[Congressional Record Volume 143, Number 54 (Wednesday, April 30, 1997)]
[Senate]
[Pages S3844-S3851]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. MACK (for himself, Mr. Levin, Mr. Nickles, Mr. Thurmond, 
        Mr. Graham, Mr. Inhofe, Mr. Coats, Mr. Kyl, Mr. McCain, Mr. 
        Abraham, and Mr. DeWine):
  S. 667. A bill to empower States with authority for most taxing and 
spending for highway programs and mass transit programs, and for other 
purposes; to the Committee on Finance.


                   The TRANSPORTATION EMPOWERMENT ACT

 Mr. MACK. Mr. President, today I am introducing bipartisan 
legislation which would allow States to keep almost all of their gas 
tax revenues for their own transportation projects without interference 
from Washington.
  The Transportation Empowerment Act--which being re-introduced in the 
House by Representative John Kasich--would replace the current law 
governing the Federal highways program, the Intermodal Surface 
Transportation Efficiency Act [ISTEA].
  Under ISTEA, Washington currently collects about $25 billion each 
year in dedicated transportation taxes, skims money off the top for 
demonstration projects, skims more off the top to fund its highway 
bureaucracy, runs the remainder through a maze of formulas, and then 
returns what's left to the States to fund their transportation 
programs.
  However, this circle of waste, has shortchanged our Nation's 
transportation infrastructure. Today, notwithstanding the tremendous 
growth in spending, our Nation's transportation investment backlog is 
estimated to be at least $200 billion. This backlog includes the 
following deficiencies: 25 percent of our highways are in poor/mediocre 
condition; 24 to 28 percent of bridges are structurally deficient/
functionally obsolete; 24 percent of rail transit facilities are in 
substandard/poor condition; and 20 to 24 percent of transit buses need 
to be replaced.
  The fact is that our country is getting less from our transportation 
dollars. Part of the reason for this is reflected in the growth of 
administrative costs. These costs, as a function of Federal highway 
construction dollars, have risen from 7 percent in 1956 to over 21 
percent today.
  The history of the Federal program has shown us that the current 
system [ISTEA] of collecting and distributing gas tax dollars needed by 
States to implement their own transportation needs is too inefficient, 
too costly, and too bureaucratic. Washington simply can't meet the 
challenges facing the Nation's infrastructure.
  Simply put: The era of big Government is over. And in this era, the 
highway system is a perfect example of a program that ought to be 
returned to the States. It's a simple formula for success--less 
Washington, more roads. In fact, transportation economists and State 
officials estimate that if States weren't hamstrung by Washington's 
arcane formulas and mandates, they could get 20 percent more highways 
and transit systems for every dollar collected.
  I have introduced the Transportation Empowerment Act because I 
believe we can better serve our Nation's transportation needs primarily 
through State run transportation programs, without Federal 
micromanagement and without laundering gas tax dollars through 
Washington.


          key provisions of the transportation empowerment act

  The legislation continues a streamlined ``core'' Federal program. 
This core Federal transportation program will include the maintenance 
of the current Interstate System, Federal lands programs--Indian 
reservation roads, public lands, parkways and park roads--highway 
safety programs and emergency disaster relief. Also included is 
continued general fund support for transit programs.
  The bill authorizes States to establish multistate compacts for 
planning, financing, and establishing safety and construction 
standards, and encourages innovative approaches on the part of the 
States, such as use of infrastructure banks and privitization. The bill 
repeals the requirement that States repay Federal grants associated 
with transportation infrastructure which is slated for privatization.
  The legislation provides a 4-year transition period, beginning in 
fiscal year 1998, during which time the existing 14 cents gas tax 
dedicated to transportation purposes would remain in place. After 
funding the new streamlined core program and paying off outstanding 
bills, the remainder is returned to States in a block grant.
  At the end of the transition period, beginning in fiscal year 2002, 
the Federal gas tax would be reduced to 2 cents--that amount necessary 
to fund the core Federal programs.
  Under the bill each State would be free to replace the Federal gas 
tax and to keep those dollars within the State to use as each sees fit.
  The bottom line is this--for far too long Washington has had a 
stranglehold on States' transportation needs. It's time for Washington 
to let go and re-empower the States to make their own decisions.
  More information about the Transportation Empowerment Act is 
available via the Internet at www.senate.gov/mack/
tea2.html.
                                 ______
                                 
      By Mr. MURKOWSKI:
  S. 668. A bill to increase economic benefits to the United States 
from the activities of cruise ships visiting Alaska; to the Committee 
on Commerce, Science, and Transportation.


         BENEFITS FROM CRUISE SHIPS VISITING ALASKA LEGISLATION

  Mr. MURKOWSKI. Today, Mr. President, I am reintroducing a very 
important measure--one that will unlock and open a door that Congress 
has kept barred for over 100 years.
  Opening that door will create a path to thousands of new jobs, to 
hundreds of millions of dollars in new economic activity, and to 
millions in new Federal, State, and local government revenues. 
Furthermore, Mr. President, that door can be opened with no adverse 
impact on any existing U.S. industry, labor interest, or on the 
environment, and it will cost the Government virtually nothing.

[[Page S3845]]

