Harman
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King
     Kingston
     Klug
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Linder
     Livingston
     LoBiondo
     Longley
     Lucas
     Manzullo
     Martini
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Meyers
     Mica
     Miller (FL)
     Molinari
     Moorhead
     Morella
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oxley
     Packard
     Parker
     Paxon
     Peterson (MN)
     Petri
     Pombo
     Porter
     Portman
     Pryce
     Quillen
     Quinn
     Radanovich
     Ramstad
     Rangel
     Regula
     Riggs
     Roberts
     Roemer
     Rogers
     Rohrabacher
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stearns
     Stockman
     Stump
     Talent
     Tate
     Tauzin
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Upton
     Vucanovich
     Waldholtz
     [[Page H1951]] Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                             NOT VOTING--10

     Borski
     Crapo
     de la Garza
     Ehlers
     Gallegly
     Gonzalez
     Lewis (GA)
     Meek
     Metcalf
     Rush

                              {time}  2111

  Mrs. MORELLA changed her vote from ``aye'' to ``no.''
  Mr. TAYLOR of Mississippi changed his vote from ``no'' to ``aye.''
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
                              {time}  2113

  The CHAIRMAN. Under the rule, the Committee rises.
  Accordingly, the Committee rose, and the Speaker pro tempore [Mr. 
Walker] having assumed the chair, Mr. McInnis, Chairman of the 
Committee of the Whole House on the State of the Union reported that 
that Committee, having had under consideration the bill (H.R. 831) to 
amend the Internal Revenue Code of 1986 to permanently extend the 
deduction for the health insurance costs of self-employed individuals, 
to repeal the provision permitting nonrecognition of gain on sales and 
exchanges effectuating policies of the Federal Communications 
Commission, and for other purposes, pursuant to House Resolution 88, he 
reported the bill back to the House with an amendment adopted by the 
Committee of the Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered and the amendment is adopted.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time and was 
read the third time.


                motion to recommit offered by mr. stark

  Mr. STARK. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. STARK. I am opposed to the bill in its present form, Mr. Speaker.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. Stark moves to recommit the bill H.R. 831 to the 
     Committee on Ways and Means with instructions to report the 
     same back to the House forthwith with the following 
     amendment:
       At the end of the bill insert the following:

     SEC. 5. REPEAL OF MAXIMUM PERIOD OF MANDATORY CONTINUATION 
                   COVERAGE UNDER GROUP HEALTH PLANS.

       (a) In General.--Section 162 of the Internal Revenue Code 
     of 1986 is amended by redesignating subsection (o) as 
     subsection (p) and by inserting after subsection (n) the 
     following new subsection:
       ``(o) Group Health Plans Not Providing Extended 
     Continuation Health Coverage.--
       ``(1) In general.--No deduction shall be allowed under this 
     chapter for any amount paid or incurred by an employer for 
     any group health plan to which section 4980B applies if such 
     plan fails to provide extended continuation coverage with 
     respect to any qualified beneficiary (as defined in section 
     4980B(g)).
       ``(2) Extended continuation coverage.--For purposes of 
     paragraph (1), the term `extended continuation coverage' 
     means coverage which would be required to be provided under 
     section 4980B but for subsection (f)(2)(B)(i) thereof.''
       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to qualifying events (as defined in 
     section 4980B of the Internal Revenue Code of 1986) occurring 
     before, on, or after the date of the enactment of this Act, 
     but shall not apply if the period of continuation coverage 
     required under section 4980B of the Internal Revenue Code of 
     1986 with respect to the qualifying event has expired before 
     such date.