  There's no magic to this; in fact, it's a very simple matter. My bill 
merely allows U.S. ports to compete for the growing cruise ship trade 
to Alaska, and encourages the development of an all-Alaska cruise 
business, as well.
  The bill amends the Passenger Service Act to allow foreign cruise 
ships to operate from U.S. ports to Alaska, and between Alaska ports. 
However, it also very carefully protects all existing U.S. passenger 
vessels by using a definition of ``cruise ship'' designed to exclude 
any foreign-flag vessels that could conceivably compete in the same 
market as U.S.-flag tour boats or ferries. Finally, it provides a 
mechanism to guarantee that if a U.S. vessel ever enters this trade in 
the future, steps will be taken to ensure an ample pool of potential 
passengers.
  Mr. President, this is a straightforward approach to a vexing 
problem, and it deserves the support of this body.
  Let's look at the facts. U.S. ports currently are precluded from 
competing for the Alaska cruise ship trade by the Passenger Service Act 
of 1886, which bars foreign vessels from carrying passengers on one-way 
voyages between U.S. ports. However, it isn't 1886 anymore. These days, 
no one is building any U.S. passenger ships of this type, and no one 
has built one in over 40 years.
  Because there are no U.S. vessels in this important trade, the only 
real effect of the Passenger Service Act is to force all the vessels 
sailing to Alaska to base their operations in a foreign port instead of 
a U.S. city.
  Mr. President, what we have here is an act of Congress prohibiting 
U.S. cities from competing for thousands of jobs and hundreds of 
millions in business dollars. That is worse than absurd--in light of 
our ever-popular election-year promises to help the economy, it belongs 
in Letterman's ``Top Ten Reasons Why Congress Doesn't Know What It's 
Doing.''
  How, Mr. President, can anyone argue with a straight face for the 
continuation of a policy that fails utterly to benefit any identifiable 
American interest, while actively discouraging economic growth.
  Mr. President, this is not the first time I have introduced this 
legislation. When I began, Alaska-bound cruise passengers totaled about 
200,000 per year. By last year, 445,000 people--most of them American 
citizens--were making that voyage. This year's traffic may exceed 
500,000 people. Almost all those passengers are sailing to and from 
Vancouver, British Columbia--not because Vancouver is necessarily a 
better port, but because our own foolish policy demands it.
  The cash flow generated by this trade is enormous. Most passengers 
fly in or out of Seattle-Tacoma International Airport in Washington 
State, but because of the law, they spend little time there. Instead, 
they spend their pre- and post-sailing time in a Vancouver hotel, at 
Vancouver restaurants and in Vancouver gift shops. And when their 
vessel sails, it sails with food, fuel, general supplies, repair and 
maintenance needs taken care of by Vancouver vendors.
  According to some estimates the city of Vancouver receives benefits 
of well over $200 million per year. Others provide more modest 
estimates, such as a comprehensive study by the International Council 
of Cruise Lines, which indicated that in 1992 alone, the Alaska cruise 
trade generated over 2,400 jobs for the city of Vancouver, plus 
payments to Canadian vendors and employees of over $119 million. If 
that business had taken place inside the United States, it would have 
been worth additional Federal, State and local tax revenues of 
approximately $60 million.
  In addition to the opportunities now being shunted to Vancouver, we 
are also missing an opportunity to create entirely new jobs and income 
through the potential to develop new cruising routes between Alaska 
ports. The city of Ketchikan, AK, was told a few years ago that two 
relatively small cruise ships were very interested in establishing 
short cruises within southeast Alaska. I'm told such a business could 
have contributed $2 million or more to that small community's economy, 
and created dozens of new jobs. But, because of the current policy, the 
opportunity simply evaporated.
  Why, Mr. President, do we allow this to happen? This is a market 
almost entirely focused on U.S. citizens going to see one of the United 
States most spectacular places, and yet we force them to go to another 
country to do it. We are throwing away both money and jobs--and getting 
nothing whatsoever in return.
  Why is this allowed to happen? The answer is simple--but it is not 
rational. Although the current law is actually a job loser, there are 
those who argue that any change would weaken U.S. maritime interests. I 
submit, Mr. President, that is not the case.
  For some inexplicable reason, paranoia runs deep among those who 
oppose this bill. They seem to feel that amending the Passenger Service 
Act so that it makes sense for the United States would create a threat 
to Jones Act vessels hauling freight between U.S. ports. Mr. President, 
there simply is no connection whatsoever between the two. I have 
repeatedly made clear that I have no intention of using this bill to 
create cracks in the Jones Act.

  This bill would actually enhance--not impede--opportunities for U.S. 
workers. Both shipyard workers and longshoremen--not to mention hotel 
and restaurant workers and many others--would have a great deal to gain 
from this legislation, and the bill has been carefully written to 
prevent the loss of any existing jobs in other trades.
  Finally, let me dispose of any suggestion that this bill might harm 
smaller U.S. tour or excursion boats. The industry featuring these 
smaller vessels is thriving, but it simply doesn't cater to the same 
client base as large cruise ships. For one thing, the tour boats 
operating in Alaska are all much smaller. The smallest foreign-flag 
vessel eligible under this limit is Carnival Cruise Line's Windstar, 
which is a 5,700-ton ship with overnight accomodations for 159 
passengers. By contrast, although the largest U.S. vessel in the Alaska 
trade is rated to carry 138 passengers, she is less than 100 gross 
deadweight tons.
  The fact of the matter is that there is no significant competition 
between the two types of vessel, because the passengers inclined to one 
are not likely to be inclined to the other. The larger vessels offer 
unmatched luxury and personal service, on-board shopping, 
entertainment, etc. The smaller vessels offer more flexible routes and 
the ability to get closer to many of Alaska's extraordinary natural 
attractions.
  In the spirit of full disclosure, Mr. President, let me acknowledge 
that there is one operating U.S. vessel that doesn't fit the mold: the 
Constitution, an aging 30,000-ton vessel operating only in Hawaii. This 
is the only ocean-capable U.S. ship that might fit the definition of 
``cruise vessel.'' I have searched for other U.S. vessels that meet or 
exceed the 5,000-ton limit in the bill, and the only ones I have found 
that even approach it are the Delta Queen and the Mississippi Queen, 
both of which are approximately 3,360 tons, and both of which are 19th 
century-style riverboats that are entirely unsuitable for any open-
ocean itinerary such as the Alaska trade.
  Mr. President, I cannot claim that this legislation would immediately 
lead to increased earnings for U.S. ports. I can only say that it would 
allow them to compete fairly, instead of being anchored by a rule that 
is actively harmful to U.S. interests. It is, as I said at the 
beginning of this statement, only a way to open the door.
  We've heard a lot of talk about growing the economy and creating jobs 
during the last few years. But we all know, Mr. President, that such 
changes are easier to talk about than they are to accomplish. Well, Mr. 
President, here is a bill that opens the door to thousands of jobs and 
hundreds of millions of new dollars, and does it without one red cent 
of taxpayer money. It's been 110 years since the current law was 
enacted, and it's time for a change.
  Mr. President, I ask unanimous consent that the text of my bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 668

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

     SECTION 1. FINDINGS.

       Congress finds the following:
       (1) It is in the interest of the United States--

[[Page S3846]]

       (A) to maximize economic return from the growing trade in 
     cruise ships sailings to and from Alaska by encouraging the 
     use of United States labor, supplies, berthing and repair 
     facilities, and other services, and
       (B) to encourage the growth of new enterprises including 
     the transportation of passengers on luxury cruise ships 
     between ports in Alaska.
       (2) In promoting additional economic benefits to the United 
     States from the cruise ship industry, there is a need to 
     ensure that existing employment and economic activity 
     associated with the Alaska Marine Highway System, United 
     States-flag tour boats operating from Alaskan ports, and 
     similar United States enterprises are protected from adverse 
     impact.
       (3) Cruise ship sailings to Alaska comprise a vital and 
     growing segment of the United States travel industry. Since 
     1989, the number of tourists coming to Alaska via cruise 
     ships has increased by 86 percent. With almost 500,000 
     passengers per year, Alaska has become the third most popular 
     cruise destination in the world, after the Caribbean and 
     Europe.
       (4) The cruise ship industry is expected to grow at a rate 
     of 15 percent per year over the next several years. In 1996, 
     7 new cruise ships having a combined capacity to carry over 
     13,000 passengers entered the market.
       (5) The only United States-flag ocean cruise ship in 
     service is an aging vessel operating cruises only between the 
     Hawaiian Islands. No United States-flag cruise ships are 
     presently available to enter the Alaskan trade. Thus, all 
     cruise ships carrying passengers to and from Alaskan 
     destinations are foreign-flag vessels which are precluded, 
     under current law, from carrying passengers between United 
     States ports.
       (6) The City of Vancouver, British Columbia receives 
     substantial economic benefit by providing services to cruise 
     ships in the Alaskan trade. In 1996, there were 487 Alaska-
     related voyages, with over 445,000 passengers, up from 
     389,000 in 1995. Most of the voyages stopped in Vancouver. 
     Vancouver has benefited from the cruise ship industry through 
     the direct and indirect employment of almost 2,500 people, 
     and through revenues from goods and services of approximately 
     $120,000,000 a year.
       (7) The transfer of cruise ship-based economic activity 
     from Vancouver, British Columbia to United States ports could 
     yield additional Federal revenues of nearly $100,000,000 a 
     year and additional State and local government revenues of 
     approximately $30,000,000.

     SEC. 2. FOREIGN-FLAG CRUISE VESSELS.

       (a) Definitions.--For the purposes of this section:
       (1) Cruise vessel.--The term ``cruise vessel'' means a 
     vessel of greater than 5,000 deadweight tons which provides a 
     full range of luxury accommodations, entertainment, dining, 
     and other services for its passengers.
       (2) Foreign-flag cruise vessel.--The term ``foreign-flag 
     cruise vessel'' does not apply to a vessel which--
       (A) regularly carries for hire both passengers and vehicles 
     or other cargo, or
       (B) serves residents of their ports of call in Alaska or 
     other ports in the United States as a common or frequently 
     used means of transportation between United States ports.
       (b) Waiver.--Notwithstanding the provisions of section 8 of 
     the Act of June 19, 1886 (46 U.S.C. 289) or any other 
     provision of law, passengers may be transported in foreign-
     flag cruise vessels between ports in Alaska and between ports 
     in Alaska and other ports on the west coast of the contiguous 
     States, except as otherwise provided by this section.
       (c) Coastwise Trade.--Upon a showing satisfactory to the 
     Secretary of Transportation, by the owner or charterer of a 
     United States-flag cruise vessel, that service aboard such 
     vessel qualified to engage in the coastwise trade is being 
     offered or advertised pursuant to a Certificate of Financial 
     Responsibility for Indemnification of Passengers for 
     Nonperformance of Transportation (46 App. U.S.C. 817(e)) for 
     service in the coastwise trade between ports in Alaska or 
     between ports in Alaska and other ports on the west coast of 
     the contiguous States, or both, the Secretary shall notify 
     the owner or charterer of one or more foreign-flag cruise 
     vessels transporting passengers under authority of this 
     section, if any, that the Secretary shall, within 1 year from 
     the date of notification, terminate such service. Coastwise 
     privileges granted to any owner or charterer of a foreign-
     flag cruise vessel under this section shall expire on the 
     365th day following receipt of the Secretary's notification.
       (d) Notification.--Notifications issued by the Secretary 
     under subsection (c) shall be issued to the owners or 
     charterers of foreign-flag cruise vessels--
       (1) in the reverse order in which foreign-flag cruise 
     vessels entered the coastwise service pursuant to this 
     section determined by the date of each vessel's first 
     coastwise sailing; and
       (2) in the minimum number needed to ensure that the 
     passenger-carrying capacity thereby removed from coastwise 
     service exceeds the passenger-carrying capacity of the United 
     States-flag cruise vessel which is entering the service.
       (e) Termination.--If, at the expiration of the 365-day 
     period specified in subsection (c), the United States-flag 
     cruise vessel that has offered or advertised service pursuant 
     to a Certificate of Financial Responsibility for 
     Indemnification of Passengers for Nonperformance of 
     Transportation has not entered the coastwise passenger trade 
     between ports in Alaska or between ports in Alaska and other 
     ports on the west coast of the contiguous States, then the 
     termination of service required by subsection (c) shall not 
     take effect until 180 days following the entry into the trade 
     by the United States-flag cruise vessel.
       (f) Disclaimer.--Nothing in this section shall be construed 
     as affecting or otherwise modifying the authority contained 
     in the Act of June 30, 1961 (46 U.S.C. 289b) authorizing the 
     transportation of passengers and merchandise in Canadian 
     vessels between ports in Alaska and the United States.
                                 ______
                                 
      By Mr. ABRAHAM (for himself, Mr. Kennedy, Mr. Hatch, Mr. DeWine, 
        and Mr. Durbin):
  S. 670. A bill to amend the Immigration and Nationality Technical 
Corrections Act of 1994 to eliminate the special transition rule for 
issuance of a certificate of citizenship for certain children born 
outside the United States; to the Committee on the Judiciary.


  technical corrections legislation concerning children born overseas

  Mr. ABRAHAM. Mr. President, I rise to introduce on behalf of myself, 
Senator Kennedy, Senator Hatch, Senator DeWine, and Senator Durbin, a 
short, technical bill to correct a drafting error in last year's 
immigration bill that could wrongly deny U.S. citizenship to certain 
children born overseas to a U.S.-citizen parent.
  To explain the problem addressed by this bill, some background is in 
order. Prior to 1986, a minor child, born abroad to a U.S.-citizen 
parent, was eligible for U.S. citizenship if the child's U.S. citizen-
parent had physically resided in the United States for at least 10 
years prior to the child's birth. The 1986 Immigration bill shortened 
this residency period to 5 years for children born after its effective 
date, but perhaps inadvertently retained the 10-year requirement for 
children born before that date.
  This double standard yielded anomalous results: In families where the 
U.S.-citizen parent had resided in the United States for more than 5 
years but less than 10, a younger child--born in, say, 1987--would be 
eligible for U.S. citizenship, while that child's older sibling--born 
in, say, 1985--would not be. To eliminate this disparity, the 
Immigration and Nationality Technical Corrections Act of 1994 amended 
the relevant provision of the Immigration and Nationality Act to 
establish a uniform 5-year residency requirement, without regard to the 
date of the child's birth.
  A provision in last year's immigration bill, however, effectively 
repealed the 1994 amendment described above, thus restoring the prior 
double standard. There was, of course, no policy basis for this change, 
and no one has claimed ownership of it. The change appears to have 
simply been a drafting error in a purely technical section of last 
year's bill.
  This error needs to be corrected without delay. Once a child turns 
18, he is no longer eligible to become a U.S. citizen under the 
Immigration and Nationality Act provision that was affected by the 
drafting error. Thus, children who turn 18 before this error is 
corrected will be permanently ineligible to become U.S. citizens under 
the provision at issue. The longer this error goes uncorrected, the 
greater the number of children who will be harmed by it.
  I therefore hope this bill can be passed without delay or 
controversy, and I will be working with my colleagues on both sides of 
the aisle to that end.
                                 ______
                                 