  Mr. STARK (during the reading). Mr. Speaker, I ask unanimous consent 
that the motion to recommit be considered as read and printed in the 
Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. STARK. Mr. Speaker, as I indicated, I am opposed to H.R. 831 in 
its present form. We can do better and we can go home tonight, and 
without any cost to the Federal Government and without any cost to 
American employers we can lift the fear from 3\1/2\ or 4 million 
American families, the fear that they may lose their extended coverage 
which they received under a bill that we passed unanimously.
  This is a bill we passed unanimously in the Ways and Means Committee 
in 1985, under which over 36 million Americans have had continuation of 
group health insurance after they lost their employer- or would have 
lost their employer-based health insurance because of a change in 
family status, because of disability, because of a transfer, because a 
branch factory or factory closed.
  This is a bipartisan amendment which adds to every word in the 
Republican bill. And all it does is extend permanently these extensions 
that are known as COBRA to nearly 4 million Americans so that the time 
clock will stop ticking and they will stop worrying about losing this 
protection.
  Let me quickly address two concerns and they have only been raised 
modestly. One concern is it will take a little extra time. It will take 
5 minutes of your time tonight, ladies and gentlemen, for a quick vote 
to add this amendment and to bring to thousands of people in your 
districts the peace of mind that their insurance will not end if they 
are currently under a group insurance plan with extended coverages.
  Second, it has been claimed that employers might be saddled with 
additional costs under a complicated thing known as adverse selection. 
That is not true. The reverse is true.
  Four million people becoming uninsured will add more costs through 
cost shifting to the total cost of all of our paying for health care 
coverage than a few people who might try and game the system. There 
will be no change in rate to employers. They will continue their same 
payment. The employee will pay 102 percent of the coverage instead of 
perhaps the 20 or 30 percent that he or she is paying now. It is as if 
I am paying $101 a month for Blue Cross under my Federal plan, just 
like many of you. If I were disabled and had to leave and did not have 
the generous continuation, I would then have to pay 400-some dollars 
plus $8 a month to the Clerk to bill me and I could continue my Blue 
Cross low option.
  I want to extend that peace of mind to every American. And as I say, 
this does not have a partisan difference in it.
  I ask Members' support for this so we can walk out of here tonight. 
This is a bipartisan bill. I subject this is a bipartisan motion to 
recommit, and I would ask Members to think about the people that will 
receive the good news that they will have a small tax deduction, those 
who are self-employed. Let us expand that. Both sides of the aisle have 
talked about the desirability of portability. This is not quite 
portability, but it is a step, it is a modest step toward getting the 
kind of health reform that we agreed last year was needed.
  This is a modest proposal that was agreed to in some of the bills 
last year on both sides of the aisle.