      By Mr. WELLSTONE (for himself and Mrs. Murray):
  S. 671. A bill to clarify the family violence option under the 
temporary assistance to needy families program; to the Committee on 
Finance.


               the family violence option ii act of 1997

  Mr. WELLSTONE. Mr. President, today I am pleased to be introducing 
the Family Violence Option II, a bill to clarify the Wellstone/Murray 
Family violence option Act contained in the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996. Last summer, Senator 
Murray and I introduced the family violence amendment to the welfare 
bill to give States the flexibility to identify victims and survivors 
of domestic abuse and, if necessary, to provide more time to remove the 
domestic violence barrier so that victims would be able to move into 
the work force. Our provision was changed to a State option, but that 
did not change the intent of the legislation.

[[Page S3847]]

  States helping battered women should not be penalized for not having 
the requisite number of women at work in a given month if domestic 
violence is the reason. Most importantly, battered women should not be 
competing with the myriad people with disabilities that prevent them 
from working. Abuse victims and survivors may simply need a little more 
time. That is why the family violence option allows States to grant 
temporary waivers, not exemptions.
  Many States have adopted the family violence option, others, some 
version of it, but most have had great difficulty figuring out what 
taking the option would mean. Senator Murray and I want to make sure 
States that take domestic abuse into account when setting work goals 
will not pay a price. Therefore, this bill makes it clear that victims 
of domestic abuse will not be counted in the 20 percent hardship 
exemption and States who grant temporary waivers of work requirements 
to abuse survivors will not be penalized if they fail to meet their 
work requirements.
  Evidence continues to emerge about the high number of incidents of 
domestic abuse or a history of abuse among welfare recipients. Most 
recently, a joint study from the Taylor Institute in Chicago and the 
University of Michigan confirmed that large numbers of women on AFDC 
are survivors or current victims. Four recent studies--conducted by 
Passaic County, NJ, Univ. of Massachusetts, Northwestern University, 
and the Better Homes Fund in Worcester, MA--document that at least 14 
percent--Passaic County, NJ--and as high as 32 percent--Worcester, MA--
of women on AFDC were currently being abused. The numbers were more 
than twice those percentages for a history of abuse.
  Given the extent of this problem, it is imperative that States be 
able to work at a more individualized pace, not a one-size-fits-all 
approach. I would like to share a story about a woman from Minnesota 
who has used the safety net of public assistance to free herself and 
her children from violence, obtain job skills and training, and become 
self-supporting.
  Edith is a woman who has defied the odds. She had her first child at 
the age of 16. By the time she was in her early twenties, she had 
become an intravenous drug user, had three more children, and was in an 
extremely violent relationship. Edith's abuser beat her routinely and 
savagely, sending her to the emergency room again and again. As Edith 
says, ``Finally, I realized that to save my life and my mental 
stability, I had to get away.'' She waited until her abuser had passed 
out and carefully pried the car keys from his hand and fled Gary, IN, 
with her young sons.
  Edith fled to Minnesota because she had family there. Within months 
her abuser found her, forcing her to flee to a battered women's 
shelter. Edith quickly realized that if she was ever going to be able 
to support her children, she would need to get the educational and job 
training that she desperately needed. It was at that point that Edith 
contacted Cornerstone's Transitional Housing Program. Cornerstone is a 
successful women's advocacy program in Bloomington, MN.
  Edith and her children came into the program in 1992. Utilizing 
educational and vocational resources, Edith entered a vocational 
program for electricians. While in Cornerstone's Transitional Housing 
Program, Edith was able to address the many issues that had resulted 
from her battering, including parenting, bad credit, and chemical 
dependency, just to name a few. With support of the program staff, 
Edith completed the apprenticeship and graduated from the Cornerstone 
program.
  I am proud to tell you that Edith will become a licensed electrician 
this summer. She has just purchased her first home and has set a new 
goal to become a contractor. Edith would tell you that had she not been 
given the time and the opportunity to participate in a transitional 
housing program specifically for battered women, she could not have 
accomplished all of her goals.
  We need to insure that women like Edith have the support system in 
place to escape abusive situations, make the transition to work, and 
then stay working. When women can support themselves and their children 
they can stay away from abusive partners and keep themselves and their 
families safe. I urge my colleagues to support this important 
legislation.
  Mr. President I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 671

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

     SECTION 1. FINDINGS.

       Congress finds that--
       (1) the intent of Congress is amending part A of title IV 
     of the Social Security Act (42 U.S.C. 601 et seq.) in section 
     103(a) of the Personal Responsibility and Work Opportunity 
     Reconciliation Act of 1996 (Public Law 104-193; 110 Stat. 
     2112) was to allow States to take into account the effects of 
     the epidemic of domestic violence in establishing their 
     welfare programs, by giving States the flexibility to grant 
     individual, temporary waivers for good cause to victims of 
     domestic violence who meet the criteria set forth in section 
     402(a)(7)(B) of the Social Security Act (42 U.S.C. 
     601(a)(7)(B));
       (2) the allowance of waivers under such sections was not 
     intended to be limited by other, separate, and independent 
     provisions of part A of title IV of the Social Security Act 
     (42 U.S.C. 601 et seq.); and
       (3) under section 402(a)(7)(A)(iii) of such Act (42 U.S.C. 
     602(a)(7)(A)(iii)), requirements under the temporary 
     assistance for needy families program under part A of title 
     IV of such Act may, for good cause, be waived for so long as 
     necessary.

     SEC. 2. CLARIFICATION OF WAIVER PROVISIONS RELATING TO 
                   VICTIMS OF DOMESTIC VIOLENCE.