                             {time}   2120

  So for a few minutes of inconvenience tonight, for one extra vote 
tonight, you can go home and say this, that for the 3,600,000 to 4 
million people in America who sometime in the next 18 to 20 months will 
lose their health insurance--they are paying for it out of their own 
pockets, at no cost to the Federal budget, at no cost to their 
employer--we can extend that privilege.
  If there ever was a time for us to come together to help those 
people, it is tonight.
  Ladies and gentlemen, I implore you, we have our own Members who have 
children who are not covered because they are over 22 and they have to 
go off health insurance, buy COBRA insurance.
  We have many cases throughout the land where this insurance will help 
families. I urge you to think tonight that we have no partisan 
difference, we have no cost to the budget, we can only help a few 
Americans who will be desperate to find health insurance if we do not.
  Mr. Speaker, as stated, I am opposed to H.R. 831 in its present form.
  We can do better. We can do better for American workers--without cost 
to the Federal Government, without cost to employers, and without 
delay.
  Both the reason for moving this motion, and the remedy it contains, 
are very simple.
  The purpose of this motion is simply to help Americans keep the 
health insurance coverage they have when they lose their job or 
[[Page H1952]] have a change in their family status--in insurance lingo 
this is referred to as ``portability.''
  This motion would improve health insurance portability through a very 
simple means--by eliminating the time restrictions contained in the 
current Federal health insurance continuation protections. These 
protections are often referred to as ``COBRA'' protections after the 
1985 authorizing legislation.
  Today, nearly 4 million Americans have coverage because of these 
Federal protections. But under current law, the protections are 
limited, to a maximum of 18 to 36 months depending upon the qualifying 
event. For these Americans, the clock is ticking. Their protections may 
soon lapse. Supporting this motion would stop the clock, and lock these 
protections in place.
  Let me quickly address two concerns I have heard regarding this 
motion. Neither hold merit, and neither should delay us in protecting 
American workers and their families.
  First, supporting the motion to recommit would in no way delay or 
jeopardize the underlying bill. If my motion is agreed to, it will 
require one vote on the motion and one vote on final passage. But if we 
exclude these protections, there will still be one vote on my motion 
and one on final passage. The assistance to be provided the self-
employed will not be delayed one minute by the inclusion of these 
protections for workers.
  It makes no sense to leave behind one group of Americans--America's 
workers--when we have a chance to simply and quickly pass legislation 
to give them all greater peace of mind.
  Second, some claim that employers will be saddled with additional 
costs if this amendment passes. Just the opposite will actually result. 
This motion will reduce the cost-shift from uninsured Americans on to 
employers.
  The individual or family member that chooses to continue coverage 
would pay 100 percent of the premium--150 percent in the case of 
disabled persons--plus a 2 percent administrative fee. The key for the 
former employee or their family member is having continued access to 
health insurance coverage at group rates. If this protection is allowed 
to lapse, these individuals and families are forced into the individual 
insurance market where rates easily become unaffordable as they can 
jump by 100 to 500 percent.
  We can all agree that the cost of health care for those without 
health insurance often ends-up in the premiums of employers and other 
who purchase health insurance. My motion would reverse this cost-shift 
trend. Rather than become a drain on business or on government 
insurance programs, those allowed to continue purchasing health 
insurance at the more affordable group rate will continue to pay for 
their coverage. By keeping more Americans under the umbrella of health 
insurance, businesses would see a drop, not an increase, in the burden 
of uncompensated care.
  We have been told of the need to take immediate action on H.R. 831 
because the Federal income tax filing deadline is approaching. For the 
nearly 4 million Americans that have insurance as a result of the 
current time-limited insurance continuation protections, their 
deadlines are passing every day, and they are losing coverage. We need 
to act quickly on both of these measures.
  I ask your support for this motion. A vote in favor of this motion is 
a vote to strengthen the health insurance protections of all Americans, 
not just the self-employed. For literally millions of Americans, time 
is running out.
  The SPEAKER pro tempore (Mr. Walker). The gentleman from Texas [Mr. 
Archer] is recognized for 5 minutes in opposition to the motion to 
recommit.
  Mr. ARCHER. Mr. Speaker, I rise to oppose Mr. Stark's motion to 
recommit H.R. 831. His proposal was fully debated in the Ways and Means 
Committee markup on this bill and was defeated on a vote of 22 to 13.
  Mr. Stark's proposal may appear to be a minor expansion of current 
law. However, the Stark instructions ignore the purpose of COBRA 
continuity coverage, place an unfair burden on business, and will 
almost certainly result in higher insurance premiums for both employers 
and their employees.
  The intent of the COBRA continuity provisions in the Tax Code is to 
offer a transitional benefit for employees and their dependents when 
they lose health coverage as a result of a qualifying event. This 
transitional coverage is intended to extend only for a reasonable 
period of time, with the expectation that individuals would shortly 
become eligible for coverage under another health plan. Under current 
law, this coverage can extend for up to 18 months for former employees 
and 36 months for their families. Removing the limitation on an 
employers obligation is essentially a mandate to provide coverage 
forever. So, plain and simple, the Stark proposal is nothing more than 
a back door employer mandate.
  This mandate on employers to cover people who are no longer connected 
to that employer in any way, for an unlimited period of time, is 
unreasonable and unfair. Furthermore, Mr. Stark's unlimited mandate 
would even require employers to permanently track individuals, who have 
never had a direct relationship with the employer.
  It is also the case, that COBRA continuity coverage is generally used 
by people who expect to have major medical expenses.
  Studies have shown that these former employees and dependents do not 
pay the true costs of their coverage. Instead, employers subsidize the 
cost of health care for former employees and dependents. This increases 
health insurance costs for employers as well as those employees who are 
contributing to their own premiums.
  Extending COBRA continuity beyond its intended purpose would not only 
increase health care costs for employers and employees, but may even 
make coverage unaffordable for some employers now offering coverage.
  That is why the NFIB and other small business groups so strongly 
oppose the Stark motion to recommit.
  Mr. Speaker, there has been sufficient time for debate on this bill. 
The House Ways and Means Committee and the full House have expressed 
their will. We need to complete our work now to provide for those self-
employed Americans who expect, and deserve to take this health 
deduction in April and not have to file amended returns.
  Mr. Stark wants to reignite the debate over health reform at this 
most untimely point, and raise the issue of employer mandates. We will 
turn to health care reform as the schedule permits, but at this moment 
we should move with dispatch to reinstate the expired tax provisions.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken, and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             recorded vote

  Mr. STARK. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 180, 
noes 245, not voting 9, as follows:
                             [Roll No. 149]

                               AYES--180

     Abercrombie
     Ackerman
     Bachus
     Baldacci
     Barcia
     Barrett (WI)
     Becerra
     Beilenson
     Bentsen
     Berman
     Bevill
     Bishop
     Bonior
     Boucher
     Browder
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant (TX)
     Cardin
     Chapman
     Clay
     Clayton
     Clement
     Clyburn
     Coleman
     Collins (IL)
     Collins (MI)
     Conyers
     Costello
     Coyne
     Cramer
     Danner
     DeFazio
     DeLauro
     Dellums
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Dixon
     Doggett
     Doyle
     Durbin
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Fazio
     Fields (LA)
     Filner
     Flake
     Foglietta
     Forbes
     Ford
     Frank (MA)
     Frost
     Furse
     Gejdenson
     Gephardt
     Gibbons
     Gordon
     Green
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hamilton
     Hastings (FL)
     Hayes
     Hefner
     Hilliard
     Hinchey
     Holden
     Hoyer
     Jackson-Lee
     Jacobs
     Jefferson
     Johnson (SD)
     Johnson, E. B.
     Johnston
     Kanjorski
     Kaptur
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kleczka
     Klink
     Lantos
     Levin
     Lincoln
     Lipinski
     Lofgren
     Lowey
     Luther
     Maloney
     Manton
     Markey
     Martinez
     Mascara
     Matsui
     McCarthy
     McDermott
     McHale
     McKinney
     McNulty
     Meehan
     Menendez
     Mfume
     Miller (CA)
     Mineta
     Minge
     Mink
     Moakley
     Mollohan
     Montgomery
     Moran
     Murtha
     Nadler
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pastor
     Payne (NJ)
     Pelosi
     Peterson (FL)
     Rahall
     Rangel
     Reed
     Reynolds
     Richardson
     Rivers
     Ros-Lehtinen
     Rose
     Roybal-Allard
     Sabo
     Sanders
     Sawyer
     Schroeder
     Schumer
     Scott
     Serrano
     Skaggs
     Slaughter
     Spratt
     Stark
     Stenholm
     Stokes
     Studds
     Stupak
     Tanner
     Tauzin
     Taylor (MS)
     Tejeda
     Thompson
     Thornton
     Thurman
     Torres
     Torricelli
     Towns
     Traficant
     Tucker
     Velazquez
     Vento
     Volkmer
     Ward
     Waters
     Watt (NC)
     Waxman
     Williams
     Wise
     Woolsey
     Wyden
     Wynn
     Yates
                        [[Page H1953]] NOES--245