       (a) In General.--Section 402(a)(7) of the Social Security 
     Act (42 U.S.C. 602(a)(7)) is amended by adding at the end the 
     following:
       ``(C) No numerical limits.--In implementing this paragraph, 
     a State shall not be subject to any numerical limitation in 
     the granting of good cause waivers under subparagraph 
     (A)(iii).
       ``(D) Waivered individuals not included for purposes of 
     certain other provisions of this part.--Any individual to 
     whom a good cause waiver of compliance with this Act has been 
     granted in accordance with subparagraph (A)(iii) shall not be 
     included for purposes of determining a State's compliance 
     with the participation rate requirements set forth in section 
     407, for purposes of applying the limitation described in 
     section 408(a)(7)(C)(ii), or for purposes of determining 
     whether to impose a penalty under paragraph (3), (5), or (9) 
     of section 409(a).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     takes effect as if it had been included in the enactment of 
     section 103(a) of the Personal Responsibility and Work 
     Opportunity Reconciliation Act of 1996 (Public Law 104-193; 
     110 Stat. 2112).
                                 ______
                                 
      By Mr. BREAUX (for himself and Mr. Hatch):
  S. 673. A bill to amend the Internal Revenue Code of 1986 and 
Employee Retirement Income Security Act of 1974 in order to promote and 
improve employee stock ownership plans; to the Committee on Finance.


                     THE ESOP PROMOTION ACT OF 1997

  Mr. BREAUX. Mr. President, I rise today to introduce a measure that 
will enhance employee ownership in businesses across America. The ESOP 
Promotion Act of 1997, which I introduce today with my colleague, 
Senator Hatch of Utah, will facilitate employee ownership and 
retirement savings and enhance the opportunities for America's 
entrepreneurs to gain improved access to capital. This legislation 
would both improve and update a number of obsolete operating rules for 
employee stock ownership programs and would implement the full intent 
of Congress, which last year passed legislation designed to make ESOP's 
available to Subchapter S corporations.
  The ESOP Promotion Act benefits the owners and workers in the 2 
million S corporations which exist in every industry in every State 
across America. As the country's principal corporate vehicle for 
entrepreneurs and family business startups, S corporations have long 
been engines of economic growth. Unfortunately, the restrictions placed 
on these businesses have also resulted, more recently, in reduced 
capital access for S corporations. For an S corporation which had hit 
the limit on the number of allowable shareholders or the amount of 
personal debt that its owners could assume to keep the company in 
business, there has been a burdensome capital crunch affecting not only 
these companies directly, but hindering the ability of our entire 
national economy to realize its growth potential.
  Last year, as part of the Small Business Job Protection Act of 1997, 
Congress enabled S corporations to have

[[Page S3848]]

ESOP's. I was proud to be a cosponsor of that measure, which by 
allowing S corporation ESOP's did two additional, critical things: it 
gave S corporations a new way to access funds without putting any new 
burdens on the Federal tax base, and it gave millions of workers a way 
to participate directly in the success and growth of the businesses 
which employed them.
  But despite the success we marked in 1996, the many S corporations 
which now want to build ESOP's cannot. The reason: there continues to 
be a number of largely technical hurdles in the Tax Code that make it 
difficult, if not impossible, to establish and sustain these employee 
ownership programs.
  One example of such a hurdle, is that, under current law, if an S 
corporation's ESOP distributes stock to its employee participants, and 
even one employee rolls over his stock into an entity that is not a 
permissible S corporation shareholder--say, an IRA account--then the 
company's Subchapter S election will be entirely invalidated. This, of 
course, is a risk that no S corporation is willing to take, and while 
the problem seems minor and technical on its face, no S corporation 
will establish an ESOP under these conditions.
  Another example of a technical disincentive is that, while S 
corporations were established in the 1950's as pass-through companies 
which pay a single layer of taxes, the S corporation ESOP would have to 
pay two layers of tax--one when the S corporation distributes stock to 
the ESOP, and the other when the ESOP distributes stock or cash to 
its participants. The second layer of tax was certainly not envisioned 
by Congress when we permitted S corporations to have ESOP's last year. 
Unfortunately, in its current form, this technicality means that an S 
corporation ESOP participant would pay a nearly 70 percent greater tax 
on his share of income than he would if he owned the company's stock 
directly. As such, S corporation ESOP's are not yet viable for 
employees, though we certainly intended that they would be when we 
established them.

  The legislation that we are introducing eliminates these and other 
technical problems by establishing parity between ESOP's sponsored by S 
corporations and those sponsored by C corporations; ensuring S 
corporation ESOP participants that they are subject to only one layer 
of taxation; and permitting employees to sell certain stock to an ESOP 
and defer tax on gain.
  In addition to the important S corporation measures in the 
legislation, the ESOP Promotion Act would improve the retirement 
savings opportunities for American workers. The bill would give 
employees the option to direct employers to retain dividends paid on 
employer stock in the ESOP/401(k) plan for reinvestment in the employer 
stock. Employees could then defer income taxes on the dividends and 
allow them to grow tax-free in their ESOP/401(k) plan until retirement.
  The bill would also correct an inequity to workers in the current tax 
law which provides an incentive for employers to pay the dividends to 
employees in cash, rather than to reinvest them in the ESOP/401(k) 
plan. Employers currently receive a tax deduction for dividends paid on 
stock held in the ESOP/401(k) plan only if the dividends are passed 
through to plan participants or are used to pay off an ESOP loan. The 
ESOP Promotion Act would provide employers with the tax deduction they 
currently receive on dividends paid on employer stock that is passed 
through to plan participants, if the dividends instead remain in the 
plan for reinvestment. This reinvestment opportunity for employees will 
enhance their retirement savings and facilitate employee ownership.
  Congress now has a responsibility for finishing the task we began 
last year--one that, perhaps, many of us believed we had completed--
when we agreed that S corporations should have ESOP's and enacted a law 
to that effect. Our bill completes the task by making ESOP's useful and 
desirable for the millions of workers in S corporations, while ensuring 
that they are suitable for the companies that wish to sponsor ESOP's. 
Clearly when Congress enacted the S corporation ESOP provision, we 
expected that it would be functional by its effective date, which is 
January 1, 1998. I hope that my colleagues will support our 
legislation, and ensure that our intent is fully implemented by the end 
of this year.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 673

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``ESOP Promotion Act of 
     1997''.

     SEC. 2. PROVISIONS RELATING TO S CORPORATIONS ESTABLISHING 
                   EMPLOYEE STOCK OWNERSHIP PLANS.

       (a) Repeal of Provision Making Certain ESOP Benefits 
     Inapplicable to S Corporations.--Section 1316(d) of the Small 
     Business Job Protection Act of 1996 is repealed, and the 
     Internal Revenue Code of 1986 shall be applied and 
     administered as if the amendments made by such section had 
     not been enacted.
       (b) Repeal of Application of Unrelated Business Income 
     Tax.--Section 512(e) of the Internal Revenue Code of 1986 is 
     amended--
       (1) by striking ``described in section 1361(c)(7)'' in 
     paragraph (1) and inserting ``described in section 501(c)(3) 
     and exempt from taxation under section 501(a)'', and
       (2) by inserting ``Charitable Organizations Holding Stock 
     in'' after ``Applicable to'' in the heading.
       (c) ESOPs Allowed To Distribute Cash Rather Than Stock.--
       (1) In general.--Section 409(h)(2) of the Internal Revenue 
     Code of 1986 is amended by adding at the end the following 
     new subparagraph:
       ``(8) Plan maintained by s corporation.--In the case of a 
     plan established and maintained by an S corporation which 
     otherwise meets the requirements of this subsection or 
     section 4975(e)(7), such plan shall not be treated as failing 
     to meet the requirements of this subsection or section 401(a) 
     merely because it does not permit a participant to exercise 
     the right described in paragraph (1)(A) if such plan provides 
     that the participant entitled to a distribution from the plan 
     shall have a right to receive the distribution in cash.''
       (2) Conforming amendments.--Section 409(h)(2) of such Code 
     is amended--
       (A) by striking ``A plan'' and inserting:
       ``(A) In general.--A plan'', and
       (B) by striking ``In the case of an employer'' and 
     inserting:
       ``(B) Plans restricted by charter or bylaws.--In the case 
     of an employer''.
       (d) Exemptions From Prohibited Transaction Rules Available 
     to ESOPs and Shareholder Employees.--The last sentence of 
     section 408(d) of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1108(d)) is amended by striking all that 
     precedes ``a participant or beneficiary'' and inserting ``For 
     purposes of this subsection,''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.

     SEC. 3. AMENDMENTS RELATED TO SECTION 1042.

       (a) Extension of Section 1042 Principles to Stock Received 
     as Compensation for Services.--
       (1) In general.--Section 83 of the Internal Revenue Code of 
     1986 (relating to property transferred in connection with 
     performance of services) is amended by adding at the end the 
     following new subsection:
       ``(i) Exception for Transfers of Qualified Securities Sold 
     to Employee Stock Ownership Plans.--
       ``(1) Exclusion from income.--Subsections (a) and (b) shall 
     not apply to, and no amount shall be includible in gross 
     income with respect to, the transfer of any qualified 
     security (as defined in section 1042(c)(1)) in connection 
     with the performance of services if, and to the extent that, 
     within 60 days after the event which would cause the 
     recognition of income pursuant to subsection (a) or (b) but 
     for this subsection, the transferee sells such qualified 
     security to an employee stock ownership plan (as defined in 
     section 4975(e)(7)) and the requirements of section 1042(a) 
     are met with respect to such sale.
       ``(2) No deduction by employer.--Notwithstanding the 
     provisions of subsection (h), the person for whom the 
     services were performed in connection with which any 
     qualified security is transferred shall not be entitled to a 
     deduction with respect to such transfer if, and to the extent 
     that, paragraph (1) applies to such transfer.''
       (2) Conforming amendments.--
       (A) Section 424(c)(1) of such Code is amended by striking 
     ``or'' at the end of subparagraph (B), by striking the period 
     at the end of subparagraph (C) and inserting ``, or'', and by 
     adding at the end the following new subparagraph:
       ``(D) a sale to which section 1042 applies.''
       (B) Section 1042(a) of such Code is amended--
       (i) by striking ``which would be recognized as long-term 
     capital gain'' from the first sentence thereof, and
       (ii) by adding at the end the following new sentence: ``Any 
     gain which is recognized after the application of the 
     preceding sentence shall be treated as ordinary income to the 
     extent of the lesser of the amount of such gain or the amount 
     which would have been treated as ordinary income but for this 
     section.''
       (C) Section 1042(b)(4) of such Code is amended by adding at 
     the end the following

[[Page S3849]]

     new sentence: ``The requirements of the preceding sentence 
     shall not apply to qualified securities received by the 
     taxpayer in a transfer to which section 83 or 422 applied (or 
     to which section 422 or 424 (as in effect on the day before 
     the date of enactment of the Revenue Reconciliation Act of 
     1990) applied).''
       (D) Section 1042(c)(1)(B) of such Code is amended to read 
     as follows:
       ``(B) were not received by the taxpayer in--
       ``(i) a distribution from a plan described in section 
     401(a), or
       ``(ii) a transfer pursuant to a right to acquire stock to 
     which section 423 applied.''
       (E) The first sentence of section 1042(d) of such Code is 
     amended to read as follows: ``The basis of the taxpayer in 
     qualified replacement property purchased by the taxpayer 
     during the replacement period shall be reduced by the amount 
     of gain not recognized by virtue of such purchase, taking 
     into account the application of subsection (a) and, if 
     applicable, the application of section 83(i) or section 
     424(c)(1)(D).''
       (F) Section 1042(e)(1) of such Code is amended to read as 
     follows:
       ``(1) In general.--If a taxpayer disposes of any qualified 
     replacement property, then, notwithstanding any other 
     provision of this title, gain (if any) shall be recognized to 
     the extent of the gain which was not recognized by reason of 
     the acquisition by such taxpayer of such qualified 
     replacement property, taking into account the application of 
     subsection (a) and, if applicable, the application of section 
     83(i) or 424(c)(1)(D). Such gain shall be treated as ordinary 
     income to the extent of the excess (if any) of the amount 
     which would have been treated as ordinary income but for the 
     application of such sections over the amount treated as 
     ordinary income under the last sentence of subsection (a).''
       (3) Effective date.--The amendments made by this subsection 
     shall apply to sales of qualified securities on or after the 
     date of the enactment of this Act.
       (b) Modification to 25-Percent Shareholder Rule.--
       (1) In general.--Section 409(n)(1)(B) of such Code is 
     amended to read as follows:
       ``(B) for the benefit of any other person who owns (after 
     the application of section 318(a)) more than 25 percent of--
       ``(i) the total combined voting power of all classes of 
     stock of the corporation which issued such employer 
     securities or of any corporation which is a member of the 
     same controlled group of corporations (within the meaning of 
     subsection (l)(4)) as such corporation, or
       ``(ii) the total value of all classes of stock of any such 
     corporation.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect on the date of the enactment of this Act.

     SEC. 4. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF 
                   DIVIDEND DEDUCTION.