     Allard
     Andrews
     Archer
     Armey
     Baesler
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Bereuter
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bono
     Brewster
     Brownback
     Bryant (TN)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clinger
     Coble
     Coburn
     Collins (GA)
     Combest
     Condit
     Cooley
     Cox
     Crane
     Cremeans
     Cubin
     Cunningham
     Davis
     Deal
     DeLay
     Dickey
     Dooley
     Doolittle
     Dornan
     Dreier
     Duncan
     Dunn
     Edwards
     Ehrlich
     Emerson
     English
     Ensign
     Everett
     Ewing
     Fawell
     Fields (TX)
     Flanagan
     Foley
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Funderburk
     Ganske
     Gekas
     Geren
     Gilchrest
     Gillmor
     Gilman
     Goodlatte
     Goodling
     Goss
     Graham
     Greenwood
     Gunderson
     Gutknecht
     Hancock
     Hansen
     Harman
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Heineman
     Herger
     Hilleary
     Hobson
     Hoekstra
     Hoke
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Johnson (CT)
     Johnson, Sam
     Jones
     Kasich
     Kelly
     Kim
     King
     Kingston
     Klug
     Knollenberg
     Kolbe
     LaFalce
     LaHood
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Linder
     Livingston
     LoBiondo
     Longley
     Lucas
     Manzullo
     Martini
     McCollum
     McCrery
     McDade
     McHugh
     McInnis
     McIntosh
     McKeon
     Metcalf
     Meyers
     Mica
     Miller (FL)
     Molinari
     Moorhead
     Morella
     Myers
     Myrick
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Orton
     Oxley
     Packard
     Parker
     Paxon
     Payne (VA)
     Peterson (MN)
     Petri
     Pickett
     Pombo
     Pomeroy
     Porter
     Portman
     Poshard
     Pryce
     Quillen
     Quinn
     Radanovich
     Ramstad
     Regula
     Riggs
     Roberts
     Roemer
     Rogers
     Rohrabacher
     Roth
     Roukema
     Royce
     Salmon
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Sisisky
     Skeen
     Skelton
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stearns
     Stockman
     Stump
     Talent
     Tate
     Taylor (NC)
     Thomas
     Thornberry
     Tiahrt
     Torkildsen
     Upton
     Visclosky
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                             NOT VOTING--9

     Borski
     Crapo
     de la Garza
     Ehlers
     Gallegly
     Gonzalez
     Lewis (GA)
     Meek
     Rush

                             {time}   2142

  Messrs. CRAMER, HALL of Texas, STENHOLM, and BARCIA changed their 
vote from ``no'' to ``aye.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. Walker). The question is on passage of 
the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             recorded vote

  Mr. ARCHER. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 381, 
noes 44, not voting 9, as follows:
                             [Roll No. 150]