       (a) In General.--Section 404(k)(2)(A) of the Internal 
     Revenue Code of 1986 (defining applicable dividends) is 
     amended by striking ``or'' at the end of clause (ii), by 
     redesignating clause (iii) as clause (iv), and by inserting 
     after clause (ii) the following new clause:
       ``(iii) is, at the election of such participants or their 
     beneficiaries--

       ``(I) payable as provided in clause (i) or (ii), or
       ``(II) paid to the plan and reinvested in employer 
     securities, or''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.
                                 ______
                                 
      By Mr. CHAFEE (for himself, Mr. Rockefeller, Mr. Jeffords, Mr. 
        Breaux, Ms. Collins, Ms. Snowe, Mr. Bingaman, Mr. Hatch, Mr. 
        Kennedy, Mr. Kerrey, Mr. Dodd, Mr. Kerry, Mr. D'Amato, Mr. 
        Bryan, Mr. Baucus, Mr. Robb, Mr. Hutchinson, Mr. Inouye, Mr. 
        Specter, Mr. Daschle, Ms. Moseley-Braun, and Mr. Moynihan):
  S. 674. A bill to amend title XIX of the Social Security Act to 
encourage States to expand health coverage of low income children and 
pregnant women and to provide funds to promote outreach efforts to 
enroll eligible children under health insurance programs; to the 
Committee on Finance.
     children's health insurance provides security (chips) act
  Mr. CHAFEE. Mr. President, I am very pleased today to introduce 
legislation to provide health insurance for millions of children who 
are not currently covered. Before I talk about the bill, let me take a 
moment to thank all of the members of the bipartisan coalition who have 
worked so hard to put this legislation together. Senator Rockefeller, 
the lead Democratic cosponsor and my colleague on the Finance 
Committee, deserves very special mention in this regard. Senator 
Rockefeller has worked for many, many years on these issues and I am 
personally grateful for all his leadership and hard work in this 
endeavor. He is a true hero when it comes to America's children.
  There are currently 10 million children in this country who do not 
have health insurance. Many of these children live in families where 
one or both parents are working but do not have employee coverage and 
earn too much to qualify for Medicaid. Others, though eligible, simply 
fall through the cracks, while still others lose eligibility because of 
age-based restrictions. This is a tragic problem and our proposal tries 
to provide real solutions.
  The Chafee-Rockefeller proposal offers the States additional Federal 
matching funds if they choose to provide Medicaid coverage to all 
children up to 150 percent of the Federal poverty level. It is a 
completely voluntary program--we hope that all States will participate, 
but we leave that decision to the Governors. States, like Rhode Island, 
that are already providing coverage at these levels will immediately 
begin to get additional Federal matching funds once they have provided 
the 1-year continuous coverage. Our bill also provides grant funds for 
States to use for outreach to the 3 million children who are eligible 
for Medicaid but not enrolled.
  I believe that the Medicaid Program is the best avenue to reach these 
uninsured children. Expansions in the Medicaid Program over the years 
have done wonders in increasing coverage for children and pregnant 
women. We also have to keep an eye on cost, and Medicaid is an 
inexpensive way to cover children--while half of Medicaid beneficiaries 
are children, children only account for 15 percent of overall Medicaid 
spending. And Medicaid is a program that already exists, so we don't 
have to create a new program or a new bureaucracy. In short, Medicaid 
works and works well.
  By encouraging States to provide Medicaid coverage to all children 
under 18 up to 150 percent of poverty, our proposal also tries to fix 
one of the program's problems: under the current Medicaid program a 
child's eligibility depends not only on family income, but also on age.
  Let me illustrate this for you: a 6-year-old girl lives in a family 
of four whose annual income is $21,000. That little girl gets Medicaid 
because Federal law requires that all children 6 and under be covered 
up to 133 percent of the Federal poverty level. On her seventh 
birthday, that little girl doesn't get much of a birthday present--she 
loses her Medicaid coverage because Federal law only requires that 
children between the ages of 7 and 13 be covered up to 100 percent of 
poverty, and her family's income level is slightly above that level. 
Her 4-year-old brother, however, keeps his Medicaid coverage, at least 
for the next 2 years. How bizarre that there are two children in the 
same family and one gets coverage because he's under 6 and the other 
doesn't because she's older than 6. Our proposal would give States the 
option to continue Medicaid coverage for both children until they are 
18.
  So, I am very pleased to introduce this legislation today along with 
this distinguished bipartisan group of Senators. I look forward to 
working together toward the goal of getting critical health care 
coverage to these children.
  Mr. ROCKEFELLER. Mr. President, I am extremely pleased and proud to 
be introducing legislation today with my colleague from Rhode Island, 
Senator Chafee. As my colleagues in the Senate already know, Senator 
Chafee has long been a leader in the area of health care, especially 
when it comes to the health care of children. I am also extremely 
pleased to be introducing this bill with the help of Senator Breaux and 
the newest member of the Finance Committee, Senator Jeffords. We are 
excited to be joined by so many of our colleagues on the Finance 
Committee, Senators Moynihan, D'Amato, Baucus, Hatch, Bryan, Kerrey, 
and Moseley-Braun, and with so many of our other colleagues who have 
joined us as original cosponsors, including Senators Collins, Bingaman, 
Snowe, Kennedy, Kerry, Dodd, Robb, Hutchinson, Inouye, Daschle, and 
Specter.
  Mr. President, our legislation already enjoys broad bipartisan 
support because it meets a serious need and it meets that need in a 
very cost-effective manner. Our legislation builds on an existing 
program and employs an approach that the Finance Committee

[[Page S3850]]

has used repeatedly over the past decade to expand health coverage to 
children and pregnant women. Our legislation is, therefore, not new, 
original, or terribly innovative. But, we know it works.
  For me personally, this legislation fulfills another part of my 
promise to work tirelessly to turn the recommendations of the National 
Commission on Children, which I was honored to chair, into reality. 
That blue ribbon panel of children's leaders from many fields, 
representing a wide spectrum of views, successfully developed a 
unanimous report to recommend an action plan to give America's children 
a real shot at becoming productive, healthy citizens. During our 
deliberations, we recognized that ensuring basic health care for 
children should be one of the country's highest priorities. The bill we 
are introducing today challenges Congress to make the commitment to 
this basic objective that is so vital for the entire country's future.
  Our legislation is complementary to many of the other children health 
bills that have been already proposed this year. That is one reason why 
I am also a cosponsor of other health bills that have been introduced 
by Senators Hatch and Kennedy and Senator Daschle. These bills are not 
competing bills. They all seek to expand the number of children with 
health insurance and they could all easily fit together to meet a 
large, and I am sad to report, a growing need in this country.
  A total of 10 million children in the United States do not have 
health insurance and as a result, the vast majority of them do not get 
necessary health care. Numerous studies have shown that uninsured 
children do not receive basic preventive care and immunizations. They 
are less likely to see a doctor for both acute and chronic illnesses 
and are more likely to delay seeking necessary care. Uninsured sick 
newborns receive fewer services in the hospital than those with health 
coverage. Children without insurance are less likely to have a regular 
source of medical care. This means that these children miss out on 
getting properly screened for problems that could be easily treated 
early or that need to be monitored on a routine basis. According to the 
American Academy of Pediatrics, having a regular source of medical care 
could reduce per-child health care costs by 22 percent.

  Those are the facts. But let us not forget the emotional turmoil a 
parent goes through trying to figure out when, or if, to get an earache 
treated or a rash checked out. Imagine how hard it must be for a mother 
and father to decide to wait just one more day in hopes that a 
troubling symptom will disappear only to have those symptoms worsen in 
the middle of the night. Some families don't even allow their children 
to play sports for fear of an injury. Having millions of families and 
children in these types of situations is just plain wrong, and we must 
try to help.
  Mr. President, the vast majority of uninsured children live in 
families where a parent works. Unfortunately, many of these families 
are unable to afford coverage offered by their employer when it is 
offered. In too many instances working parents don't even have that 
option. The trends for job-based insurance are very disturbing. Between 
1987 and 1995 the percentage of children with job-based insurance 
declined from 67 to 59 percent. But this downward trend is not new. 
Between 1977 and 1987 job-based insurance declined by 5 percent. Every 
minute that goes by another child loses his or her private health 
insurance.
  Mr. President, our bill is very simple. We encourage States to expand 
coverage for children by offering them an enhanced Federal match. Under 
our bill, the States would be eligible to receive a 30-percent increase 
in their current Federal matching rate if they choose to expand 
coverage for pregnant women, infants, and children up to 150 percent of 
poverty. We cap the Federal match at 90 percent so that all States 
would be required to contribute some additional funding. Under our 
bill, Rhode Island would be eligible to receive an enhanced Federal 
match rate of 70 percent up from 54 percent. West Virginia would be 
eligible to receive a 90 percent Federal match, up from 72 percent.
  Our legislation targets those families earning less than one-and-one-
half times the poverty level or about $24,000 a year for a family of 
four. Only a quarter of families at or below this income level have 
job-based insurance. By comparison, 81 percent of families earning 
wages above 150 percent of poverty have job-based insurance. The 
concern of replacing private insurance with public coverage--the so 
called crowding out effect--is minimized when so little job-based 
coverage even exists for families at these income levels.

  Under current law, Medicaid eligibility varies based on a child's age 
and a family's income level. Our legislation aims to establish uniform 
level of eligibility. I recently heard from a West Virginia mother 
desperate for health insurance for her 1-year-old. She and her husband 
work and earn about $22,000 a year. When their daughter turned 1, she 
lost her Medicaid coverage. She qualified for Medicaid when she was an 
infant but because Medicaid's income standard for eligibility is 
different for a 1-year-old she no longer qualified after her first 
birthday. The mother's employer offered health insurance, but at a cost 
of $289 a month or $3,500 a year. They could not afford to buy it. This 
mother was absolutely desperate for assistance because she knew her 
daughter needed immunizations and other well child care services.
  Mr. President, our legislation seeks to end instances of children 
losing their Medicaid coverage just because they have a birthday. Our 
legislation seeks to end instances of children in the same family 
having to meet different income standards.
  We do this not by mandating States to expand their Medicaid Program. 
We believe that by providing additional Federal money States will be 
able to move beyond their current eligibility levels. Our legislation 
would also allow those States that have already exceeded 150 percent of 
poverty to receive an enhanced Federal match. This match would be for 
those children they are already covering between 100 percent and 150 
percent of poverty. We did not think it was fair to penalize those 
States who have already tried to improve coverage for children.
  A key way to expand the number of children enrolled in Medicaid is to 
guarantee eligibility for 12 months. Some 3 million children are 
currently eligible but not enrolled in the Medicaid Program. Some of 
these children qualify for a few months of Medicaid coverage. But 
because of slight changes in their parents' income, they lose coverage 
over the course of the year. Our bill would require States to guarantee 
12 months of eligibility for all children on Medicaid as a condition of 
receiving an enhanced Federal match.
  Expansions of Medicaid in the late 1980's resulted in a decreased 
number of low birthweight babies, improved access to health care, a 
decline in infant mortality rates, and millions more children in 
working families with health insurance. We can build on these successes 
with this legislation. I look forward to working with my colleagues in 
the Senate and in the House in advancing this bill. I am excited at our 
opportunity to meet a very real and vital need of millions of America's 
children.
  Mr. JEFFORDS. Mr. President, the children of America need our help. 
Nearly 10 million children have no health insurance. Many of these 
children live in families with working parents who simply do not make 
enough money to afford health insurance.
  In order to help address this national problem, I am pleased to 
cosponsor, with many of my good friends and colleagues, the Children's 
Health Insurance Provides Security [CHIPS] Act. The CHIPS Act will 
provide Federal financial incentives to encourage States to provide 
uniform Medicaid coverage up to 150 percent of poverty for children of 
all ages.
  The Medicaid Program provides health care for poor children and 
pregnant women. My home State of Vermont, through its Dr. Dynasaur 
program, uses Medicaid and is now ranked second best in the Nation in 
providing health insurance coverage for children under 18 years of age.
  We felt it was important to improve our existing Medicaid system, a 
system which is already in place and currently provides health coverage 
to 16 million low-income children. Three million additional children 
are eligible to receive Medicaid benefits, but they are just not 
enrolled. We should fix that problem.

[[Page S3851]]

 We also feel that it is important to provide incentives to expand 
Medicaid coverage nationally to the children of families who are at 150 
percent of the Federal poverty level--the working poor. This 
legislation builds upon the good work done in Vermont, and many other 
States, in ensuring that our children have access to health care.
  Our bill encourages States to expand current Medicaid eligibility for 
children and pregnant women to 150 percent of the Federal poverty level 
by increasing the amount of money that the Federal Government 
contributes to the Medicaid Program. States that elect to participate 
in the program will need to guarantee that all children are covered to 
at least 100 percent of the Federal poverty level and that all children 
are provided with 12 months of continuous medical coverage.

  The bill also provides grant money for outreach programs. States may 
design their own outreach programs based on their special needs and 
specific populations. We will help by simplifying the application 
process for Medicaid and other Federal programs for which these 
children qualify. One third of all uninsured children are eligible but 
not enrolled in Medicaid. Our bill, by emphasizing outreach and 
administrative simplification, will help get many of these children 
enrolled in the Medicaid Program.
  We must commit our efforts to giving children the best possible start 
in life. As a recent report entitled ``the Social Well-Being of 
Vermonters'' indicates, the foundations we lay for our young children 
will affect their later success in all areas of life. A healthy start 
begins with a healthy pregnancy and early, comprehensive prenatal care. 
Our legislation will give many children the health insurance coverage 
they need and, by doing so, help ensure a solid foundation for our 
country's future.

                          ____________________