                               AYES--381

     Ackerman
     Allard
     Andrews
     Archer
     Armey
     Bachus
     Baesler
     Baker (CA)
     Baker (LA)
     Baldacci
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Barrett (WI)
     Bartlett
     Barton
     Bass
     Bateman
     Beilenson
     Bentsen
     Bereuter
     Berman
     Bevill
     Bilbray
     Bilirakis
     Bliley
     Blute
     Boehlert
     Boehner
     Bonilla
     Bonior
     Bono
     Boucher
     Brewster
     Browder
     Brown (CA)
     Brown (OH)
     Brownback
     Bryant (TN)
     Bryant (TX)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Cardin
     Castle
     Chabot
     Chambliss
     Chapman
     Chenoweth
     Christensen
     Chrysler
     Clement
     Clinger
     Coble
     Coburn
     Coleman
     Collins (GA)
     Combest
     Condit
     Cooley
     Costello
     Cox
     Cramer
     Crane
     Cremeans
     Cubin
     Cunningham
     Danner
     Davis
     Deal
     DeFazio
     DeLauro
     DeLay
     Deutsch
     Diaz-Balart
     Dickey
     Dicks
     Dingell
     Doggett
     Dooley
     Doolittle
     Dornan
     Doyle
     Dreier
     Duncan
     Dunn
     Durbin
     Edwards
     Ehrlich
     Emerson
     English
     Ensign
     Eshoo
     Everett
     Ewing
     Farr
     Fawell
     Fazio
     Fields (TX)
     Filner
     Flanagan
     Foley
     Forbes
     Fowler
     Fox
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Frost
     Funderburk
     Furse
     Ganske
     Gejdenson
     Gekas
     Gephardt
     Geren
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goodlatte
     Goodling
     Gordon
     Goss
     Graham
     Green
     Greenwood
     Gunderson
     Gutierrez
     Gutknecht
     Hall (OH)
     Hall (TX)
     Hamilton
     Hancock
     Hansen
     Harman
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hefner
     Heineman
     Herger
     Hilleary
     Hinchey
     Hobson
     Hoekstra
     Hoke
     Holden
     Horn
     Hostettler
     Houghton
     Hoyer
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Jacobs
     Johnson (CT)
     Johnson (SD)
     Johnson, Sam
     Johnston
     Jones
     Kanjorski
     Kaptur
     Kasich
     Kelly
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kim
     King
     Kingston
     Kleczka
     Klink
     Klug
     Knollenberg
     Kolbe
     LaFalce
     LaHood
     Lantos
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Levin
     Lewis (CA)
     Lewis (KY)
     Lightfoot
     Lincoln
     Linder
     Lipinski
     Livingston
     LoBiondo
     Lofgren
     Longley
     Lowey
     Lucas
     Luther
     Maloney
     Manton
     Manzullo
     Markey
     Martinez
     Martini
     Mascara
     Matsui
     McCarthy
     McCollum
     McCrery
     McDade
     McDermott
     McHale
     McHugh
     McInnis
     McIntosh
     McKeon
     McNulty
     Meehan
     Menendez
     Metcalf
     Meyers
     Mica
     Miller (CA)
     Miller (FL)
     Mineta
     Minge
     Moakley
     Molinari
     Mollohan
     Montgomery
     Moorhead
     Moran
     Morella
     Murtha
     Myers
     Myrick
     Nadler
     Neal
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oberstar
     Obey
     Olver
     Ortiz
     Orton
     Oxley
     Packard
     Pallone
     Parker
     Pastor
     Paxon
     Payne (VA)
     Pelosi
     Peterson (FL)
     Peterson (MN)
     Petri
     Pickett
     Pombo
     Pomeroy
     Porter
     Portman
     Poshard
     Pryce
     Quillen
     Quinn
     Radanovich
     Rahall
     Ramstad
     Reed
     Regula
     Richardson
     Riggs
     Rivers
     Roberts
     Roemer
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rose
     Roth
     Roukema
     Royce
     Sabo
     Salmon
     Sanders
     Sanford
     Sawyer
     Saxton
     Scarborough
     Schaefer
     Schiff
     Schroeder
     Schumer
     Seastrand
     Sensenbrenner
     Shadegg
     Shaw
     Shays
     Shuster
     Sisisky
     Skaggs
     Skeen
     Skelton
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Spratt
     Stark
     Stearns
     Stenholm
     Stockman
     Studds
     Stump
     Stupak
     Talent
     Tanner
     Tate
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Tejeda
     Thomas
     Thornberry
     Thornton
     Thurman
     Tiahrt
     Torkildsen
     Torres
     Torricelli
     Traficant
     Upton
     Vento
     Visclosky
     Volkmer
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Ward
     Watts (OK)
     Waxman
     Weldon (FL)
     Weldon (PA)
     Weller
     White
     Whitfield
     Wicker
     Williams
     Wilson
     Wise
     Wolf
     Woolsey
     Wyden
     Yates
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                                NOES--44

     Abercrombie
     Becerra
     Bishop
     Brown (FL)
     Clay
     Clayton
     Clyburn
     Collins (IL)
     Collins (MI)
     Conyers
     Coyne
     Dellums
     Dixon
     Engel
     Evans
     Fattah
     Fields (LA)
     Flake
     Foglietta
     Ford
     Frank (MA)
     Hastings (FL)
     Hilliard
     Jackson-Lee
     Jefferson
     Johnson, E. B.
     McKinney
     Mfume
     Mink
     Owens
     Payne (NJ)
     Rangel
     Reynolds
     Roybal-Allard
     Scott
     Serrano
     Stokes
     Thompson
     Towns
     Tucker
     Velazquez
     Waters
     Watt (NC)
     Wynn

                             NOT VOTING--9

     Borski
     Crapo
     de la Garza
     Ehlers
     Gallegly
     Gonzalez
     Lewis (GA)
     Meek
     Rush

                              {time}  2150

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  

                          ____________________